Worry-Free Tax Returns Are Just 4 Steps Away
Posted by: Brookside Admin
Income taxes and preparing your personal tax return can seem daunting. That's why so many in Tulsa, Broken Arrow and Bixby trust us to provide tax help. Even with the help of a professional, however, there are a few steps you can take to ensure a stress-free tax season. These tips could save you money, but they'll certainly save you from excessive worry.
File Tax Returns Electronically
The most reliable way to ensure the accuracy of your tax return is to use a trusted CPA. Whether you allow a professional to file your taxes, or trust yourself, it's a better idea to file digitally, rather than by hand.
Consider this statistic: in 2013, only 0.5% of taxes of e-filed returns were found to contain an error. Paper returns were found to contain an error 21% of the time.
Nearly 13 million taxpayers continued to calculate their taxes by hand in 2015, but it's not worth the risk.
Don't Try For A Tax Refund
That sounds like a counterintuitive sentiment, but as most tax professionals will tell you, a tax refund really means you gave the government an interest free loan throughout the year that they're no paying you back for. You certainly don't want to be left paying additional taxes, but receiving a hefty refund doesn't mean you've done your taxes well either. Your goal should be to owe nothing, and be owed nothing. Doing so means you'll keep more of your paycheck throughout the year than you would have if you're owed a large refund. Sure, it's fun to have a lump sum come to you in the spring, but it may be more helpful to have a few extra dollars available to you each month.
Keep Detailed Records For Tax Deductions
You probably already know that you need to keep records of the deductions you're claiming in case you're audited and need to provide documented proof of those claims. But, did you know you should keep records of your expenses regardless of whether you plan to use them for tax deductions or not? And, they could come in quite handy even if you're not audited.
By holding onto receipts and detailed records of all of your expenses and gains throughout the year could help a tax professional find deductions and credits you didn't even know about. The more information you can provide a CPA, the better chance they have of finding new opportunities to lessen your tax liability.
So, don't throw out any receipts until you're certain they won't be needed.
Avoid Short-Term Capital Gains
Where's the line between short-term investments and long-term investments? In the IRS' eyes, it's the one year mark. Short-term investments are considered an asset if they're held for 365 days or less. Even one day more and you'll enjoy the significantly lower tax rate of long-term investments.
For those with a taxable income including short-term investments over the $37,500 threshold, you'll face a minimum of a 25% tax rate for those short-term investments. For higher income brackets, those investments could be taxed as much as 39.6%.
Meanwhile, long-term investments aren't taxed at all for lower income brackets. Even the highest possible income bracket only has long-term investments taxed at a 20% rate. And remember, the difference between the two types of investments could be as little as one day.
In addition to the advice listed above, there's one more key step to taking the stress and worry out of tax returns. Be sure to file on time. By making your deadline, you eliminate a number of troubling outcomes and additional penalties.
At Brown Kinion and Company, our experienced CPAs work with you to ensure your taxes are completed on time, and correctly. We'll also help you claim deductions and credits available to you, as well as help you organize and plan for next year's taxes.
Contact us at our offices in South Tulsa / Bixby, and in Broken Arrow.