Tips To Avoid Stressful Tax Time For Military Personnel And Civilians
Tax time is always a stressful period for active military personnel and civilians. But careful documentation of expenses can help facilitate easier filing of your taxes. Its always advisable for any taxpayer to keep, a proper record of their expenses and payments. These records are useful in case you are ever faced with an audit. By keeping an organized account of your expenses and payments, you may be able to reduce your total tax payments. Keeping organized documentation also leads to less unplanned or uncontrolled spending. You have more power over your financial situation.
Organize
For calculating your tax returns you should keep documentation of major expenses such as:
Medical and/or dental bills which were not reimbursed
The purchase of a home or its sale
The number of stocks and bonds you possess including details such as the date it was originally purchased and date of sale. This helps in determining profit or loss.
Any child care expenses or alimony support
Back-Up Documentation for Deductions
If your deductions exceed the standard deduction to which you are entitled, you may want to itemize your deductions to facilitate easier filing of your tax returns. At present, standard deductions for single person or married people filing separate tax returns is $5,150.00. For a married couple filing jointly, the deduction is $10,300.00. For heads of households it is $7,550.00. You may consider filing Form 1040 (Schedule A) if any of the following applies to your particular situation:
You have paid interest and taxes on your home
If you have suffered financial loss through an uninsured casualty or theft
If you adopted a child
Donated large amounts to registered charities
If you have undergone any educational training to enhance your or maintain your present job skills.
If you purchased professional books and magazines
If you paid Union dues and fees
If you paid for renting a safe deposit box
If you paid professional fees for having someone prepare your tax return.
How to Organize
The simplest way of documenting your expenses is by first finding out what kind of expenses you can claim as tax deductions. Throughout the year, as you make tax deductible expenses keep such receipts or bills in a special folder. You may want to consider purchasing an accordion file to categorize your tax deductible expenses. This way at the end of the year, you can easily determine your tax deductions and avail of tax benefits that apply to you.
Being prepared with your tax documentation will reduce stress when tax time comes around each year. Having a well-kept expense account will also help keep you in control of your finances and help you avoid paying more tax than you need to.
Organize
For calculating your tax returns you should keep documentation of major expenses such as:
Medical and/or dental bills which were not reimbursed
The purchase of a home or its sale
The number of stocks and bonds you possess including details such as the date it was originally purchased and date of sale. This helps in determining profit or loss.
Any child care expenses or alimony support
Back-Up Documentation for Deductions
If your deductions exceed the standard deduction to which you are entitled, you may want to itemize your deductions to facilitate easier filing of your tax returns. At present, standard deductions for single person or married people filing separate tax returns is $5,150.00. For a married couple filing jointly, the deduction is $10,300.00. For heads of households it is $7,550.00. You may consider filing Form 1040 (Schedule A) if any of the following applies to your particular situation:
You have paid interest and taxes on your home
If you have suffered financial loss through an uninsured casualty or theft
If you adopted a child
Donated large amounts to registered charities
If you have undergone any educational training to enhance your or maintain your present job skills.
If you purchased professional books and magazines
If you paid Union dues and fees
If you paid for renting a safe deposit box
If you paid professional fees for having someone prepare your tax return.
How to Organize
The simplest way of documenting your expenses is by first finding out what kind of expenses you can claim as tax deductions. Throughout the year, as you make tax deductible expenses keep such receipts or bills in a special folder. You may want to consider purchasing an accordion file to categorize your tax deductible expenses. This way at the end of the year, you can easily determine your tax deductions and avail of tax benefits that apply to you.
Being prepared with your tax documentation will reduce stress when tax time comes around each year. Having a well-kept expense account will also help keep you in control of your finances and help you avoid paying more tax than you need to.
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