Tips For Annual Tax Filing

Posted on: 3 March 2020

One of the things that many people dread about the beginning of a new year is the impending tax season. Tax filing can be intimidating and confusing, especially if you try to do it yourself. With so much misinformation and so many changes happening with the tax law, it pays to make sure that you really understand the situation before you try to file. Here are a few things that you should know.

The Increased Standard Deduction Can Make Things Easier

For those who don't have a significant amount of itemized deductions, the standard deduction can make tax filing quicker and easier because it's a flat rate and you don't have to take the time to gather and calculate your itemized deductions. 

The new tax code has resulted in an increased standard deduction for tax filers, which means more people can benefit from taking the standard deduction instead of itemizing. 

However, you won't recognize the benefit of the time savings unless you know for sure that the standard deduction is going to be greater than your itemized deductions. Take some time to scan your receipts and do some rough calculations in your head. 

If you think it's going to be close, then it might be worth investing the time in trying to draft your taxes with the itemized deductions as well to see if it saves you more. Otherwise, you might want to just opt for the standard deduction and save yourself the time investment.

You can also work with an accountant to complete your taxes more easily. Your accountant will be able to quickly and easily assess your itemized deductions and determine if it's more beneficial to itemize versus taking the standard deduction.

Getting A Refund Doesn't Mean Your Withholdings Don't Need To Be Changed

When you complete your taxes and get a refund at the end of the year, you might think that your withholding is fine and doesn't need to be adjusted. However, you may still need to make changes to your withholding, and you should review those withholdings every year.

Receiving a significant refund at the end of the year only means that you have let the IRS hold onto more of your money throughout the course of the year. Receiving that money in your paycheck instead gives you the opportunity to earn interest on those funds, which you won't be able to do if you don't adjust your withholdings.

To learn more, reach out to a local tax preparation service.