Three Tips to Reduce the Stress that Comes with Tax Season
Holiday decorations are stored away, New Year’s celebrations are over. Now it is time to move on to the next season of the year: tax season.
It is not uncommon to look at the upcoming April 15 tax deadline with some amount of dread. You can take steps to help reduce the stress and frustration that comes with filing your taxes. Three broad tips that apply to most taxpayers include:
- Organize documents. Get all paperwork in order for easy access when filling out tax forms. This includes pay stubs, old tax forms and paperwork you received from the IRS (like W-2s).
- Prepare for change. Those who itemized returns in the past may find the standardized deduction a better option in 2019. Why? The tax overhaul that went into effect last year increased the standardized deduction to $12,200 for individuals and $24,400 for married couples filing a joint return. Keep this in mind if itemizing because you may want to choose the standardized deduction once you review your numbers.
- Reduce your tax obligations. Nothing reduces stress quite like saving money. There are many legal ways to reduce your tax obligations. Retirement savings is one example. Taxpayers can often reduce their taxable income by setting aside funds in certain retirement accounts. For 2019 filings, taxpayers under the age of 50 can contribute $6,000 into a traditional IRA and $19,000 into a traditional 401(k). Those over 50 can put away $7,000 into their IRA and $25,000 into a 401(k). If done correctly, these transactions translate to a lowered taxable income and ultimately save you money.
Bonus tip: know your rights if you get a notification of an impending audit from the IRS. An attorney experienced in tax law can review the correspondence anddiscuss your options.