It's April, your taxes are due imminently, and you're probably asking yourself all sorts of questions. How do I file my taxes online? How do I get a bigger refund? Should I move to Saudi Arabia, where they are taxed at a measly 3.14 percent? You may have been hoping that taxes would be one of those grown-up things you would never have to deal with but alas, if you don't want to go to jail, taxes are a must. They are boring, annoying, and kind of depressing at times, but they are inevitable, as the old saying goes. But if you're lucky, at the end of the process you'll get a nice, big, fat refund that feels like a reward (except it is actually just your own money being returned to you, so calm down).
There are a lot of important things you should know when doing your taxes, especially as a young woman. In 80 percent of households, women are responsible for making the financial decisions for the family. Did you know if a woman is newly married, starting a new job, or having a baby, the process of filing taxes will change? Here are some tax tips you must know.
1. File electronically
What is this? The stone age? Do your taxes online. Sites like TurboTax, H&RBlock and TaxAct literally make it as easy as possible to file your taxes. There is no excuse for not filing online and on time (which means before April 15, for all the amateurs out there).
2. Know Your Deductions
As a Millennial, you can qualify for a bunch of deductions and tax credits you probably didn't even know about. Bustle talked with Erin Ballard of CreditCardInsider.com about deductions. She says that the standard deduction is the dollar amount that the IRS lets each taxpayer deduct from his or her taxable income, thereby reducing the amount of tax we each pay. For example, if your net income was $50,000 and you take the standard deduction for a single woman, you'll only pay taxes on $43,900.
One really big deduction you may be able to get is for student loans! You can deduct up to $2,500 a year of the amount you paid in student loan interest, but this deduction is phased out depending on your income. Here are some other common areas to look for deductions from CreditCardInsider.com:
- Mortgage interest and property taxes paid for your primary residence.
- Health insurance premiums for the self-employed.
- Medical and dental expenses.
- Charitable contributions.
- State income taxes.
- Unreimbursed employee expenses.
Those are the more obvious deductible areas, but the following ones may surprise you a bit. Here are some less common deductions from CreditCardInsider.com:
- Moving expenses.
- Educator expenses.
- Business use of the home.
- State and local sales taxes.
- Nontraditional medical expenses and medical miles.
- Tax preparation fees.
- Mileage for volunteering.
- Gambling losses.
According to Ballard, for 2013, the standard deduction for single women and young married couples who file separately is $6,100. For a married couple filing jointly, it is $12,200. For those who qualify as Head of Household, the standard deduction is $8,950.
3. Don't sign up for instant refunds
The only thing better than a tax refund is an instant tax refund, right? Wrong. Beware of tax preparation services who try to lure you in with instant cash back. Yes, after filing taxes we all want an immediate reward rather than having to wait by the mailbox for our refund. But instant refunds come at a high cost — the instant refund is really just a short-term loan from the government and the annualized interest rate can top 100 percent, so you will end up losing money.
Plus, refunds really don't take that long to come after you file. You can sign up for direct deposit at no charge...but if you wait for snail mail then you have the added benefit of forgetting all about it until the postman arrives with a delightful surprise.
4. Get help if you need it
If you're a person with a straightforward 9-to-5 job, you work for one company, and you don't own massive property, your taxes are most likely going to be pretty easy to do yourself. If you are a freelancer, run your own business, or have a very profitable side business, you should strongly consider bringing in a professional.
Andrew Poulos, principal of Poulos Accounting & Consulting, Inc., inAtlanta, Ga. told Bustle when you should consider hiring a professional to do your taxes. When you start to get into more complex situations, you should seek a knowledgeable professional rather than trying to navigate your taxes on your own.
"I advise prospective clients to hire a professional if they have anythingbesides the simple '1040 tax return' with one or a few W-2's. When youstart to get into more complex situations such as itemized deductions,interest income, dividends, stock sales, rental properties, self-employedindividuals, child care credit, capital gains transactions, they all requirea professional with knowledge. Those who are self-employed or small business owners should also hire a tax professional to prepare their return."
5. Don't make your tax refund your savings
Don't always count on a big tax refund, and don't count on your refund to save you from dire financial straits. You never know if you are getting one and how big it will be. Create your own savings plan.
According to Ballard, it is your responsibility to keep all records, including receipts, mileage logs, account statements, and any other documentation you rely on to arrive at your numbers. "Get into the habit of filing or scanning receipts. Consider learning and using consumer or small business financial software, and even hiring a competent tax professional to help you file. Tax professionals worth their salt can identify money-saving tax strategies that average taxpayers are unaware of, simply because it's their job to do so and they deal with tax issues every day," she told Bustle.
Taxes don't have to be the scariest things on earth if you give yourself plenty of time and know a few tips that will make filing a lot easier. Good luck!