Benjamin Franklin once quipped, “…in this world nothing can be said to be certain, except death and taxes.” Although this is funny, it is also true. Whether you work for a large corporation, as a subcontractor, or are self-employed, you will have to file taxes with the IRS.
For those who are filing taxes for the first time, here are some important tips you need to know before you file.
You Can File for Free
Free is always good, but filing your taxes for free is even better! According to the IRS, if your gross income (the amount you made before any deductions were taken out) was less than $66,000 per year, you are eligible for free software filing options through their Free File program. Some programs even let you file your state income taxes for free, too.
Tax Reform Provisions
Rep. Kevin Brady (R-Tx-8) of the House Ways and Means Committee sponsored a tax reform bill in November of 2017. What does this have to do with the new job or business you started last year? Plenty.
First, the bill was passed into law in December of that same year changing the percentage of money you have to pay based on how much you or your business made. This year’s taxes are affected by this new law. If you started a business in the past year, seeking the advice of a tax professional is wise.
In fact, even if you didn’t start a business in the past year, you should seek a tax consultant to help you understand all the new changes made to the tax code. For example, Section 11049 suspends the deduction for moving expenses, which may affect someone who started a new job in 2018.
Think About Next Year
I know what you’re thinking. I haven’t even filed this year’s taxes and you want me to think about next year?
As you begin to wade through the income, deductions, and numerous forms of filing taxes, just remember, anything you forgot to take advantage of this year, do it next year!
While it is still fresh on your mind, write down a list of items you will look into for next year’s return. For example:
- Home Ownership – There are numerous deductions a person may be able to take when purchasing a home. From mortgage interest to PMI, the deductions that can be found from purchasing a home may add up quickly. If you are considering purchasing a home this year, keep this in mind.
- Give to Charities – Any amount you give to various charities may be deducted, including miles driven for charitable purposes.
- Medical Expenses – As any new parent knows, these expenses can add up quickly. Any amount paid for healthcare, including insurance, doctors, dentists, prescriptions, and medicines, may be deducted at the end of the year. Don’t forget your health savings account (HSA) may also be deducted.
- Educational Expenses – Still paying off those student loans? You might be able to deduct the interest paid during the year.
- Retirement Savings – Too young to be thinking about retirement? Well, think about potential deductions if you have an Individual Retirement Account (IRA).