Tax season can be rough, especially if you end up owing taxes after going through the stress of filing. There are some things you can do to help decrease your chances of owing taxes, which can put you in a good position to navigate tax season without any major problems. Here are a few things you can do to help yourself out this tax season.
Adjust Your Withholding
One of the main things that get in the way of people getting a tax return is that they have too little withheld initially. When you select a higher number of exemptions, less money is withheld from your taxes. That means that you will get more money each paycheck, but that you are likely to owe taxes when you finally file during the tax season. Choosing the appropriate number of exemptions will help you to avoid overpaying or having to pay during tax season, instead, you will be more likely to get a tax return or come out even. If you aren’t sure how many exemptions to claim, you should talk to someone familiar with taxes or research more information.
Claim Credits and Deductions
There are tons of credits and deductions available to be claimed by tax filers. You won’t qualify for all of them, but if you don’t check them carefully, you will probably miss deductions that could save you money. There are even deductions or things like solar energy. If you installed solar panels on your home, you can take a credit for 26% of the cost. You can also deduct donations to charities (even in-kind donations, like clothes donated to a thrift store). Deducting the interest you have paid on your student loans is another deduction that people forget but that can help significantly.
Plan in Advance
Sometimes, you can’t avoid needing to pay taxes after filing. However, you can plan in advance so that you don’t end up having the amount you owe catch you by surprise. Instead, estimate how much you are likely to owe early in the year and put aside money to pay it off just in case. That way, when tax season does come, you will have the money you need already in your bank account and available to pay back what you owe.
No one wants to have to owe taxes at the end of the year. Luckily, there are a few things you can try to prevent that from happening and soften the blow.
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