Tax Refunds & Advice

Form 1040EZ may be calling your name when it comes time to file your final return. That being said, this is not the best form for every tax filer. You need to make sure that Form 1040EZ, which is commonly known as the short form, is best for your situation.

Why do the majority of people want to use this form? Simply put, it is the easiest to figure out and takes the shortest amount of time to complete. And for most taxpayers, easy and time saving is something that they are quite interested in.

You can comfortable use Form 1040EZ if you meet all of the qualifications below:

1. Your income for the past year was $100,000 or less

2. You earned less than $1,500 in earned income

3. Both you and your spouse are under the age of 65

4. Your income is derived from nothing more than interest, wages, and/or unemployment compensation

5. Your filing status must be married filing jointly or single

6. You are comfortable using the standard deduction as opposed to itemizing

7. You don’t have any adjustments to make to your income

Do you qualify to file Form 1040EZ next year? If so, you will probably want to take advantage. The bottom line is that this form is easy to file and will not take up a lot of your time. Although you may be used to hiring a tax professional, if you can get away with filing Form 1040EZ you may be able to complete the process on your own next year.

Do you want to pay less in taxes next year? If so, there are three simple ways that you can do this. Although you will still owe some money to the IRS, less is always better, right? Listed below are three simple ways that you can lower your taxes without having to take any drastic steps:

1. One of the most important factors in determining taxes is your adjusted gross income. Simply put, your adjusted gross income consists of all of your income minus any adjustments. By looking at your tax forms from last year, you will get a good idea of what your adjusted gross income usually works out to. The more money you earn the higher your adjusted gross income. And the higher your adjusted gross income the more taxes you pay. By lowering this number, by doing things such as contributing to a retirement account, you can also bring down the amount that you owe in taxes.

2. Although almost every taxpayer can take a standard deduction, you may want to look into itemizing if it will work to your advantage. Itemized deductions can include but are not limited to mortgage interest, student loan interest, charitable contributions, job related expenses, and health care expenses in many cases. The more deductions that you can find the less you will be taxed on.

3. Tax credits are available, and you need to take advantage if eligible. Generally speaking, tax credits are meant to reduce your tax. They are available for things such as adopting a child, saving for retirement, and college expenses.

If you take advantage of any of these tips, you should be able to lower your taxes. And when you do this, it means more money in your pocket.

Are you the type of person who likes to plan for the future? If so, you are probably ahead of the tax game, year in and year out. On the other side of things, if you tend to put things off and wait until the last minute you may not be skilled at the art of tax planning. That being said, it is important for everybody to take advantage of planning for the future. No matter what your tax situation, if you plan in advance you will not run into any circumstance that you cannot handle.

With the proper amount of tax planning, you will find that you are not nearly as bogged down when it comes time to file your final return. Those who do not plan in advance often times find themselves staring at several days’ worth of work in order to file an accurate and timely final return. It is always easier to tie up the loose ends at the end of the year if you have been planning for this event during previous months.

Additionally, when you properly plan you will find that you have a better chance of receiving a refund as opposed to owing more money. For instance, tax planning can lead to locating and taking advantage of more deductions throughout the year. As noted earlier, this will help you to lower your tax liability and increase the likelihood of receiving a refund.

This is only a small sampling of why tax planning is so important. Simply put, you will be much better off if you keep a watchful eye on your tax situation throughout the year. Planning does not take a lot of time, and in the end it is well worth it.