It's income tax time and you are thinking here we go again with a sigh. No, this is not too early to think about it, especially if you have money coming to you.
Like it or not, tax time is around the corner and you have to face reality. But there is a distinct advantage to getting an early start - it's a reminder to be more organized in this regard in the year to come. At the very least, you can look forward to having a better time next year.
Salaried people have an easier time because their income taxes are computed and withheld outright by their employer. At the end of the year, all the employee needs to do is to collate the tax deductions. In fact, the employee taxpayer who is paying a standard deduction should not be surprised if he ends up with a tax rebate. If you aren't sure what all you can take a deduction on, consult your accountant, or, if you do your own taxes, go to one of the popular tax software sites and see what they suggest. Of course, if you have a home business, you have more paperwork and more deductions to consider. These individuals will find that their best choice is to hire an accountant. It saves a lot of worry and can be worth the expense. Among the deductibles in a home business are business supplies, gasoline for business travel, etc. A tax expert should be able to spell out the tax deductibles for you, and good business practice demands that you file all receipts and records of transactions.
Now, if you've done your taxes and find out you're getting a big refund, it's time to celebrate, right? That would be doubtful. The implication is that without being asked, and without being rewarded, you are allowing the government free use of your money. A pity because you may have gotten some income opportunities with that money. In any event, that is water under the bridge, and instead you should consider it as unearned savings that should be kept for future use or contingencies. You can deposit it in a savings account and the interest however negligible is still better than nothing. It might test your willpower knowing that you have usable surplus money, but on the other hand you are presented with the wonderful if unexpected opportunity of having a reserve fund for real emergencies.
Words of advice - systematize your income tax starting now and avoid frantic improvisation in the future. For one, you should start keeping an orderly file of your receipts and records so you can have documentary support for your deductions if and when necessary. And by the way, do you know that a tax expert can actually maximize deductions that will reduce your tax payments?
Like it or not, tax time is around the corner and you have to face reality. But there is a distinct advantage to getting an early start - it's a reminder to be more organized in this regard in the year to come. At the very least, you can look forward to having a better time next year.
Salaried people have an easier time because their income taxes are computed and withheld outright by their employer. At the end of the year, all the employee needs to do is to collate the tax deductions. In fact, the employee taxpayer who is paying a standard deduction should not be surprised if he ends up with a tax rebate. If you aren't sure what all you can take a deduction on, consult your accountant, or, if you do your own taxes, go to one of the popular tax software sites and see what they suggest. Of course, if you have a home business, you have more paperwork and more deductions to consider. These individuals will find that their best choice is to hire an accountant. It saves a lot of worry and can be worth the expense. Among the deductibles in a home business are business supplies, gasoline for business travel, etc. A tax expert should be able to spell out the tax deductibles for you, and good business practice demands that you file all receipts and records of transactions.
Now, if you've done your taxes and find out you're getting a big refund, it's time to celebrate, right? That would be doubtful. The implication is that without being asked, and without being rewarded, you are allowing the government free use of your money. A pity because you may have gotten some income opportunities with that money. In any event, that is water under the bridge, and instead you should consider it as unearned savings that should be kept for future use or contingencies. You can deposit it in a savings account and the interest however negligible is still better than nothing. It might test your willpower knowing that you have usable surplus money, but on the other hand you are presented with the wonderful if unexpected opportunity of having a reserve fund for real emergencies.
Words of advice - systematize your income tax starting now and avoid frantic improvisation in the future. For one, you should start keeping an orderly file of your receipts and records so you can have documentary support for your deductions if and when necessary. And by the way, do you know that a tax expert can actually maximize deductions that will reduce your tax payments?
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