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Friday, March 26, 2010

Tax goofs

Over the last two months, I've been busy with my side-job of helping people prepare their taxes.  When there is trouble at tax time, I've noticed that it usually comes from just one or two places.  Here's a couple of easy tips to make sure that your tax time is easy breesy...

1)  Have taxes deducted from your paycheck.   Sounds like a no-brainer, doesn't it?  In the office where I work, at least 30% of our customers come in and say "but my Aunt said that because I have a dependent, I shouldn't have to have any taxes taken out..." or "but my Mother said that if I just file Married and 4 then I will have enough taxes taken out..."      Mom and Auntie have been incorrect each time, unfortunately.  And the IRS doesn't take crying and tears into consideration at tax time.  Frankly, I don't have much patience for them either.

Unless you make less than $11-$18,000 per year,  have 2-3 children and pay a lot of day care expenses, odds are you are probaby going to pay some tax during the year. Expect 10-15% of your earnings will be paid out in taxes, THEN do your planning and research re: reducing your tax burden.  You'll be happily surprised instead of crying on April 15th.

2)  Find an old file somewhere and throw your receipts into it.   Again, so many of my clients have deductions that they could take, like school supplies and uniforms.  But who knows what's going to be deductible when?  It is a moving target.  My best advice, and what I do for myself, is to just keep all medical receipts, and anything except grocery store, ATM and restaurant receipts.  There's a good chance you'll find gold in them there receipts!

More Tax posts that readers like:

Standard Deduction Changes Save You Money

How Long to Keep Records