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Leap into Tax Season with these Tips

February 29, 2020
Leap into tax season with these tips

If the words "tax season" sound overwhelming, you are not alone! Tracking down receipts and W-2 forms can be stressful. Here are some tips to make taxes seem a little less intimidating. 

1. Due dates matter! It is very important to be mindful of due dates. This year, tax returns should be submitted on or before Wednesday, April 15, 2020. However, you should consider filing as soon as you can.

2. Tax breaks and deductions are sometimes overlooked, but you may be able to save a significant amount of money by taking the time to ensure you're not forgetting any deductions. Some of the most commonly forgotten deductions are reinvested dividends, out-of-pocket charitable contributions, interest payments on student loans, refinancing mortgage points, and more. Some of these deductions have specific stipulations and circumstances, while some are more general. Either way, it is worth your time to explore all options!  

3. Should you file by yourself or hire a tax professional? This is a common question when tax time rolls around. There is not necessarily a right or wrong answer. However, there are certain situations in which you might consider hiring a professional. For example, if you have complex deductions, made non-cash contributions to charity, were self-employed or owned your own business, frequently traded investments, or has a drastic life change like buying a house or starting a family. If any of these applied to you during the tax year, you may want to hire a professional to assist you. 

4. Common tax terms can also make taxes seem intimidating. Knowing some of the most common lingo and acronyms may help you.
    
  • AGI is your Adjusted Gross Income, which is your total income minus certain adjustments for items like moving expenses, health insurance payments by the self-employed, student loan interest, IRA (Individual Retirement Accounts) contributions, or alimony. 
  • EIN is your Employer Identification Number, which is a nine-digit Federal Tax Identification number used to identify a business entity for tax purposes. 
  • EITC means Earned Income Tax Credit. This is a refundable federal income tax credit for low to moderate income working individuals and families.
5. Don't wait until the last minute! This is crucial. Gather all important tax documents in one place as soon as they become available to you. Your bank or lender will most likely notify you when tax documents become available for download if you have paid interest on strident loans, or have an interest-earning savings account, for example. You may also have forms related to your healthcare coverage, as well. 

6. Ask for help. If you have questions, reach out to a tax professional near you. 

Taxes have a major impact on your financial health. Learn about the different types of taxes and forms here. Hopefully, these tips will help you leap into a stress-free tax season.

The information and recommendations contained herein is compiled from sources deemed reliable but is not represented to be accurate or complete. In providing this information, neither Cortland Bank or its affiliates are acting as your agent or is offering you any tax, accounting or legal advice. 

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