Even though paying income tax is a pain for many people, the taxes we pay are what allow us to live such a comfortable life and that’s a privilege many don’t have! But there’s no question that it can be frustrating filing all that paperwork and potentially paying a large amount of money owed too. These three tips are ones I’ve discovered that help me make the most of tax season.
1) Don’t Pay Until You Have To
While many people look forward to getting a big refund at the end of the year, paying taxes this way actually means you’re losing out on potential extra money. A tax expert once told me that a big tax refund simply means you’ve been paying more tax each month than was required. And that’s the equivalent of giving the government an interest-free loan for the year. Instead, request less tax be taken off and put the difference into a high-interest savings account. Then simply pay any tax owed at the end of the year. It takes a little discipline to save this way, but it means extra money in your pocket after you file!
2) Combine Deductions
Often, deductions from previous years can be combined with the current year’s deduction to maximize savings on taxes. In Canada, for example, charitable donations can be claimed up to five years after the donation is made. Since higher donations result in bigger tax savings, waiting to claim that donation for a year or two can result in bigger savings in the future. Similarly, arranging to claim the entire family’s medical expenses in the same year can result in a larger deduction.
3) Keep Everything
No matter how carefully you prepare your taxes, there’s always a chance of the government requiring proof for a claim that you’ve made. Keeping all your supporting documentation organized is incredibly important if you’re asked to present proof for one of your claims. Personally, I use a two-fold approach to organizing my tax paperwork. First of all, I place all the paper copies of my receipts and tax papers in a folder and pack it away in case it’s needed. Secondly, I scan my most important tax papers, including a copy of my tax return, and upload it to the Master Lock Vault. Having that information easily accessible lets me rest easy after filing my taxes.
To help you breeze through the tax season, Master Lock is hosting a Tax Relief Rewards Sweepstakes that you won’t want to miss! Just register for a FREE Master Lock Vault account and you’ll have the chance to enter to win one of five prizes of $1,000 to help add even more to your refund…or minimize your payment! Existing Master Lock Vault members will receive an email with a link to enter the sweepstakes as well. Sign up for your free account by April 16, 2015 for your chance to win!
Taxes are a fact of life but there are all kinds of ways to make them more bearable. From the savings available to students to the added tax benefits that are given to a new parent to the special tax credits available to seniors, there are ways of maximizing your return no matter what stage of life you’ve entered. And with Master Lock to help you stay organized, tax time is even easier!