Every year Americans have to file their taxes unless they don't earn enough income to qualify having taxes taken out of their income. There are heaps of free tools available to help you prepare your taxes and determine if you will get a refund or owe money.
Some of the most widely used tax preparation tools are Turbo Tax, Tax Cut and Tax Act and tax calculators available on top sites like Bankrate.com, MSN.com or CNN.com/money.
One of the reasons many Americans miss out on claiming deductions or end up owing taxes or is because their financial documents are not in order. Many throw away, misplace receipts or falsify documents because the original documents cannot be located.
Using tax preparation software has all the tax laws imbedded in the tool which makes it easier for you to see what deductions you are eligible to claim. Here are 7 crucial steps to help you get organized and file your taxes.
1. Gather. Gather all receipts, gather monthly, quarterly and yearly statements, medical bills, student loans, credit card statements, prescriptions, financial statements, etc. and place in one easy to find location.
2. Categorize. Categorize all receipts such as medical, loans, financial statements, purchases, business expenses, income, etc.
3. Plan ahead. Avoid waiting until the last minute. You can use an automated tool to track your spending and deductions or use a piece of paper, or Word or software such as Excel or Access to enter your data electronically.
4. Automate. Use a software package like Quicken or Quick Books to record all of your deductions. Use basic column headings: Item, Date Purchased or Sold, Cost, Quantity, Total Cost.
5. Deductions. Identify all items that can be used as itemized deductions and put them in one folder. Determine if the standard deduction for your tax bracket is greater than your itemized deductions. If not, calculate your itemized deductions.
6. Go Green. File your taxes electronically. You will receive your refund in approximately two weeks from the date of filing and you help save the environment.
7. Be Patient. Don't get a tax refund anticipation check or refund anticipation loan. You are charged a fee to get your refund faster than waiting the normal waiting period due to a high interest rate charged for the loan. Save yourself some money.
8. Free Filing. If you salary is less than $57,000 or less you can file your taxes electronically for free.
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