January 16, 2013

Don’t Tax Yourself on Getting Taxes Together

published this at 2:15 pm

It is that time of year that just about everyone other than tax accounts dread.

Yes, time to gather up all those papers and try and figure out if you will be getting a gift from Uncle Sam, or perhaps giving him a little something instead. Either way, doing your taxes can be quite taxing, pardon the pun if you will

So, how can the average worker avert the desire to bang their head up against the wall until they render themselves unconscious?

Let’s start by categorizing workers into two groups – full-time employees and contractors.

If you find yourself in the former, the best advice is to:

* Check with your employer if your tax document is late or if the numbers do not add up. Given the move to 2013, many workers noticed a change in their paychecks earlier this month. A payroll tax increase has led to many workers cutting back on expenses for the time being, that being the culmination of a two-year cut on taxes which fund Social Security. For those unaware, the tax jumped back up to 6.2 percent from the previous 4.2 percent. Keep in mind that your employer is required to finalize your W-2 to report wages, tips, and other compensation you received during the last year by Jan. 31;

* Already think about next tax season – As you are either preparing to or currently working on your taxes for the 2012 work year, pay attention. You may want to make some changes going forward this year to assist you with your 2013 taxes. Whether you want to change certain deduction amounts or how many people can be claimed, review the last 12 months to see if you can change your paycheck to better benefit you over time.

Self-Employed Workers Need to Deduct What They Can

For those workers who are self-employed, they probably enjoyed not seeing taxes deducted from their checks or cash payouts these last 12 months. As most know, however, the time has come due to pay up.

While you have to pay federal, state and local taxes like many other folks, there are savings sitting there for you if you know where to look for them.

If you work from home, remember that you can deduct items like mileage, electricity, phone bill, any purchases that went towards your work efforts like a new computer, printer or fax machine, office supplies etc. You can also deduct travel expenses such as airfare, rental cars, hotels and more if they were accrued during your work time. Lastly, you may be able to deduct a portion of your rent, insurance, etc. if your home is the main base for any business you run and/or work you do for an employer.

The most important facet of all of this talk is making sure you have kept proper records over the last 12 months.

Are you one to save and organize receipts or are you the individual who will be scurrying around April 14 looking for such items?

Whether this tax season brings you a gift or not, be prepared to get your taxes done over the coming weeks, meaning that April 15 does not stare you down like a whole in the wall.

Photo credit: addictinginfo.org

About the Author: With 23 years’ writing experience, Dave Thomas covers a variety of business and consumer topics, including payroll outsourcing.

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