The tax filing season creeps up on millions of taxpayers each year. As the rush of the holidays comes to an end, you have just a few weeks to spare before the new year's tax season officially gets underway. Rather than be caught off guard during this all important time of year, you can use these tips to start preparing now for the upcoming 2018 tax filing season.
Research Your Tax Bracket and Income Limits
As with most tax seasons, the one for 2018 will come with several changes about which you should be aware. The most notable change that will most likely impact you involves the increase to the tax bracket income limits.
Every tax bracket will undergo a two percent increase for 2018. If you plan on filing single, for example, and earn have less than $9525 of taxable income, you will file under the 10 percent tax bracket. This taxable income limit is up slightly from $9325 from the 2017 season.
Before you file your taxes next year, you should discover in what tax bracket you will be filing based on how much on your income the IRS can tax. Depending on the number of credits, deductions, exemptions, and income you plan to claim on your return, you may owe less than what you did last year.
Decide Whether or Not to Itemize
Also depending on your income, filing status, and other details, you may benefit by not itemizing your taxes but rather claiming the standard deduction on your returns. People who are self-employed or have higher incomes typically itemize deductions to lower what they owe the IRS and also to get some of these expenses refunded to them.
However, it may not behoove you to itemize given that the standard deduction limit will rise to $6300 for the 2018 filing season. You may not reach this amount even if you itemize deductions on your returns. In fact, you may owe more to the IRS if you do not claim the standard deduction.
If your income and tax filing status do require you to itemize, however, you may lower your tax burden by deduction expenses for:
- medical expenses
- charitable contributions
- state and local taxes
- mortgage interest deductions and mortgage points
- health insurance premiums if you are self-employed
- losses to your home or business from qualifying natural disasters
Know What Business Expenses to ClaimAs a business owner, you may be allowed to deduct certain expenses on your tax returns. The IRS encourages you to claim business expenses for:
- company-related travel
- mileage and repairs for your personal car used for business purposes
- home office expenses
- business supplies
- entertainment and lodging expenses related to business
Again, you should have receipts on hand when filing your returns and be ready to provide proof to the IRS of these expenses if required.
Keep Track of Your Charitable Donations
As mentioned, you can deduct donations that you made to charitable organizations in 2017. To qualify for a deduction, the amount of the cash, goods, or other assets that you donated must meet or exceed the limit stipulated by the IRS. The donations must also have been made to a recognized 501 (c) (3) charity or religious organization.
You can deduct the amount of the money or the fair market value of goods that you donated. You should ask the charity for a receipt and have it on hand when filing your returns.
Know When to File Your Taxes in 2018
Finally, you should know on what day your returns are due to the IRS. Personal tax returns are due by April 15.
However, if you are a business owner or self-employed, you may be required to pay taxes on a quarterly basis. The returns are due by the 15th of the month that ends every quarter.
These timely tips can help you prepare now for the upcoming 2018 tax filing season. You can head off any unpleasant surprises and know by what date to file your tax returns with this information in mind.