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How Are You Filing Your Taxes?

Posted By:  |  March 6, 2016  |  0 Comment(s)

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Regardless of your opinion of the annual tax filing ritual, one thing is certain: you want it to be as painless as possible. When you begin examining your filing options, though, it can be difficult to judge which path holds the least resistance. How you prepare your return ultimately comes down to your personal circumstances, your level of skill and just how involved you want to be in the process.

Boiling tax filing down to its essence requires a subjective look at everything you intend to put into it. You must also consider the potential benefits for taking a more time-consuming approach. If your aim is to file your taxes in a financially optimal way, choosing the easiest method may not be to your advantage. Perhaps the best way to begin is by reviewing what you have to include on your return.

Your Finances

The complexity of your return, along with your method of filing, is partially dependent on how much you made last year and the number of income sources. The reason for this is two-fold; if your income fell into a higher bracket, creating a potentially higher liability, you’ll need to have a close look at your deductions. This is particularly true if your goal is to pay as small of a tax bill as possible.
Next, the number of revenue streams you had coming in plays its own part in your filing choices. If you were a contract worker for multiple parties, for instance, it can be easy to make a mistake. You’ll need to include every employer’s income details and keep straight the various deductions you intend to take for each endeavor. These complications can make filing solo a tenuous proposition.

Tax Breaks

As long as you’re considering tax deductions, think about which ones you’re planning on taking. If you’re itemizing, for instance, there are several details to which you must pay close attention. Any expense you intend to write off must be allowed, or accepted, by the IRS. Also, each individual deduction should have a corresponding receipt. Since correctly taking deductions requires a certain degree of knowledge and experience, you may not want to attempt them on your own.

Filing Options

You no doubt understand that you can file through the mail or online, but what professional options are available to you? For starters, more complicated tax returns may require paid filing software as opposed to the free variety (these details will be indicated when you choose one you like). If you suspect that your return would be better filed by a licensed professional, you have a number of options.

A certified public accountant or enrolled agent should be able to handle virtually any type of individual income tax return (and likely many for your business, if applicable). He or she will spend an hour or two carefully going over your income and deduction paperwork, fine-tuning the filing details to ensure you get the most bang for your buck. Saving you even a few hundred dollars on your tax bill is better than the alternative. The best part about hiring a tax professional is that you’re learning as you go, enabling to make the most of your taxes if you decide to file on your own next season.

 
<–Back to Debt Blog     Next Post: The IRS is Enlisting Help to Collect on Your Tax Debt –>

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  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
  • Negotiates with your creditors on your behalf.
  • Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
  • Combines all your debts and creditors into one monthly payment.
  • Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
  • You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
  • Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
  • Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
  • Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
  • Borrowers can receive funds from their loan within only a few days.

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