Don’t Make These Costly Tax Mistakes

Don’t Make These Costly Tax Mistakes

Everyone works to get paid. Money is important, no matter what you use it for. If you’re like most people you prefer to use your money how you want. That means you want to give as little money to the government as possible. Paying taxes is our civil duty and our country couldn’t be run without taxes. But that doesn’t mean you should give any more than the law requires.

Save Yourself From Overpaying

The ironic thing is even though many people do everything they can to pay as little tax as possible, many people end up paying more than they should because of simple mistakes. So are you making these mistakes? Are you costing yourself additional income because you don’t know what to look out for when you file your taxes? One way to avoid this is to hire a professional, experienced accounting firm. They take care of the mistakes for you. But there are some things you can do to avoid these mistakes, as well. First, you need to know what they are. Knowing is half the battle.

1. Not Using Tax Advantage Accounts–there are numerous types of accounts that can help you save on taxes, including retirement accounts. In addition, Coverdell ESAs and 529 plans offer nice tax breaks while you pay for educational expenses, including tuition. Health savings accounts offer another great way to lower your tax bill. These are all tax-advantage accounts that can help you save big.

2. Selling Investments at the Wrong Time–investments are a great way to make money. However, a big part of that is selling at the right time. When your investment increase in value you want to sell when tax rates are lower. If you sell your winning stock before you’ve owned for a year you’ll pay a much higher tax percentage: 37 percent. But wait to sell it for a year or longer and your percentage drops to 20 percent. That’s a huge savings.

3. Missing Estimated Taxes–if you pay estimated taxes, it’s vital not to forget them. If you do miss one, then make up for it on your next payment. It’s also important to pay the right amount. You don’t want to underpay, or overpay. So make sure you accurately determine the amount to avoid paying penalties, or overpaying and losing disposable income.

4. Not Keeping Tax Records–this seems like such a simple thing. Yet, so many people don’t keep proper tax and financial records. If you end up getting chosen for an audit the best way to survive it and come out on top is by having a record of everything. Even if you don’t get audited, having all your records safely stored makes the filing process so much easier. Plus, you’re more likely to avoid errors or miss any important payments and deductions.

Trust GROCO With Your Taxes

Of course, these are not all the mistakes people make when it comes to taxes. That’s why it’s always a smart idea to hire a qualified, trusted tax accounting firm to take care of your taxes for you.