Tuesday, February 12, 2019

By Barbara Pronin Nobody looks forward to preparing and submitting forms to the IRS but, with tax season is right around the corner, it’s time to get serious about keeping your taxes as low as possible and minimizing the chances of an audit.

Consumer advisors at The Motley Fool advise four moves you can make right now to make tax season go down a little easier:

Decide whether itemizing makes sense - Itemizing only makes sense if the value of your deductions is higher than the value of the standard deduction. Some deductions, like your 401k deduction, can be claimed even of you don’t itemize, so consider the deductions that are restricted to those who itemize, such as deductions for mortgage interest, state and local taxes, medical expenses and charitable contributions. Unless your itemized deductions add up to more than the standard deduction, don’t bother to itemize.

Hunt down all your deductions and credits - Claiming as many as you can will reduce the amount of taxes you owe, so claim them whether you itemize or not. They can include student loan interest deduction, child tax credit, education tax credits if you are paying for tuition, and credits for energy-efficient improvements to your home, and more. If you’re not sure which credits you are entitled to, using tax prep software can help. You can also consult with a tax professional - and remember that seniors and low-income taxpayers can get help for free. Check with your community or senior center for information about the Volunteer Income Tax Assistance Program (VITA) or Tax Counseling for the Elderly (TCE.)

Contribute to tax-advantaged savings accounts - You can contribute to an IRA for the prior tax year right up until the April tax deadline, so do so each month between now and then to take advantage of the tax break.

Get organized - Gather your paperwork together, including everything that documents the income, deductions and credits you are claiming. It will make things easier for you and handy in the event you are audited. Going forward, if you haven’t already done so, keep a file folder handy and keep all your receipts in one place. It’s a habit you’ll appreciate more and more as your tax situation gets more complex.

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