Effectively dealing with taxes in 2017

The first four months of every New Year signifies tax season. This is a stressful time of year due to family and workplace commitments.

Therefore, get a head start on tax filing by knowing the benefits, restrictions, and solutions to tackle tax season 2017.

Benefits

This tax season is a blessing for procrastinators. The deadline extends from April 15th to April 18th. This is due to April 15th being a Federal Holiday (Emancipation Day).

The standard deduction for Head of Household increases by $50 to $9,300. This deduction reduces taxes owed, which in turn, increases the refund.

Exemptions exist for individuals and family with health insurance coverage. To avoid penalty, provide proof of these exemptions: religious reasons, prisoners, hardship exemptions, incomes too low for coverage, and Americans living abroad more than a year.

Restrictions

Property taxes could be a hindrance for some business professionals. A SmartAsset survey finds out two things concerning home property tax. The first: homeownership tax breaks favor the wealthy who own luxury homes or who can afford to purchase one. The second: the majority won’t benefit from a property tax deduction. A standard deduction provides the greatest savings option, especially for the head of household.

Early taxpayers are early because they expect a refund. Nevertheless, refunds are coming at a slower pace this year to allow the government time to prevent fraudulent activity from passing through. Taxpayers using Earned Income Tax Credit or Additional Child Tax Credit are the most affected. Expect the first round of refunds to arrive late February and early March.

Despite a new administration, when it comes to health insurance, the previous health insurance law remains in effect. Taxpayers without health insurance coverage in 2016 will pay a higher penalty than in years past. This year’s penalty is the higher of two choices: $695 per adult or 2.5% of annual income. Underage children without coverage pay $347.50 per child. The penalty total will not exceed $2,085 per household. If it does, you pay the capped amount ($2,085).

Solutions

What working professionals need to do is to gather valuable documents now. The paperwork is the deciding factor between a refund and an outstanding bill to pay. The paperwork to gather includes the W-2 forms, 1099 forms, PayPal copies, business expense receipts, investment papers, charitable donations documents, and proof of health insurance. A major reason taxpayers miss out on deductions is a lack of paperwork.

A second solution is contacting an accountant for assistance. Their assistance provides a second opinion in filing taxes and tax deductions. Because accountants are busy in April (especially tax day), waiting until the last moment for accounting assistance will backfire. Instead, contact them now. Ask questions such as price, confidentiality, discretion, and organization (will they keep records for auditing).

Thanks to delays in refunds, this next tip is a “stop and smell the roses” suggestion. Taxpayers expecting a refund must understand how to splurge wisely. Good splurges are a retirement account deposit, a health savings deposit, a debt payment, a college payment, and a home necessity (repairs, appliances, etc.).

This information highlights the 2017 tax returns. The suggestions under ‘solutions’ are great advice for future tax seasons. As always, never wait until tax day to file taxes. Schedule a time to file taxes. A focused, stress-free mind can fill out the form completely and find deductions. Last minute procrastinators stress over taxes, causing mistakes in tax preparations and missed deductions.

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DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.