Although taxes are a stress for many, there are some positives to getting them done. If you are one of many getting money back this year, think of it as an excellent opportunity to get something you really want—a car. One of the biggest car-buying blocks for people is not having the down payment needed to walk into a dealership and get financed. Your return may just be the amount you need, or get you closer to your down payment goal. And what if there were a way to increase that amount? If you have a W-2 ready to go, why not get that refund sooner than later so you can buy your next car.
Getting Ready for Taxes
The biggest step toward doing your taxes is getting everything together to do your taxes. The first thing you'll want to do if you pay quarterly taxes and didn’t pay the final quarter of the year is to make a payment by January 15th so you avoid any penalties. Also, if you have an IRA or Roth IRA, make a contribution by April 17th—it can give you a little tax break.
Once you’ve done the last-minute money shifting and payments, you can focus on your taxes. Here are some steps you can take to prepare:
- Print a checklist. You may not need to do every item on the list, but a checklist can help you navigate the process and identify things that have to be done.
- Gather the right tax forms. Have all the forms or a software program with the right forms ready to go.
- Itemize deductions. Follow some simple steps to itemize your deductions.
Once you’re set to begin, you can look at a few tips that could maximize the amount you get back.
Tips for Maximizing your Return
It’s easy to overlook simple deductions that can mean more money in your pocket—after all, nobody really wants to spend too much time on taxes. However, there should be a few things you look for in general. They are:
- One of the many write-offs you don’ know about
- Look for scholarly (education) tax breaks
- Report charitable contributions (including the value of things you’ve donated, but be sure to have documentation)
- Work from home? Don’t hesitate to deduct your home office
- Don’t forget the Earned Income Tax Credit (EITC)
- Don’t forget your dependents—they also help get you money back
Other Things to Know When Doing Your Taxes
Experts offer several other tips when it comes to taxes. Some of them include things like make it a point to file electronically, and always take the proper steps to protect your identity. Make sure that you properly address the healthcare section. Most importantly, file on time.
When to Call in the Professionals
There are times when investing the money to get help with your taxes is worth it. Help can be as simple as an online program that walks you through your tax return using a series of questions. Make sure whatever service you use is legit, like TurboTax. Look at a list of the best software for taxes.
Sometimes your taxes are even more complex. Maybe you have dependents, are self-employed, have an abundance of deductions, have foreign bank accounts, or one of the other numerous scenarios that can make tax preparation more difficult. If you are unsure, let a local professional handle it. Look for a well-reviewed service that is honest and ethical. With the right person, you’ll be able to maximize your return.
Buying a Car with Your Tax Return
When the refund hits the bank, your down payment is ready to go. You’ll want to think about a few things before you sign the check over. Think about creating a budget if you don’t have one so you get a car with a monthly payment you can afford. Don’t forget that you’ll have added monthly costs like gas, insurance and maintenance.
Think about it, your maximized refund may help you get into the car you’ve always wanted—so take the time this year to do your taxes right.
