What's up, everybody? It's your boy, Brandon Copeland, aka Professor Cope, and you are now tuned in to another special episode of Cope'ing With Money.
So, it is tax season, and I have been on record time and time again saying that I know we've put a lot of focus on investing and budgeting, and those are really, really important topics. But one of the most common misunderstood and overlooked pieces of a full financial game plan is tax strategy.
I know it's tax season, although if you're keeping your money on your mind, when is it not? Taxes are something that you should be considering throughout the year as you're making decisions, as you're making moves.
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For most people, the due date for the 2021 tax year is April 18. However, you can file for an extension if necessary and push that date back to as far as Oct. 17. Whether you choose to extend or not, we're going to go over some commonly used tax strategies to make sure that you are getting the most efficient bang for your buck and maximizing your 2021 tax return.
Although we're talking 2021 filing specifically, these are all strategies that you can use year-round to minimize your payments and keep the filing process as smooth as possible. Just make sure you double-check specific dates and dollar amounts for your filing year. And, as always: Consult with a tax professional who understands you and your personal situation better.
Understand Your Tax Situation
Know your situation. The amount you pay is dependent on your own situation, not your friends or your neighbors, or the person that you work with.
Remember that different states have different taxes and occasionally due dates as well.
If you're self-employed, remember to take your deductions. You may have business expenses or a home office, especially in this work-from-home environment. If you have children, you may also be able to receive a child or child-care tax credit. So make sure you keep this in mind when filing.
Most people still don't realize that your biggest expense is not the cable bill, not the phone bill and not the internet bill. But ultimately, it's your tax bill.
So I want to make sure we emphasize this year, not only our tax filing, also our tax planning and strategy for the future.
File Even If You Don't Have To
Another thing I want you to consider is filing even if you don't have to. Even if your income is below the filing threshold, you may still be eligible for a refund of withheld taxes or estimated payments.
And if your adjusted gross income is $73,000 or less, you don't have to pay a service or preparer to file your taxes for you. You can actually go to the IRS's website and file your return for free.
If any of these tips sound like they could apply to you, make sure you go to Kiplinger.com so that you can learn more.
Make Sure You File on Time
Let's make sure that we are filing on time.
Since April 15 falls on Good Friday and Passover, the usual tax filing date has been pushed back to April 18. However, let's make sure we're staying on top of our filing deadlines.
Double-checking your work and avoiding common errors will help you avoid delays. Things like providing an incorrect Social Security number or the wrong bank account or not having the signatures in the right place can ultimately result in delays.
Plus, you can make use of e-filing and Direct Deposit to stay organized and help automate some of the process. Filing electronically also means your refund will arrive sooner.
If you can't file on time, as I mentioned earlier, you can request an extension to Oct. 17.
Deduct Your IRA Contributions
If you're looking to lower your tax burden for the 2021 tax year, consider a contribution to a traditional IRA.
You can contribute up to $6,000 for 2021 all the way up to the tax return due date, which could lower your taxable income up to the amount you choose to contribute. If you're self-employed or age 50 or older, make sure you're doing research to ensure you are maximizing this strategy for you.
Other Tax Breaks
And finally, remember to take your tax deductions. Make sure you go to Kiplinger.com to see a full list, but some of these include things like gambling losses. Ultimately, this is only to the extent of your winnings. However, it's something that you may want to consider.
If your third stimulus check did not come in, there's an option for you to make the IRS aware of that so that you can get the money that you're entitled to.
If you're self-employed, you can deduct half of your Social Security and Medicare taxes. You want to make sure that you're taking full advantage of that.
And finally, there are a number of deductions for military personnel. So you should make sure you consult with a tax professional who specializes in filing for military personnel.
Trust Your Instinct
Even if you're filing last minute, make sure you take the time to understand your tax situation fully. You may have deductions or exemptions that you didn't even know about, which could ultimately save you money.
These rules do change. So it's important to stay up to date with tax strategies, but always, always, always consult with a tax professional. And you can always come to us at Kiplinger.com to get as much research and information as possible to help you with your tax filing.
How do you maximize it so that you can get the most bang for your buck and now take that money and invest or pay back student loan debt, or go on that vacation you always dreamed of or build up that emergency fund? It's your money. You've worked hard for it. So, let's maximize it.
With that being said, I hope you all stay safe, stay blessed, stay sane. If you want to see more of my money features, go to Kiplinger.com/cope. Cope'ing With Money. I'll see you next time.
Links and Resources Mentioned
- Follow Brandon Copeland on Instagram and Twitter, or send him an email.
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