That taxing time of the year has arrived once again. But a simple approach could help you lower both the stress and also your tax bill.
I always take a dry run with my tax return. I fill in as many blanks as I can, and make a note of any areas (especially deductions and credits) I think might apply but need to check further.
This re-familiarization process is important, whether you do your own return or have somebody else prepare it. You need this time to tune back into the tax-filing world after a year of probably not thinking too much about it. And it's also a way to minimize the stress because there is no pressure to get everything done properly the first time around.
Then I gather any missing documentation and other information, hopefully finding out more about claiming those deductions and credits.
By the time I tackle the tax return a second time, not only have I already filled in many of the blanks but it feels like becoming reacquainted with a recent rather than a distant "friend."
Even if somebody else is preparing your return, you still need to gather all the necessary information and documentation. The dry run approach helps you do a more comprehensive job with less stress.
Here are some tax-saving tips:
- Families could claim the cost of kids' activities, and caring for a dependent.
- Students could claim the cost of tuition and textbooks, as well as student loan interest and the education amount.
- If you use public transport, you could claim the cost of transit passes.
- As well as the usual credit for charitable donations (of money, goods, listed securities or land), donations up to $1,000 made after March 20, 2013, could qualify for the new donor's first-time super credit if you are a first-time donor.
- Senior couples could split/shift up to half of a pension from one person to the other to save tax if s/he is in a lower tax bracket.
- You could save up to $750 if you were a first-time homebuyer last year.
Mike Grenby is a columnist and independent personal financial advisor; he'll answer questions in this column as space allows but cannot reply personally: [email protected].
