The April 15 tax deadline is closing in and the exercise of filing your return can be stress-inducing even if you’ve done it for years. To ease your tension and lower your 2012 and 2013 taxes, try these five strategies:
Strategy No. 1: Get organized. Whether you’ll be completing your own return or hiring a pro, turn your mass (mess?) of financial records into a coherent arrangement that will let you see if you have every document you need.
Otherwise, you might fail to report to the Internal Revenue Service all the 2012 income, interest or dividends you earned. Then you could be hit with IRS penalties and interest or, worse, find yourself targeted for a tax audit.
Strategy No. 2: Seize every opportunity to lower your taxes due to work. The federal tax code is filled with opportunities to claim tax credits and deductions for the self-employed and employees. Take the time to track them down.
If you’re self-employed, there’s still time to open and fund an SEP IRA (Simplified Employee Pension Individual Retirement Account) for 2012. That’ll lower your ’12 taxes and defer taxes on investment gains in the future. You can invest up to 25 percent of your self-employment income or $50,000, whichever is less.