Tips to Avoid Overpaying Taxes

in All Items, Tax Information, Tax Tips

Most of us don’t have a lot of money to throw around and, in this economy, need to save every penny possible. This is why it can be so disheartening to find out that you’ve been overpaying on your taxes. The good news is that, even if you’ve made the mistake of overpaying in the past, you don’t have to keep making it. There are many things you can do to pay a fair and honest tax but to still ensure you’re not paying more than your fair share. It’s just a matter of finding ways to legally cut corners.

Are you someone who strives to be environmentally-conscious in all that you do? If so, chances are that you might have had some “green” work done on your home. Whether you bought and installed an appliance to make your home more energy efficient or made a more serious modification to your home’s construction, you are likely entitled to a tax break. As further good news, those who purchase specially designed  “green” vehicles can also save. Just be sure that you keep documentation that proves you purchased  green home modification or a green vehicle. If you don’t bother to report your purchase, then you’ll miss out on a great tax break!

This tip might not help you to pay less in taxes, but it will help you to earn more money throughout the year. Many people, especially those who tend to get large income tax refunds each year, don’t bother messing with the withholdings section of their W-2 forms. After all, they like getting those “surprise” checks every year. However, the money that you receive in your refund is mostly funds that were withheld from you. If you’re withholding too much, you could end up suffering and going into debt. If you need help properly determining your withholdings amount, talk to a professional.

The good news is that, if you do overpay on your taxes and you happen to catch your error within a certain amount of time, you can actually petition the IRS to give you your funds back. You’ll have to show proof that you overpaid and by how much, and you’ll also be responsible for filling out and sending off the necessary forms. However, as long as you can do all of that, the IRS is generally very reasonable about making sure that you get your money back.

Obviously, however, it’s much better and a whole lot more hassle-free to avoid overpaying on your taxes in the first place. If you are not a tax pro yourself (and who is?), you’ll strongly want to consider hiring a professional tax preparer. These individuals are trained to help you pay the least amount of taxes  legally, and, when possible, to earn you tax credits and refunds that you are entitled to. If you do decide to go it alone, consider using a reputable tax software to make the process easier, and always make sure that you double-check everything.

Have a tax question? Ask one of our tax professionals.