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Tax Tips

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Tax Day is right around the corner! This is the day when your individual tax returns are due to the federal government. Whether your accountant will be helping to complete your taxes or you plan to file them yourself, it can still be helpful to brush up on a few basics:

1. Organize your paperwork. You may receive tax paperwork in the mail from your company's HR department, or electronically. When you have documents in multiple places, it's easier to overlook something important or scramble last minute to find a critical form. Designate a space in your home for tax organization and bring all your paperwork to this location. Organize receipts and invoices by their appropriate category, along with forms from any investments and other income, donation receipts, and healthcare-related paperwork.

2. Review your documents early. Check your W-2 and 1099 forms for accuracy as soon as you receive them in the mail. If you wait until the deadline to review these documents or confirm you have all the necessary paperwork, it may be too late to make corrections prior to the filing deadline. If you are unable to complete your tax return by the deadline, you can file for an extension. However, this extension is only applicable to the return, not the payment you owe.

3. Locate your donation receipts. To claim a charitable donation on your federal tax return, the IRS requires you to maintain a written document from the charity or the bank statement showing the amount of money donated. The IRS also notes that it is your responsibility as a donor to obtain a written statement for any single charitable contribution of $250 or more. If you donate clothing or other items to Goodwill, the IRS requires these items to be documented on a donation receipt. For an item to qualify, it must be in "good condition" or better. Goodwill offers an online donation guide to help donors determine the fair market value of their donations.

4. Contribute to your IRA. This is one option for lowering your taxes. If you have not reached your yearly contribution maximum, you can make contributions up to the limit.

5. Consider the best option for filing your taxes. Depending on your income, you may qualify to file your federal taxes using free, online software. The IRS offers a free file software lookup tool to determine eligibility and display filing options. Anyone, regardless of income, may download and use the IRS forms for free. Other options include paid-to-use programs like TurboTax and H&R Block tax software. You can also work directly with an accountant to file your taxes.

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