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Your Financial Life
By David Dorion / May 26, 2015

Taxes: Tips for Next Year

Tax-Day-April-15

Although April 15 has come and gone, it’s never too early to begin planning for next year’s tax season. If you’re an investor or are planning to claim deductions, you will need to keep accurate, well-organized tax records and hold onto receipts.

Keep track of sources of income.

Interest that you receive from investments is taxable income and must be reported on your tax return. Some examples of income you might receive include interest from bank accounts and certificates of deposit and dividends from stocks and/or mutual funds.

Declare an insurance payout.

A lump-sum death benefit from a life insurance policy is generally not included in your gross income. If you receive the death benefit in installments, the income tax-free portion is prorated. Consequently, each payment you receive will include a portion of income tax-free death benefit and interest, taxable as ordinary income. Make sure you list out all sources of income on your taxes so you are not penalized.

Do your research.

Before filing taxes, the more preparation you do ahead of time, the easier tax filing will be. Above all, do your research to understand tax-related terms, make sure you have all of your information readily available, and choose the deduction method that reduces your taxes the most.

Avoid basic tax filing mistakes.

The most common tax filing mistakes may surprise you. Before you file next year’s taxes, make sure you are double checking your math, inputting the correct Social Security number and signing each form. These things may seem simple. However, even a minor error can result in a late or missed tax refund.

Get credit for deductions.

You might be eligible for more tax deductions than you previously thought. Tax deductions can include the interest on student loans, charitable giving, and moving expenses if you have to relocate for a new job, as well as deductions that can be taken while looking for work. Therefore, hold onto any receipts that could reduce your overall taxable income.

Visit the tax section of our Transamerica blog for more helpful articles on how you can make the most of your tax situation in anticipation of April 15.

Transamerica Life Insurance Company and its representatives do not give tax or legal advice. You should consult with and rely solely upon your own independent advisors regarding your particular situation and the concepts presented here.

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