One of the most interesting generation of this time, millennials, are likely enjoying themselves a little too much and failing to sort their obligations straight. Taking responsibility for their finances, especially filing taxes, might be the least of their priorities.
These people either just started navigating their place in the real world or have settled already in one place and found their career path.
If you think you’re too young to think about taxes especially since you’re only starting to map out and figure out your financial journey, you’re wrong. It’s better to start early on for it may only cost you hundreds, or even thousands later.
We all know tax season can be quite tedious and daunting, but it can also be a buzzing bonanza if prepared well. Pay close attention and avoid your way to making these four common rookie errors your generation make when filing and preparing taxes.
One day millionaire with tax refunds
Once you get your hands on the tax refund, it’s more often than not that people spend it on unnecessary things such as clothes, electronic gadgets, travel and the likes. This isn’t what you want to hear but it’s what you need to: do not spend your refund on these things.
Pay off your debts, invest in stocks or other assets, and make a necessary and reasonable purchase rather than wasting your refund on shoes and clothes that won’t even last till next tax season. Be responsible with your finances and know where to spend it.
Not hiring an expert
A common mistake millennials (and other generation/s) commit come tax time is resolving and securing their complicated taxes themselves.
If you have been paying attention to your taxes, prepared it thoroughly and it’s simple in structure, feel free to easily file your taxes with little to no cost. If you still prefer to seek guidance to make you feel comfortable, do so.
If your taxes are too complicated to do yourself, that’s the time you consult with a professional. These accounting professionals have all the know-how relating to ironing your taxes. They are aware of all the legal loopholes, tax credits, and the likes and they will work to help you get the most return. If you don’t know what to do, consult a pro.
Allowing high-interest debts sit too long
High-interest debts are difficult and take time to clear off the table. These are usually student loans, mortgage, and car loans among others.
Your annual tax refund saves you big time, here’s where it can be of use. Of course, it still depends on your personal and financial priorities.
If you can qualify for other methods in which you can reduce your monthly payments (i.e. student loan forgiveness program, mortgage refinancing, etc.), those might help. But if you find yourself on the edge, paying off these high-interest debts could be a smart move. Repaying your debts early lifts up a heavy weight off your shoulders and make room for other priorities, don’t you want that?
Not claiming moving costs
Millennials have been known as the generation who moves frequently from place to place primarily due to career opportunities every couple of years.
Changing residences frequently can put a hole in your pocket. This factor tends to be overlooked come tax filing. If you’re unaware yet, you can claim moving expenses as a tax deduction. There are certain requirements need to be met in order to claim deduction but if you’re able to settle it properly, your move can be tax deductible.
Time to be an actual adult and settle important financial matters at hand. Know what to prioritize and where should your money go. If there’s a need to seek assistance from tax professionals to help aid you with your tax conundrums, don’t shy away and consult with them. Ultimately, pay attention to your taxes.
About the author: Chie is a daytime writer for Depreciator – Tax Depreciation Schedule, a company dedicated completely to Tax Depreciation Schedules that aid the Australian property market.