Now that tax filing season is upon us, you should prepare to file your tax return. Following these eight crucial tax filing tips will ensure that the process runs as smoothly as possible!
Be Aware of the Deadline
There is technically no penalty for filing your taxes late if you owe the IRS nothing. However, if you owe money and your return isn’t submitted by the deadline, severe penalties may be imposed. So, take note of that deadline and be sure to meet it.
Note Down the Documents You’ll Require
You’ll need certain paperwork to file taxes, such as the W-2 your company provides, and your 1099 forms.
It could help to look through your tax return from the previous year. If your situation is similar this year, then it will likely give you an idea of the paperwork you’ll require. To make sure you have all the necessary information, create a checklist.
As Soon as You Get Your Tax Documents, Scan and Keep Them
During tax season, your tax forms could slowly arrive in the mail. Keep them in a folder as they come in, but be sure to also scan a copy of each and store them electronically. In the event that any of your physical copies are damaged, you’ll have a backup.
Ensure You Get Expert Tax Assistance in Advance
You might be able to file your taxes on your own if they aren’t complicated. However, you may require the assistance of a tax preparer if you operate a business or have a more complex return. Attending a tax planning webinar is another great option as well, as it’ll give you lifelong lessons that will enable you to make the most of every tax return season.
Choose Whether or Not You’ll be Itemizing
You might want to consider itemizing your taxes this year.As you won’t require the same level of documentation if you won’t be itemizing, it pays to run some numbers early to determine your course of action.
Ensure that You Disclose Your Full Income
In the past year, you might have acquired a side business to generate more revenue. If so, you must disclose your income. The IRS recognizes savings account interest, for example, as income, so it must be reported on your tax return.
Be Mindful of Capital Losses
You can utilize investment losses from the previous year to offset capital gains if you sold any investments at a loss. Protect Wealth offers excellent stock market training resources for you to effectively manage your assets.
Also, you may offset up to $3,000 of ordinary income using capital losses. Check your brokerage account to determine if you have any losses that you may use to your advantage, tax-wise.
Be Accurate with Your Tax Deductions
Making guesses about tax deductions is a sure-fire strategy to raise your chances of being audited or to get into trouble if your return is singled out for additional inspection. As a quick tip, you’re better off adding up your receipts and using the precise amount for a deduction rather than using a round number, as it can arouse suspicion.
Although filing a tax return can be stressful, it doesn’t have to be. We hope these pointers have given you some ideas on how to go about managing the process in an organized and simple way!
