Tips for filing taxes

At first, filing an income tax return may seem overwhelming. However, by taking it one step at a time, you can avoid beginning mistakes and maximize your tax refund throughout tax season. 

Maintaining control of your funds is critical to your success

If your income reaches a certain level, you are required to file a tax return. Your “year to date” earnings may be discovered on your pay stub, and if you work for many companies, be sure to add up your earnings from each of those employment. It is critical to include extra income streams such as money from rental property, sales, investments, or interest. 

Ascertain your eligibility for tax credits and deductions

Having a general notion of the credits and deductions to which you may be entitled might assist you in assembling the relevant papers. There are a few points to remember: 

The money saved by Saver​

tax time - stubsondemand

Contributing to a retirement plan may qualify you for a tax benefit even if you are not enrolled full-time in school and are not listed as a dependent. According on your tax status and adjusted gross income, you may claim a credit of up to $1,000. In order to be qualified for the 2021 tax year, you must have an adjusted gross income of less than $33,000 if you file as a single. Your adjusted gross income must not exceed $66,000 if you are married and filing jointly. However, subsequent tax years may alter these figures.

The interest on student loans has piled

Depending on your modified adjusted gross income, you may be able to deduct up to $2,500 in interest payments.

Charitable gifts are tax deductible

No, I don’t think that’s what I’m talking about. If you itemize your taxes, you may be able to deduct such contributions.

Expenses incurred as a result of freelancing work

Tax deductions for work-related expenses such as industry subscriptions and office supplies may be available for self-employed individuals. To see if you qualify for any new tax credits or deductionsgo to the IRS website. 

Keep track of your tax filing deadlines

tax day - Stubsondemand

Two months of preparation time are available if your tax paperwork come in January or February, allowing you to file your return by the customary April 15 deadline. Determine the day you’ll begin your return, and make sure it’s early enough to allow for additional time if you need to find extra papers or seek assistance in the process. 

Generally speaking, experts urge that taxpayers file their tax returns as soon as possible. You have a higher chance of preventing tax-related identity theft if you file your taxes early, which is on the increase. It will also expedite any refunds you may be entitled to.

Keep an eye out for your tax returns

Tax Forms detailing your earnings from your jobs and other sources of income should arrive in January or February. Full-time employees get a Form W-2 that details their wages and the taxes taken from them. A Form 1099-NEC may be issued to you if you operate as a contractor or freelancer. Forms 1099-DIV and 1099-INT, for example, may reflect dividends or interest received on investments, or student loan interest you’ve paid (Form 1098-E). Tax deductions and credits for school costs may be found on Form 1098-T, which displays how much you spent in tuition and how much money was received in grant money or fellowships, and how these amounts can be deducted from your income. 

If you haven’t yet filed your 2021 tax return, don’t worry; the IRS hasn’t yet established a start date for the process. Even if your financial position is basic and easy, you should make sure you’re up to speed and doing all you can to lower your tax burden regardless of when tax season in 2022 begins. 

Determine who will prepare and submit your tax returns for you

This year’s taxes will be more challenging if you have substantial life changes, such as getting married or divorced or starting your own company. Consequently, you may need to employ a CPA or other tax specialist to prepare and submit your tax returns.

Don’t wait until April to make that choice since it might wind up costing you a lot more.

Professional tax preparers should expect to charge $515 to file an itemized Form 1040 with Schedule A, Schedule C (for sole proprietorships), and a state tax return in 2021-2022.

As the filing deadline of April 15 approaches, expect to pay more for tax preparation services. The alternative is that you’ll be rushing to locate someone who isn’t too busy to assist you.

Take precautions to avoid tax evasion and fraud

Many individuals get phone calls, emails, and text messages purporting to be from the IRS as tax season approaches. I don’t trust these people. In the current climate, “the most essential thing right now is to not reply to telephone calls or emails from people who claim to be the IRS or the United States Treasury,” says Lipman. No one from those organizations will ever get in touch with you.

Lipman points out that the IRS will only communicate with you through US mail until you go to court. If you’re looking for a tax preparer that promises a larger return, she advises against “shopping about.” An untrustworthy tax preparer might lead you into serious difficulty if he or she makes such promises. It’s “antithetical to how the tax law’s function,” Lipman says, adding that taxpayers sign their forms under penalty of perjury and are liable for any inaccurate information, whether it’s a mistake or fraud. Your compensated tax preparer should be scrutinized carefully, Lipman advises. Make sure they have the proper credentials.”

On the IRS website, you may find a list of tax preparers who have been vetted by the government. Another precaution is direct deposit. If you anticipate a return from the IRS, sign up for direct deposit; if you owe money, use IRS Direct Pay.

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn