Things You Must Add During Tax Checklist Management
Are you aware that failure in filing your taxes on time has a penalty of 5% unpaid tax monthly? Filing your taxes 60 days late means you will also have to pay at least $135 or the full amount of taxes you are indebted to the government, whichever is the lowest.
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IRS reports state that more than 5% of Americans have failed to file taxes in the year 2018 alone and have amassed about $130 Billion Dollars in back taxes, interests and penalties.
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Not having the proper tax checklist can make filing taxes a stressful endeavour, but with careful preparation it can be done with ease. Here below are some tax checklist tips for you to consider.
Make Sure Your Personal Info is Correct
The IRS needs you to fill in your correct personal information, birth date, and social insurance. It is also advised that you include correct information regarding individuals you have covered under your tax returns. Individuals such as your partner, your children, and other dependants.
Do Not Forget to Include your Income Information
You need to write down all of your sources of income in order for you to manage your taxes. These include any businesses, income from investments, and employment. Below is a list of forms you will need when filing taxes.
W-2 forms for the employment income information of you and your spouse.
Income from alimony.
Social security benefits need Forms SSA-1099.
You will need Forms 8606 and 1099-R, these are for pension distributions and IRA.
1099 forms for your investment income
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Be sure to secure the correct IRS form that corresponds to your specific sources of income. You also need to report your other sources of income such as scholarships, medical savings account, jury duty, and winnings from glambling. You can make use of online pay stub generators to create pay stubs for documentation.
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Your Tax Checklist Should Also Include Income Deductions
Your taxable income amount can easily be reduced by income deductions. This will help increase your refund and lower the amount of money you owe.
Pay Attention to Tax Credits
Tax credits are immediately deducted from the tax that you owe. Though, you will need documents in order to claim these. Here’s a list of common tax credits
Retirement savings contributions.
Child tax credit for when you have children under 17 years of age.
Education credits for example tuition fees and the likes
Paying attention to your credits will help you secure a tax withholding reimbursement. Credits can either be non-refundable or refundable. If your refundable credit exceeds the amount of your taxes, you get a refund of the difference.
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