We all know that most people don’t enjoy the process of tax return filing. This is especially true if you discover you end up owing more in taxes. It can be a tedious process and if you don’t have your paperwork in proper order it can take a few days or even a few weeks.
If a mistake is made it’s possible to end up being audited. The truth is most people don’t intend to make mistakes but without at least some understanding of the process and requirements, mistakes can easily happen. This is especially true if you rush through the process.
5 Wise Tax Tips
Filing tax returns and paying the correct amount isn’t impossible. If you just do a bit of prep work ahead of time, you’ll have everything you need at your fingertips to properly file.
Be Prepared for Tax Return Filing
Keep your documents together, in a safe place, where you’ll know where they are whenever you need them. You’ll be surprised how often you may refer back to tax documents. Of course you’ll need them when filing for each year’s taxes, but you may need them when applying for a home or car loan. Or, if you are seeking a grant for a business venture. Learn the Tax Documents you’ll need to bring to your tax filing appointment.
Have a Basic Understanding of Tax Laws
The laws which govern the Internal Revenue Service are always subject to change. When new legislation passes, tax laws can be affected. That means in an ever-changing landscape of requirements for filing taxes it is a good idea to have a good reliable source for filing your tax returns. Of course, at Cowdery Tax and Business Solutions, we’re here to help you do just that. One of our primary goals is to help you do this while keeping your costs as low as possible.
Being ignorant of changes to tax codes is not a good enough excuse to let you get away with improper tax filings. It’s easy to overlook something simply because you were unaware of a new requirement. But, the responsibility for proper tax filing belongs to each citizen.
Be Aware of Tax Filing Mistakes
According to the IRS, there are common myths surrounding tax refunds. So don’t let yourself get caught in myths that lead to mistakes. Speaking of mistakes, one of the most common ones is forgetting about additional income. Additional income can come from sources such as side jobs, freelance work, interest paid on savings accounts, royalties, and other sources. The IRS uses a variety of resources to verify your income paid. This can include forms submitted by employers and persons who hire out for help. If there is a disparity between their submitted payout forms compared to your reported income, it could easily trigger an audit.
When a tax form is reported with a disparity it will be returned to the issuer, i.e., the taxpayer for corrections to be made.
Another mistake that can easily happen is when numbers have incorrect sums. When rushing it’s easy to enter the wrong number on a calculator, or mistakenly type or write the wrong number in a box. Late fees and other penalties can be avoided by printing all paperwork and double-checking sums on returns before they are submitted.
File Early in the Tax Season
Many people take their time in filing their tax returns each year. Since they have until April the 15th annually to file their return they wait until then, or just before then to file.
But, taxpayers are encouraged to file their returns earlier rather than later. This helps to avoid costly fees and penalties if mistakes are made on returns that need to be corrected. Even if you find that you owe, and can’t pay the tax right away, the IRS offers the option for paying installment payments. And, if you begin and complete those installments with plenty of time before the tax deadline you can avoid penalties.
Keeping Records for Several Years
Tax records are important because audits can happen for several years after a return has been filed. It’s recommended to keep your tax forms and all relevant records in a safe place for six years. It is perfectly acceptable to keep those records in a digital format and save them in a safe, secure, document drive such as Dropbox, or One Note, or other file keeping system.
Remember that being some preparation, awareness, and help when needed, filing tax returns can be a simple process that isn’t too overwhelming.
As always we’re here to help. Simply email or call at (740) 374-6942, Cinda@CowderyTax.com, or use the contact form below.