Did you know that you can get a 5% unpaid tax per month due to failure of filing your taxes on time? If you file your taxes 60 days past due then you are also obligated to pay $135 minimum or how much money you owe the government in total, whichever is lower.
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IRS reports say that about 5% of Americans were unable to file their taxes in the year 2018 and accumulated a debt to the IRS of about $130 billion dollars in interests, back taxes, 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. Consider these 5 tips in making your tax checklist.
Clarify Your Personal Info
The IRS will require you to fill in the proper personal information, your social insurance, and your date of birth. It is a must that you include detailed and accurate information regarding individuals that are covered under your tax returns. These are your children, your partner, and other dependants that are covered under your tax returns.
Remember to Include Your Income Info
You have to document all of your sources of income if you wish to properly 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 you’re your you and your partner’s income from employment information.
Income you have received from alimony.
Social security benefits need Forms SSA-1099.
You will need Forms 8606 and 1099-R, these are for pension distributions and IRA.
Different 1099 forms for income from investments.
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Be sure to secure the correct IRS form that corresponds to your specific sources of income. You should also report other sources of income such as jury duty, medical savings account, scholarships, and gambling winnings. You can make pay stubs through pay stub generators so you can document your income better.
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Don’t Omit Income Deductions from Your Checklist
Your taxable income amount can significantly be reduced by income deductions. This will help increase your refund and lower the amount of money you owe.
Keep an Eye for Tax Credits
Tax credits are directly deducted from your taxes unlike tax deductibles that work to reduce the amount of income that is taxable. Though, you will need documents in order to claim these. Here below are a list of common tax credits.
Saver’s credit
Child tax credit if you have children below 17 years of age.
Education credits for example tuition fees and the likes
You will be able to get a significant reimbursement of your tax withholding if you pay close attention to your credits. Credits come as either refundable or non-refundable. Having refundable credit that is more than your taxes will allow you to receive the difference as refund.
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