Tax season is a time-consuming task that should not be taken lightly. There are many things that can go wrong and end up in a hefty tax bill. The first thing you should do is make sure to give yourself enough time to complete your filing. In addition, you should make an appointment with a tax advisor as soon as possible, so they can help you avoid any surprises or issues with the IRS.
In order to make your tax season less of a headache, it’s always best to be prepared and stay informed about what’s going on within the government and what changes may affect your taxes.
Don’t rush your filing. You’ll often find more than one way to complete the process more efficiently and time will always fly by so you should never feel panicked.
Brandon Berquist, a CPA & tax specialist at Personal Capital says “It is important to take the time to organize the information you’ll put on your tax return and make sure you understand all of the events that occurred this year which will be reflected in it. Your business accountant will collaborate with you to file an accurate and complete tax return.”
Contrary to popular belief, you don’t have to start and finish your taxes in one sitting. Breaking them down into smaller parts may make the process seem less daunting. He suggests you start early and complete the return in stages, which can be easier. You’ll also have the opportunity to review it multiple times before you’re finished.
Focus on being organized all year-round.
April can be stressful due to the amount of paperwork involved in filing taxes. Instead of sifting through paperwork and searching for receipts, George Birrell, CPA and Founder of TaxHub, recommends organizing yourself and finances at different intervals throughout the year. “You need to be organized all year round or at least organize yourself and finances at different intervals throughout the year.”
To avoid scrambling for paperwork at the last minute, Birrellrecommends keeping receipts, invoices, and organizing expenses digitally throughout the year.
If you can’t afford to pay your taxes, they may not be that far behind in filing them. If this is the case, you should file your tax returns on time and wait to see what happens before taking any further action.
Stay on top of your filing with good use of your calendar and alerts. Even if you cannot pay the filing deadline, it’s important to file as soon as you can.
“You will be penalized by about 5% of the unpaid taxes for each month or part of a month that your return is late,” advised finance expert Andrea Woroch. “Even if you can’t pay any outstanding taxes, it’s important that you file your tax return on time. This way, you avoid paying penalties and make sure to receive a refund. Keep in mind: the failure-to-pay penalty is less than the failure to file penalty.”
Check what deductions you are eligible for.
Deductions aren’t just buzz words — they matter when you’re filing taxes. Empowering yourself by knowing which deductions apply to you is important. Paul Sundin, a CPA and tax strategist at Emparion, says deductions that might apply include medical expenses like the costs of diagnosis, cure, mitigation, treatment. Sundin also points out mortgage interest payments count as a deduction if the total comes out to $600 or more. Don’t forget about other charitable donations you may have made when filing your taxes! Cash donations over $250 or non-cash donations worth over $500 that came with written confirmation will be counted.
File your tax return early to get the refund you’re expecting
Some people know right away if they’re eligible for a refund or entitled for a rebate. That’s a good incentive to get a refund earlier rather than later and take one more task off your plate. And if there’s ever anything holding up your refund, you can use that buffer.
“The sooner you file your taxes, the sooner you’ll get your refund. Plus, filing early can help reduce data entry errors and save on tax dollars.” Bruce Bailey, a CPA and professor at University of Massachusetts Lowell. If you need to use your refund for something important, don’t wait until you have all the documents in order. File as soon as possible so your application can be processed.
It’s important to find out when would be best to hire a tax expert. Know the right time by finding out more about your industry tax rates, operating hours, and even payroll.
If you’re not 100% certain about deductions or know the answer to any of these questions, hiring a professional might be in your best interest. People may think they’re saving money by doing their own taxes, but they might end up paying more if they miss out on deductions or don’t know the rules about income that doesn’t fit traditional categories.
Instead, “Work with a tax preparer to figure out which personal or business expenses are deductible and determine what documents need to be saved” Dr. Salvador Gonzalez, a CPA and professor at Walden University advises.
Andrea Woroch adds it might be helpful to hire a professional especially if the last year included a major upheaval of one kind or another. “Maybe you got married, had a baby, moved out of state, or got a divorce in 2020 — it’s going to make filing more complicated than usual. Hiring a professional will give you peace of mind and stop mistakes from potential future problems. Even if you’re not in the midst of a life upheaval, an expert might be helpful to increase your efficiency. If you get easily overwhelmed or don’t have the time, then hiring an expert can feel like a saving grace. They’re not just a nice to have, but often necessary for businesses looking to stand out among competitors.
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