Things to Add When You’re Managing Your Tax Checklist
Are you aware that you can receive a penalty of 5% unpaid tax per month whenever you file your taxes past the deadline? 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 have stated that about 5% of Americans were unsuccessful in filing their taxes in 2018, they have accumulated up to $130 billion dollars in debt to the IRS in penalties, back taxes, and interests.
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Filing taxes can be tough if you don’t have a proper tax checklist, but it does not have to be so if you prepare right beforehand. Consider these 5 tips in making your tax checklist.
Make Sure Your Personal Info is Correct
The IRS will require you to fill in the proper personal information, your social insurance, and your date of birth. You are also required to log detailed information regarding any individuals that are covered under your tax returns. These are your children, your partner, and other dependants that are covered under your tax returns.
Do Not Forget to Include your Income Information
You must record all of your sources of income for proper tax management. These can include income from investments, employment, and businesses. Below are forms that you will need when you file your taxes.
W-2 forms for the employment income information of you and your spouse.
Income from alimony.
Social security Benefits will require 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 have the right IRS form of your income sources. You also need to report your other sources of income such as scholarships, medical savings account, jury duty, and winnings from glambling. For income documentation, you can make pay stubs through the use of online pay stub generators.
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Don’t Forget to Include Income Deductions in Your Checklist
Income deductions can greatly help in reducing your amount of taxable income. This can reduce the amount of money you owe.
Pay Attention to Tax Credits
Tax credits are directly deducted from your taxes. Though, you will need documents in order to claim these. Here’s a list of common tax credits
Retirement savings contributions.
Child tax credit if you have children under 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 are 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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