Regardless of how many times you have paid taxes in the past, the annual tax season can often make you forget all that you know about tax filing. This not only leads you to unnecessary strain but also causes unwanted delays in the process.
But when you follow a well-planned approach to tax filing, you can easily avoid these issues while maintaining the accuracy of your tax information. This also helps you steer clear of audits and gets you applicable tax refunds without excessive wait.
Through the following strategic approaches to filing taxes, you can turn the otherwise grueling process into a walk in the park.
Since the tax season usually starts in January and ends in the middle of April, you have a few months to handle your filing requirements. You can make good use of this time by starting your tax filing steps early. From learning the benefits of hiring an accountant to understanding the process of self-filing, this gives you some time to choose between different tax filing options as well.
Assess Your Income
To file taxes accurately, you should make it a point to calculate your total annual income. This includes the paychecks that you receive from your employers, the profit you generate on investments, and the extra funds you get from any side hustles. When you visit professionals who use tools such as Intuit Accountants software, they also require this information to help you file your taxes.
Select a Filing Status
The minimum income requirement to file tax returns varies on your filing status. The choices include but are not limited to filing as a single person, a married couple, and the head of household. In some cases, you may also qualify for more than one filing status. If you are filing your taxes on your own, you can learn more about this through books such as the J.K. Lasser tax guide.
Gather Your Documents
No matter how you are filing your taxes, you need documents that outline your financial transactions such as your income receipts and expense records that determine your taxable income. To make sure that you have these documents, you should start gathering them before or early tax season. For quick access, you can also store some of these documents in an online secure solution such as Dropbox cloud storage.
Consider Hiring a Professional
Whether you want to learn the benefits of a 401(k) retirement plan or the drawbacks of filing under incorrect status, it may take some research and time for you to clarify these concepts. In many cases, understanding these complex topics can also prove difficult. Keeping this in mind, you can consider filing your taxes with the help of an accountant. Despite their efficacy, these professional services remain quite affordable.
Discover Deductions and Credits
If you use digital solutions such as the YNAB app to manage your money, you may appreciate just how important it can be to save your funds. This also applies to tax filing. With several deductions that lower your taxable income and credits that slash off your tax bill, you should keep an eye on which deductions and credits you can avail. Professional accountants as well as tax apps can help you in this regard.
Explore Payment Options
While submitting your tax returns, you should also be ready to pay your taxes without any delay. This saves you from financial penalties as well as legal repercussions. If your taxes are too high, you can also reach a payment plan with the IRS. When you are up to date with your taxes, it makes for better money management and lets you easily follow essential principles of building wealth.
Don’t Miss the Deadline
The tax deadline to submit tax returns usually falls in the middle of April. But it doesn’t mean that you have to wait until the last day to file your taxes. In fact, the sooner that you file your taxes, the better chances you have of avoiding hassles such as long lines at accountants and lengthy wait times to get in touch with the IRS.
Through these simple but effective approaches, you can simplify the process of tax filing. You can also follow these practices every year to make sure you can breeze through your tax obligations.