Things to Add When You’re Managing Your Tax Checklist
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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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 needs you to fill in your correct personal information, birth date, and social insurance. You are also required to log detailed information regarding any individuals that are covered under your tax returns. These include your children, your partner, and or other dependants.
Remember to Include Your Income Info
You need to write down all of your sources of income in order for you to manage your taxes. Things such as investment income, businesses, and employement. 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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Make sure to have the proper IRS form for specific income sources. You also need to report your other sources of income such as scholarships, medical savings account, jury duty, and winnings from glambling. You can make use of online pay stub generators to create pay stubs for documentation.
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Your Tax Checklist Should Also Include Income Deductions
Your taxable income amount can easily be reduced by income deductions. This can reduce the amount of money you owe.
Pay Attention to Tax Credits
Tax credits are directly deducted from your taxes unlike tax deductibles that work to reduce the amount of income that is taxable. These will need documents in order for you to claim them, however. 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 like tuition fees.
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. If the taxes you owe are less than your refundable credit, you can receive the difference as reimbursement.
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