Are you a person who finds tax filing difficult? It would be unfair to claim that we never went through that anxiety! But don’t worry. This post will show the exact method of filing tax returns correctly.
We will begin by sharing some tips regarding Tax Filing to avoid silly errors. So, see the tips below to get things in order;
IMPORTANT DEADLINES –
Watch important deadlines. For 2022: The IRS opened its door for tax filing on 24th January 2022 and will close on 18th April 2022 except for Miami and Massachusetts. The closing for these two United States will be on 19th April 2022.
Note: The US tax payment deadline differs from federal.
Keep Track of All Income –
Filing returns is not mandatory for all. Factors like age, income level, source of income, marital, and filing status all determine whether you need to file a tax return.
When you add all incomes from various sources like salaries, rental property, interest, capital gains, and its total surpasses the exemption limit, then you must file a tax return.
To know the tax exemption limit, check out the draft from the IRS website.
Gather Every Paperwork
Collect all paperwork related to incomes, charitable donations, investments, work-related expenses, and other documents like grants, fellowships, and loans in one place.
Assigning a separate file for all tax-related documents will help in the long run. It aids in taking credits, deductions, or any benefits while filing a return.
The Forms Needed
- W-2S: Wage and income statement for employees from employers.
- W-4: If one’s financial situation changes.
- 1099-NEC: To report non-employee compensation.
- 1099-MISC.: For miscellaneous payments and incomes.
- Forms 1099: DIV or 1099-INT- for dividend income.
- 1098-T: For college students.
Credit and Deductions
You need to know your eligibility for credits and deductions.
Examples include charitable deductions, other sources of expenses, loans, grants, business expenses, mileage, etc. Get a clear idea about these aspects before filing a tax return, as they’ll help lower taxes.
You must choose a suitable method of filing your tax return. It may be online or offline.
Online tax filing takes three weeks to process, and its status can be tracked on their website, while offline takes six weeks to process.
Is Professional Help A Necessity?
You can always file a tax return without the assistance of a professional by using free software programs, tax calculators, and consultancy.
These software programs are great for promoting money-saving reviewing expenses and investments to make better, well-informed financial decisions.
However, a professional or Certified Taxpayer provides complete information regarding credits and deductions. These aspects may lower tax amounts.
Therefore, a businessperson or self-employed individual may choose to hire a professional to reduce the chances of errors.
REMINDER – Don’t forget to file US tax.
Tax-filing is not as complicated as it seems. One needs to get rid of the apprehensions, organize the necessary documents, and make knowledgeable decisions.
Yes, you can take an extension of up to 6 months if needed, but that’ll come with a certain amount of penalty to be paid.