Things You Must Add During Tax Checklist Management
Are you aware that failure in filing your taxes on time has a penalty of 5% unpaid tax monthly? 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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Not having the proper tax checklist can make filing taxes a stressful endeavour, but with careful preparation it can be done with ease. Here are some tips in making your tax checklist.
Clarify Your Personal Info
The IRS needs you to fill in your correct personal information, birth date, and social insurance. It is also advised that you include correct information regarding individuals you have covered under your tax returns. Individuals such as your partner, your children, and other dependants.
Do Not Forget to Include your Income Information
You have to document all of your sources of income if you wish to properly manage your taxes. Things such as investment income, businesses, and employement. Listed below are a list of income forms needed when filing your taxes.
W-2 forms for the employment income information of your spouse and yourself.
Received income from alimony.
Social security Benefits will require Forms SSA-1099
Pension distributions and IRA will require Forms 8606 and 1099-R.
1099 forms for your investment income
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Be sure to have the right IRS form of your income sources. Other sources of income such as jury duty, winnings from gambling, scholarships, and medical savings account, also need to be reported. For income documentation, you can make pay stubs through the use of online pay stub generators.
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Your Tax Checklist Should Also Include Income Deductions
Income deductions can significantly reduce taxable income. Your refund can significantly be increased as well as reduce the amount of money you owe.
Be Mindful of Tax Credits
Tax credits are directly deducted from your taxes. But, you require documents in order to claim them. Here below are a list of common tax credits.
Retirement savings contributions or saver’s credit.
Child tax credit if you have children below 17 years of age.
Education credits for example tuition fees and the likes
Paying attention to your credits will help you secure a tax withholding reimbursement. Credits can either be non-refundable or refundable. If the taxes you owe are less than your refundable credit, you can receive the difference as reimbursement.
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