Things You Must Add During Tax Checklist Management
Are you aware that you can receive a penalty of 5% unpaid tax per month whenever you file your taxes past the deadline? 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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Not having the proper tax checklist can make filing taxes a stressful endeavour, but with careful preparation it can be done with ease. 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. It is also advised that you include correct information regarding individuals you have covered under your tax returns. These are your children, your partner, and other dependants that are covered under your tax returns.
Never Forget Your Income Info
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 you and your spouse.
Income from alimony.
Forms SSA-1099 for your social security benefits.
Pension distributions and IRA will require Forms 8606 and 1099-R.
Different 1099 forms for income from investments.
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Be sure to secure the correct IRS form that corresponds to your specific sources of income. You should also report other sources of income such as jury duty, medical savings account, scholarships, and gambling winnings. You can make use of online pay stub generators to create pay stubs for documentation.
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Don’t Forget to Include Income Deductions in Your Checklist
Your taxable income amount can easily be reduced by income deductions. This will help increase your refund and lower 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.
Keeping an eye on your credits can greatly help in getting you a refund of your withholding tax. Credits come as either refundable or non-refundable. If your refundable credit exceeds the amount of your taxes, you get a refund of the difference.
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