Things to Add When You’re Managing Your Tax Checklist
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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Filing your taxes is quite the daunting task without the right checklist, but with proper preparation you can go through with it in a breeze. Consider these 5 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. You are also required to log detailed information regarding any individuals that are covered under your tax returns. These are your children, your partner, and other dependants that are covered under your tax returns.
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. Listed below are a list of income forms needed when filing your taxes.
W-2 forms you’re your you and your partner’s income from employment information.
Income you have received from alimony.
Social security Benefits will require Forms SSA-1099
Forms 8606 and 1099-R.
1099 forms for any income received from investments.
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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
Your taxable income amount can significantly 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. Though, you will need documents in order to claim these. Listed below are some common tax credits.
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 come as 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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