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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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. Here are some tips in making your tax checklist.
Double Check Your Personal Information to See If It’s Correct
The IRS will require you to fill in the proper personal information, your social insurance, and your date of birth. 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 must record all of your sources of income for proper tax management. These can include income from investments, employment, and businesses. Below are forms that you will need when you file your taxes.
W-2 forms for the employment income information of your spouse and yourself.
Income from alimony.
Social security benefits need 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. You can make pay stubs through pay stub generators so you can document your income better.
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Your Tax Checklist Should Also Include Income Deductions
Income deductions can significantly reduce taxable income. This can reduce the amount of money you owe.
Keep an Eye for Tax Credits
Tax credits are immediately deducted from the tax that you owe. But, you require documents in order to claim them. Listed below are some common tax credits.
Retirement savings contributions.
Child tax credit for when you have children under 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 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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