Things to Add When You’re Managing Your Tax Checklist
Did you know that you can get a 5% unpaid tax per month due to failure of filing your taxes on time? 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 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. Here are some 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 a must that you include detailed and accurate information regarding individuals that are covered under your tax returns. These are your children, your partner, and other dependants that are covered under your tax returns.
Do Not Forget to Include your Income Information
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. Below are forms that you will need when you file 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.
You will need Forms 8606 and 1099-R, these are for pension distributions and IRA.
1099 forms for your investment income
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Be sure to secure the correct IRS form that corresponds to your specific sources of income. You also need to report your other sources of income such as scholarships, medical savings account, jury duty, and winnings from glambling. 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 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 unlike tax deductibles that work to reduce the amount of income that is taxable. But, you require documents in order to claim them. Listed below are some common tax credits.
Retirement savings contributions.
Child tax credit if 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 can either be non-refundable or refundable. If your refundable credit exceeds the amount of your taxes, you get a refund of the difference.
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