Does the thought of April approaching set the hairs on the back of your neck on end? If so, you can join millions of people worldwide who also fear doing their taxes. Luckily, with our handy tips, handling your taxes can be a lot easier.
Forms, Forms, and More Forms
In the United States, you may need to complete a W-2, 1099, 4852, or 1040X. Here’s a quick rundown to help you understand the most important ones.
Employers are required to complete this form for each employee and to send it to the IRS at the end of the year. It reports an employee’s annual wages, as well as any taxes withheld from their paychecks.
There are well over 15 types of this form, but they all act as another way for you to report any additional or different income. Generally speaking, financial institutions handle 1099s and you should receive copies by early February.
This is simply a substitute form for the W-2. If, for some reason, you haven’t received a W-2 from your employer by April, you can use the 4852 to estimate your earnings and applicable tax.
Linked to the form above, a 1040X is used if after completing a 4852 and then receiving a W-2, you need to amend the previous details.
As financial expert Alvin Hall says: “…many Americans have this intuitive belief that money will somehow take care of itself over the long run regardless of what they do day-to-day.” With our tips, you can stay on top of your finances and make doing your taxes less of a chore.
There are several apps and websites available to help you sort out your taxes, but did you know the IRS provide their own free service? Free File uses brand-name software to help calculate everything for you, so don’t worry about getting your sums wrong.
Obviously, the more money you make in a year, the more tax you pay. Tax attorney Joshua Zimmelman suggests that if you own your business, you might think about postponing sending some invoices to make sure that you’ll receive payment in the next tax year. This can help a lot if some of this income would force you into a higher tax bracket..”
Don’t forget you can take advantage of either a standard deduction or an itemized one. Standard equals a ‘no questions asked’ flat rate, depending on your status. For example, if you’re single you could claim a $12,000 deduction. Itemized is precisely what it sounds like, and although the deduction can be more significant, it involves filling out a lot more forms.
Don’t panic if you have a complicated tax situation and believe you won’t file your taxes before the deadline (April 15th). It’s possible to request a six-month extension, which gives you until October 15th to get your taxes in order.
Unfortunately, we’re only human and, as such, make mistakes. What can you do if there’s a problem with your taxes?
A tax audit is a scary experience, say leading tax lawyers Rotfleisch & Samulovitch, and if results are bad, it can cost you a lot of money. A tax audit typically occurs if the IRS finds something suspicious, even if it’s a simple mistake on your part.
If this happens to you, then a tax lawyer is almost certainly the best option. “Unlike a tax accountant, your information is protected by solicitor-client privilege,” add Rotfleisch & Samulovitch. This means that any discrepancies won’t risk becoming public knowledge so that you can avoid embarrassment.
Ultimately, it falls to the individual to prepare correctly for tax season. If you keep our handy tips in mind, they should help you avoid any unnecessary trouble and make doing your taxes a breeze.