Tips And Tricks On Tax Preparation In The U.S.
One of the best things about being a United States citizen is that you get to enjoy many constitutional rights and benefits. Well, this is as long as you abide by the law and, of course, pay your taxes as you should when they are due. As a matter of fact, tax evasion is a serious legal offense in the US. It amounts to a felony and can attract hundreds of thousands in penalties if not imprisonment.
In most cases, employed individuals may not need to worry much because most of the work is done by the employer. If you are self-employed, have a business, or run a company, on the other hand, that’s a different story. The tax period can take a toll on you, especially if your business involves a diverse range of transactions and you have many employees on your payroll. With proper preparation and the right information, however, it becomes less stressful to file your taxes without errors or costly mistakes.
With this being said, here are some tips and tricks you could borrow to make your preparation for income tax returns in the U.S. less stressful.
1. Seek Expert Help
The IRS has made significant efforts to simplify tax forms, thus reducing the complexity and amount of time spent on tax filing. However, many folks will still find the process quite a daunting task, perhaps because it occurs only once per year. This is precisely why it helps to get professional help for tax preparation and other related services like tax planning and audit defense. Since you will be sharing your critical financial information with someone else, it pays to ensure you pick a trusted tax service provider.
At a considerable cost, they will take the heavy load off of your shoulder, allowing you to concentrate on other important matters directly relating to your business. While ensuring accuracy, the process is also faster and much more efficient.
2. Organize Your Taxation Paperwork
It is imperative to prepare and organize your tax paperwork as early as possible for a comfortable filing process. In fact, most companies start sending out as well as receiving vital tax documents as early as January. Getting ready and organized with your tax paperwork helps you avoid the stressful last-minute rush, which might also be prone to errors.
So, the earlier you prepare your tax documents, the easier it becomes when submitting your tax returns. To many people, the tax filing process can be messy and intimidating. However, that shouldn’t be an excuse for failing to prepare and submit your taxes. As a matter of fact, tax prep software can help make things easier for you. Many financial tools also have features that help keep the information ready for when the tax period comes. They provide critical information like income from gross receipts from all your sales or services, expenses, and the like to ascertain your qualification for deductions and credits that would reduce your overall tax amount.
3. Understand Your Qualified Deductions and Credits
Another great tip when it comes to tax preparations is to take advantage of your tax deductions and credits. In fact, tax deductions and credits are an essential element of the tax preparation and filing process. As a business person, tax deductions reduce the amount of your taxable income while credits significantly reduce your overall total tax bill.
So, are you wondering what business tax credits are available for you? Kindly consider visiting the IRS website and you will find a list of various tax credits you may qualify for depending on your particular industry. This is crucial for businesses in industries like biodiesel and those that offer certain services such as childcare for their employees. So, don’t hesitate to consult your tax preparer to help you figure out the tax credit suitable for your business. Also, if you consider using tax prep software, ensure you have answered all the required questions appropriately for you to qualify for potential tax deductions or credits.
4. Itemize Business Expenses
According to tax experts, it goes a long way to have your expenses itemized, categorized, and detailed. That way, you save significant amounts of time and hassle before the actual tax filing deadline depending on the taxpayer category you fall in. So, consider working closely with your accounting or your bookkeeping team (for larger businesses) or even seek some external assistance from a respectable bookkeeping services provider.
Additionally, your tax expert can help you itemize your expenses in a way you can claim some reasonable benefits from your expenses. For more information on this, the IRS offers a detailed business expenses explainer detailing the types of expenses that should be claimed.
5. Double-Check Your Paycheck
Double-checking your paycheck is a crucial element when it comes to tax preparation. In fact, it took the IRS a while to revise the withholding tables after the Tax Cuts and Jobs Acts were passed in December 2017. So, with that said, you actually need to double-check your paycheck withholding amount for this year since there could be changes that could influence your tax return filing.
Consider using the IRS tax withholding estimator to check on your paycheck as well as adjusting your withholding where necessary. The service is free and doesn’t hurt you in any way. Therefore, everybody should be up to date with IRS tax withholding requirements to avoid getting on the wrong foot with the taxation laws. Here are some ideal scenarios where one can use the IRS tax withholding estimator.
- A two-income family
- People that work only part of the year or in two or more jobs.
- If you have children who claim credits such as Child Tax Credit.
- Individuals that itemized deductions in 2018
- Individuals with older dependents which includes children age 17 and above.
- People with high incomes hence more complex tax returns.
Sometimes it can get on your nerves, but taxation is the responsibility of any loyal and law-abiding citizen. Since filing income tax is not always a walk in the park, adequate preparation can help make the process smooth and easier. Hopefully, the above few tips will help make it less frustrating for you.