Even though Tax Day only comes around once a year, keeping up with taxes may seem like a year-round effort. You should be aware of your potential filing duties and how your decisions may impact your financial situation, regardless of whether you file by yourself or with the help of a tax professional.
Any business operation requires the payment of taxes as a necessary component. Although you can’t avoid it, you can try to lessen its effects in any way you can. Your responsibilities and awareness are already evident by the simple fact that you pay taxes.
If You Only Get One Part Correct, Make It Your Filing Status
Taxpayers must be aware of their accurate filing status as they prepare for the forthcoming filing season. The kind of tax return format a person should use when submitting their taxes is determined by their filing status. The amount of taxes they owe and possibly even whether they must file tax returns at all depend on their filing status.
Because it can affect how much tax you pay (or save), filing status is crucial. Additionally, if you make a mistake, you will undoubtedly receive the dreaded audit. Of course, it is preferable to seek the advice of experienced accountants when it comes to such important issues to avoid making a catastrophic error. Your filing status essentially indicates how you want the IRS to handle you and can affect some things, including which deductions and credits you can claim, which forms you need to complete, and more.
It Is Better to E-file
When someone says they’re planning to e-file their taxes, it suggests they’re sending their tax return to the government electronically rather than via physical mail. Both state and federal taxes can be e-filed. The federal government uses software that enables people to electronically prepare and file their taxes, and every state owns software for digitally preparing and filing state taxes.
A commercial tax preparation program with an e-file feature is an alternative. The majority of tax professionals provide e-filing as an alternative if you have your taxes prepared by them. If you’re looking for handy online tax software, check out Afirmo’s tax software which is easy to use and can help you file your taxes accurately and efficiently.
Exemptions Are an Easy Way to Reduce Your Taxes
Have you heard that being a contributor to society, being married, or having children entitles you to any form of tax break? These rebates are known as exemptions, and in 2011, they each reduced your taxable income by $3,700.
Consider the following simplified scenario: You earn $50,000 and are subject to a 25% tax rate. If you are eligible for one exemption, your tax bill will be reduced by $925 (because $925 is 25% of $3,700).
Audits Won’t End the World
They do cause frustration, yes. However, receiving a notice of an audit won’t ruin your financial situation. The IRS has specific markers that will immediately initiate an audit to handle thousands of tax returns rapidly. That doesn’t necessarily imply that you did anything wrong; it only means that your return may contain information that suggests you’re trying to mislead the IRS or even that you committed more than just a minor math error. (The IRS will fix your elementary math errors.)
You need to be able to demonstrate that you have been paying all of the taxes if everything on your return was completed accurately. Your return will be left unchanged by the IRS if they agree with you, and the audit will end without penalties or jail time. If you commit a mistake, you can be responsible for additional taxes, interest fees, or penalties.
Since taxes undoubtedly play a frequent role in everyone’s lives, all should keep themselves informed about them and any potential changes. So, everyone may all benefit from the important points this article makes!