Everyone dreads the time of the year when they file their income tax. After all, people prefer to avoid dealing with piles of documents or spending their hard-earned money on taxes. Your storage and reference job will be easier if you turn papers into PDF files. Create a backup to avoid the risk of losing them. The financial experts say to collect all your retirement savings details, donations, medical bills, 1099 forms, W-2s (Wage and Tax Statement), etc. If you have alimony payments, child custody expenses, and others, keep those details accessible. It will help in your tax audit or tax return.
Some people also hire financial services like Hogan CPA Financial Services for the convenience and safety of their savings. You can also take the same route if you prefer. Before this, here are a few critical points to explore.
Things to keep handy
If you face a tax audit, you must show three years of records minimum. Suppose you have more – even better. Please keep all of them in a folder every year. Evaluate your W-2 and pay stubs to ensure everything is going fine. Some tax returns or deductions can be pending from the past year. You should check them as well. Some people make charitable donations for tax savings. IRS would ask for receipts only if your contributions stand at USD $250 or more. Still, saving receipts doesn’t hurt. Remember, you can get a small refund on your tax with proper planning. Investing in savings accounts, educational savings a/cs, and others can help.
Furthermore, those who appealed for the extension for federal tax return 2022 should organize and finish all their filing-related formalities by October 15, 2023. You can also enter details of your W-4 paycheck for the current year to claim a tax refund. Paying your estimated tax amount for 2023 on time will be best. Online platforms can come in handy in this area. However, your credit and deduction records should be up-to-date when you pay your 2022 taxes.
New Year tax planning – January 1 to April 15
The standard tax return deadline tends to be April 15. However, you can pay it by April 18 also. Some inform that it can be valid till the October deadline. Still, managing these things within a legitimate timeframe is better to avoid the hassle. During the same time, you may also have to pay your state tax. So, keep this in mind too.
At the time of tax planning, you can save a lot of headaches by being organized. Your tax documents, such as 1099 forms, W-2 forms, etc., should be available. Know your tax amount before filing your papers. Learn whether you qualify for any tax credit. Also, you may want to know if you can apply for an extension for tax filing. As hinted earlier, paying your tax on time can be rewarding from many angles. If you delay, you risk penalties or IRS notice. These can make things cumbersome on your end. Hence, unless there is some serious need, you should aim to file your returns on time. It will be good for your financial and mental health.
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