Things to Keep in Mind When Doing Your Taxes
Yes, it’s that time of year when all of us are obligated to do our taxes and most people truly dread that entire season. All those documents, paperwork, ensuring that you have all your dividend and interest statements gathered.
It sounds quite tiresome, however, that’s something nobody can avoid. Honestly, doing taxes is a task no one will ever enjoy, and who can blame them? Still, you have to be prepared for it, no matter how much you hate it.
If you haven’t done it before, then it’s highly likely you have no idea what to do first. There are a number of key things worth remembering, but don’t worry. We’ve got you covered. Today we are going to lead you through this process, slowly, yet effectively.
You Don’t Have To Give Money To Get Your Taxes Filed
According to some statistics, American people spend more than 200 billion US dollars every single year on tax preparation! This goes to show that the average cost for preparation is around 180 US dollars.
Now, it’s important to accentuate that you do not have to spend a bunch of money just to file a return. Namely, service members, along with their families employ Military OneSource’s MilTviax, which is a great program that can help you file your taxes free of charge.
In case you have any questions, you can always reach their tax consultants by either online chat or phone. More importantly, you can also check whether there is a Volunteer Income Tax Assistance (VITA) nearby.
Tax Return Software
If you want to utilize something that is going to simplify this whole process and simply speed it up, then you should consider downloading a high-quality tax return program. Namely, as tax gurus at keepertax.com love to say, these programs are here to help users efficiently file their returns. Is it difficult to use?
Definitely no! You can do all your tasks with a couple of touches of a designated button. Namely, this types of software really come with a number of benefits and we are going to name a couple of them:
- These applications are very affordable. Their prices are normally less than fifty US dollars.
- As we previously mentioned, they are very efficient. A lot of them require less than thirty minutes to file a return.
- Another great thing about them is that they are very user-friendly and will walk you through in step-by-step to prevent any mistakes.
Adjusted Gross Income
During this process, you will receive instructions such as “if your AGI is less than 100,000 US dollars” or something like “up to ten percent of your AGI”. So how does this work? Namely, all of us are obligated to report our salary, and then the government deducts some costs.
These are typically IRA contributions or education tuition and they do it to define the adjusted gross income or widely known as AGI. On the other hand, AGI what deductions and credit we might be eligible for and how large they are.
Furthermore, after taking all these additional credits, deductions, and exemptions we reach our taxable income.
Give Dependents’ Social Security Numbers
You will need this to claim particular tax credits, for example, the Child and Dependent Care Credit or the Earned Income Credit, or to file as a head of your house. Ensure that your ex-spouse isn’t putting the same dependency on you.
In case something like this occurs, your return could be checked again. If you wish to claim the child care credit, you should bear in mind that you must go through the IRS guidelines to ensure your costs and your dependents are eligible if you want to claim the Child and Dependent Care Credit.
The Tax Deadline
A deadline must be respected in most situations, especially in this one. If you do not file your tax return, or at least demand an extension you are going to face some serious penalties. What could happen?
For instance, you could face a failure-to-file penalty that is five percent of your tax bill for each month that your return doesn’t arrive on time. Now, if you are expecting some sort of refund and yet you do not get your return in when you’re supposed to, you are going to miss out on the opportunity to bring back a lot of your own cash.
This is a gloomy and a little bit depressing topic to discuss, yet, just because you’re not talking about it, it doesn’t mean it’s not going to happen. With the help of these suggestions, you will quickly realize that it’s not as hard as it may appear to be.