How To Prepare For The Next Tax Season

Just because tax season is over, doesn’t mean taxpayers can now take it easy. Some may have their tax returns rejected while others may be subjected to a federal or state tax audit. Errors on one’s tax return can be as simple as a typo error in one’s name or transposed digits in your birth date or SSN. Mistakes can also be as grave as failing to report your income properly. All these can lead to a bigger problem with tax authorities. The good news is, these inaccuracies can be avoided and it all starts with you.

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The time is NOW!

Preparedness takes away much of the stress during tax season. The thing is, most taxpayers don’t prep up until tax season is already upon us.

Problems stem from one’s tendency to procrastinate. Whether you are filing as an individual or a small business, keep in mind that the accuracy and correctness of your tax return rely heavily on all the information that you have gathered throughout the year such as income and expense-related documents, receipts, financial statements, and personal information details.

Do not wait until the next tax season before you start gathering and organizing your records. Whether you are following the fiscal year or the calendar year, be diligent in keeping your records organized in a neat file the whole year round. When you have all your records organized, it lowers your chances of missing out on necessary income and expenses information that you need to declare in your returns.

Update your personal records

Aside from diligently putting your financial records in order, you must also keep your personal records up to date. Any change in your status must be declared accordingly, whether you are newly married or just got divorced. This is especially important for couples who are filing taxes jointly as both husband and wife are fully responsible for the accuracy and completeness of their tax return.

It would also help you a great deal to list down your personal information as well as that of your dependents. You may know your Social Security number by heart and can recite all your dependents’ birth dates in your sleep, but when it comes to filing your tax returns, you are just one digit away from committing an error. It’s so easy to transpose numbers and this often happens when one is already in haste to finish filling out the forms.

You don’t have to carry your list around you all the time but having an updated list of your and your dependent’s personal information when you are filing your returns will ensure that you get this part correctly and lower your chances of committing an error that may cause for your return to be rejected.

Know the impacts of the GOP Tax Bill

It would be beneficial on your part to know about the tax laws. As we all know, the GOP Tax Bill brought in a lot of amendments. These changes affect you depending on your personal circumstance: how much you earn, how many children you have, how much you pay state or local taxes, how much you pay in mortgage interest, and more. You don’t have to master the new tax laws. Arm yourself with basic knowledge so you can start planning for the next tax season.

Meet with your tax preparer.

Not all tax professionals can be a tax preparer. They have to meet the qualifications and proficiency requirements set by the IRS. If you don’t have a tax preparer yet, the best place to search for one is the IRS’s Online Directory of Tax Return Preparers. Choose a reputable tax relief company that employs experienced enrolled agents, tax attorneys, and CPAs to do the job for you. Once you have selected a tax professional who will prepare your income tax returns on your behalf, you start the process and discuss the details such as your eligibility for certain deductibles and other tax-related matters that you may have in the past.

 

Final word

As we all know, errors in one’s tax return, whether committed deliberately or unintentionally may lead to hefty fines being slapped at you by federal and state tax authorities. But the tax season need not be a stressful experience for individuals and small business owners alike, nor does it have to end with your returns being rejected and finding yourself with a huge tax debt. Being diligent in organizing with your receipts and other financial documents all year round and having a tax preparer that you can count on can take that heavy burden off your back and make this dreaded season such a pleasant one.

 

Sources:

Why People Need Tax Debt Relief And How We Can Help

https://www.investopedia.com/articles/pf/07/tax_prep.asp