Preparing and filing a tax return can be quite a critical task. While the smallest of the mistakes can result in a criminal offence, the minutest of the changes can help you save some money too. It all depends on how efficient your accountant is and how prepared you are for the task. While selecting good accountants, like SK Financial CPAs, is a good measure, following some basic tips can help you collect information and prepare documents for the filing crunch time.
• Review Your W-2 Wage Information And 1099s’ Transactions
Check both of these documents thoroughly to see if there are any discrepancies. Make sure that all numbers documented on the forms are accurate. In case of any mistakes, make sure that all issues are ironed out as soon as possible.
• Save Bank Statement Copies And Brokerage Statements Throughout The Year
These documents can help you clarify what cash inflows are tax-deductible and if there are any tax losses carried forward from last year that can be used in this tax year.
• Keep Documented Proof Of IRA Contributions
IRA contributions can help you receive tax deductions. If you have made any such contributions during the year, keep their proofs in the form of cancelled checks and brokerage statements.
• Collect Information About All Your New Dependent Family Members
The tax laws allow you to receive credit for every family member who is dependent on your income. This means that if there has been a new addition to your family in the current year and he or she is dependent on you, then claim his or her social security number as soon as possible. When your accountant is filing your tax return, present him with these details to receive tax credit.
• Save All Receipts Of Expenses Incurred As Part Of Your Job Or Your Business
All work related expenses, not reimbursed by your employer or most of the expenses incurred in the name of your business, can be used to gain tax credit. If you are unable to present any proof of your expense or purchase, you will not be able to use it as a tax-deductible item.
• Save Proofs For All Charitable Donations
The government, in general, encourages all citizens to contribute for the betterment and the welfare of the society and the country. As part of this encouragement, the IRS allows you to use these charitable donations as tax-deductible items and gain credit for all contributions made. However, again, it is important to have appropriate documentation to prove your contribution.
• Keep In Handy The Last Year’s Tax Return
Presenting your accountant with the previous tax year’s return can prove beneficial to you almost always. There might be certain pieces of information that your accountant can use to help you alleviate your tax responsibilities and help you gain legal tax credit. For example, any amount of carried forward tax loss can be used this year to your advantage.
Tax returns and tax payments do not necessarily have to be a nightmarish event. If you are responsible in keeping all your receipts, all relevant documentation and have a good accountant, filing tax returns might not be a bad thing.