Are you aware that you can receive a penalty of 5% unpaid tax per month whenever you file your taxes past the deadline? If you file your taxes 60 days past due then you are also obligated to pay $135 minimum or how much money you owe the government in total, whichever is lower.
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IRS reports have stated that about 5% of Americans were unsuccessful in filing their taxes in 2018, they have accumulated up to $130 billion dollars in debt to the IRS in penalties, back taxes, and interests.
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Filing your taxes is quite the daunting task without the right checklist, but with proper preparation you can go through with it in a breeze. Here are some tips in making your tax checklist.
Double Check Your Personal Information to See If It’s Correct
The IRS will need you to provide your personal information, date of birth, and social insurance. It is a must that you include detailed and accurate information regarding individuals that are covered under your tax returns. These include your children, your partner, and or other dependants.
Do Not Forget to Include your Income Information
You have to document all of your sources of income if you wish to properly manage your taxes. These can include income from investments, employment, and businesses. Listed below are a list of income forms needed when filing your taxes.
W-2 forms for the employment income information of you and your spouse.
Income you have received from alimony.
Forms SSA-1099 for your social security benefits.
Forms 8606 and 1099-R.
1099 forms for your investment income
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Make sure to have the proper IRS form for specific income sources. Other sources of income such as jury duty, winnings from gambling, scholarships, and medical savings account, also need to be reported. For income documentation, you can make pay stubs through the use of online pay stub generators.
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Don’t Omit Income Deductions from Your Checklist
Income deductions can greatly help in reducing your amount of taxable income. This can reduce the amount of money you owe.
Be Mindful of Tax Credits
Tax credits are directly deducted from your taxes. Though, you will need documents in order to claim these. Here below are a list of common tax credits.
Retirement savings contributions.
Child tax credit if you have children below 17 years of age.
Education credits like tuition fees.
You will be able to get a significant reimbursement of your tax withholding if you pay close attention to your credits. Credits come as either refundable or non-refundable. If your refundable credit exceeds the amount of your taxes, you get a refund of the difference.
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