Tax season is the period each year when individuals and businesses prepare, file, and pay taxes to the government. In the United States, taxes are paid primarily to the Internal Revenue Service (IRS). The IRS begins accepting tax returns around mid-January, with a typical filing deadline of April 15.
The Internal Revenue Service had processed 100.1 million federal income tax returns as of April 5, 2024, according to the American media website CNET. The income tax return collected for April 2024 is 0.3% less than the 100.3 million processed by the same time last year.
If you can’t file by April 15, you can request a 6-month extension (to October 15) using Form 4868. Keep in mind that you still have to pay any taxes owed by April 15 to avoid penalties. A Jacksonville tax preparation attorney says they can help guarantee that a person’s taxes are filed efficiently and correctly, giving peace of mind to clients during tax season.
Whether you are an employee, self-employed, or a business owner, being organized and informed can help you maximize your deductions, avoid costly mistakes, and comply with all relevant tax laws.
In this article, you will learn the essential steps on how to confidently prepare for the tax season and potentially reduce your tax liability.
Gather Your Financial Documents
Compiling and organizing your financial paperwork makes the filing of taxes easier. Your financial documents should include the employer’s W-2 form, which shows your income and tax payments for the year. If you are self-employed, you will not need a W-2 but should instead collect 1099 forms.
You will have to collect interest statements for banks and investment accounts. Save all deductible receipts, like medical bills and business expenses. Gather all the purchase and sales receipts for the property too.
Keep your last two years’ tax returns. These documents can serve as reference and help you identify which documents you’ll likely need again.
Store all of your tax documents in one location for ease of access and to avoid misplacing them when tax season comes. Keeping your records well-organized and protected reduces the risk of tax fraud.
The Law Offices of Timothy R. Anderson, LLC, says tax fraud includes not paying taxes that are owed, including failing to file a tax return, filing a false return, not reporting income, or knowingly taking an unauthorized deduction.
Understand Your Deductions and Credits
Understanding deductions and tax credits can maximize your tax savings. A deduction decreases taxable income. Meanwhile, a credit decreases the amount of tax one owes.
List some of the common tax deductions, such as mortgage interest, student loan interest, and medical costs. Don’t forget to take into account the deduction for state and local taxes.
The more tax credits you qualify for, the more you can reduce the amount of tax you owe. Examples of tax credits are the Earned Income Tax Credit, Child Tax Credit, and educational credits.
Have proper records for the deduction and credit. If you are unsure about which benefits you are eligible for, seek the advice of a tax professional.
Choose the Right Filing Method
After understanding your deductions and credits, figure out which filing method suits you best. There are different avenues for you to file taxes, including the traditional manual way, using tax software, or using an online tax service.
Manual filing is suitable for hands-on individuals with simple finances who manage their financial data. Those who want to file their taxes quickly and reduce the risk of errors can opt to use the software method of filing.
An online setup provides a user-friendly interface that simplifies the process of filing taxes. Evaluate your comfort level with technology, the complexity of your taxes, and your budget on hand to help you decide which tax filing service to use.
Choosing the right method can help you file taxes faster and maximize your tax returns.
Consider Hiring a Tax Professional
Letting a professional guide you through tax season can only make the process easier and smoother for you.
A tax professional is trained to check your documents and see to it that all the deductions and credits are included. Moreover, tax laws change every year, and a tax professional can help make certain that your return is in conformity with the law. A tax professional keeps you compliant with changing tax laws and provides peace of mind during tax season.
If your financial situation is complex, including incorporating a business, managing multiple income sources, investing in real estate, or possessing numerous assets, a professional can provide valuable insights and advice specifically tailored to your tax needs.
Investing in a tax professional will save you time and stress and let you focus on other important things. Evaluate your situation and determine whether the benefits of hiring a tax lawyer outweigh the costs.
Review and Double-Check Your Return
Always review and recheck your tax documents before submitting them to avoid costly mistakes that can cause unnecessary problems.
Make sure all the basic information, such as the SSN, name, and address, has been accurately entered. Check if you have accounted for all of your income sources.
Missing or incorrect entries may lead to delayed refunds or the dreaded audit. If you have taken additional deductions, verify their validity and attach proper documentation.
A mathematical miscalculation can significantly impact your tax liability, which is often overlooked. To save time, money, and stress, use a tax preparation program to evaluate your return and then have it reviewed by a trusted tax professional.