Are you aware that failure in filing your taxes on time has a penalty of 5% unpaid tax monthly? 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 say that about 5% of Americans were unable to file their taxes in the year 2018 and accumulated a debt to the IRS of about $130 billion dollars in interests, back taxes, and penalties.
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Filing taxes can be tough if you don’t have a proper tax checklist, but it does not have to be so if you prepare right beforehand. Here below are some tax checklist tips for you to consider.
Clarify Your Personal Info
The IRS will require you to fill in the proper personal information, your social insurance, and your date of birth. It is also advised that you include correct information regarding individuals you have covered under your tax returns. These are your children, your partner, and other dependants that are covered under your tax returns.
Do Not Forget to Include your Income Information
You need to write down all of your sources of income in order for you to manage your taxes. Things such as investment income, businesses, and employement. Below are forms that you will need when you file your taxes.
W-2 forms you’re your you and your partner’s income from employment information.
Income you have received from alimony.
Social security benefits need Forms SSA-1099.
You will need Forms 8606 and 1099-R, these are for pension distributions and IRA.
1099 forms for any income received from investments.
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Be sure to secure the correct IRS form that corresponds to your specific sources of income. Other sources of income such as jury duty, winnings from gambling, scholarships, and medical savings account, also need to be reported. You can make use of online pay stub generators to create pay stubs for documentation.
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Your Tax Checklist Should Also Include Income Deductions
Your taxable income amount can significantly be reduced by income deductions. This will help increase your refund and lower the amount of money you owe.
Keep an Eye for Tax Credits
Tax credits are directly deducted from your taxes. Though, you will need documents in order to claim these. Listed below are some common tax credits.
Saver’s credit
Child tax credit for when you have children under 17 years of age.
Education credits for example tuition fees and the likes
You will be able to get a significant reimbursement of your tax withholding if you pay close attention to your credits. Credits can either be non-refundable or refundable. Having refundable credit that is more than your taxes will allow you to receive the difference as refund.
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