It is important that you learn to file your own taxes like a professional. In order to achieve this, you need to perform a self-assessment of your incomes, and most especially all taxable incomes. You may need to seek advice from a financial advisor just in case you don’t know all taxable incomes. Filing your tax can be a lot easier, especially when you have been preparing for a long time. You need to follow these simple steps;
Make Sure You Keep All Receipts
There are several expenses you should be able to deduct from your income while filing your taxes on a yearly basis. These expenses include all charitable donations you made in the year, the unreimbursed employee expenses, and medical expenses. Instead of throwing your receipts into the garbage, you may want to file them and retrieve them when filing your taxes in 2019. Receipts and smaller documents are proof of your income and may help you claim tax rebates when filing your taxes.
Separate Your Side Business Expenses
If you operate a side business aside from your regular 9 to 5 job, perhaps you should consider separating such business expenses from your personal expenses when preparing your taxes. It is equally important that you use different debit and credit cards for your businesses and personal expenses. Doing this will help you avoid going through several months of credit, debit cards and bank statements just to figure out how much taxes you will pay on them. Paying taxes separately for your personal and business income will help you avoid mixing things up and paying more than you ought to. Read more about separating personal income from business income before taxes, on this website.
Update Yourself on New Tax Rules
Most of the tax changes made in a year will normally go into effect the following year. For this reason, you need to be aware of these changes. The government might have implemented some tax cuts you might have qualified for. For this reason, you need to check through the new tax rules before preparing your taxes.
Some of the major changes that may affect your taxes are the Higher standard deductions, Child tax credits, Personal exemptions, new limits on state and local tax deductions, Decrease in Mortgage Interest deductions, and New Pass-through deductions on business income.
Based on your tax situation, tax changes may affect you positively or negatively. You need to be familiar with your tax liability in order to make the best out of these changes.
Gather All Paper Work
Now that you are aware of the taxes you owe, it is time to gather all paper works. The most important paper works are the tax forms from your employers. You may have to collect these forms from previous employers. You need to gather all the documents showing earnings and interests. You need to provide documents showing your proof of health insurance coverage and the receipts of all medical expenses, charitable donations, and expenses on private businesses.
Choose the Appropriate Filing Status
Your filing status will be determined by your marital status, as well as other factors such as the percentage of your household expenses that are paid by yourself. You should also check for the tax returns you qualify for. The tax agency should be able to provide information and help on tax refunds for low-income earners.
If you are a serving or retired military personnel your family members may qualify for certain tax refunds. Similarly, people with disabilities and senior citizens also have certain tax refund benefits. There are children or dependent family tax credits for Education-related taxes- you need to confirm this as well.
Pay Attention to Certain Itemized Deductions
The total deduction for State and Local income, property, and sales taxes are constantly changed. Make sure you check the limits. Keep in mind that Interest on Equity loans is only deductible only when you spend the money on renovating or building a home. For most filers, there are no tax deductions on fees incurred through tax preparation, moving and job expenses. You can get more information on itemized deductions on the government official website.
Choose How You Will File Your Taxes
Though the paper filing option is still there, the online application is becoming more popular because it is more convenient and you can easily track the progress of your taxes. If you insist on filing the paper tax payment form, you should check the appropriate online address to download the paper forms and fill them correctly. Paper forms must be submitted at the appropriate tax offices.
In some cases, you may scan the filled forms before uploading and submitting them online. Once you submit your forms, you must follow the next directive to make tax payments. You will be given a reference number for which to track the progress of filing tax. Your filing will also be acknowledged instantly.
In Conclusion, it is important that you get your taxes prepared as early enough because it is the only way to avoid errors and omissions. There are some exemptions and tax deductions that will lower payable taxes on all income, but you may not discover these if you don’t consult with a tax professional. Even if you consult with a tax professional, you still have to prepare all documents in earnest to ensure that you do not omit any. Most of the times income earners get into trouble is when they omit certain documents whether by error or deliberate act.
Do away with the habit of throwing away receipts and other documents of your spending they may be required as evidence that you qualify for certain tax refunds. If you can afford the costs of hiring a tax consultant to file your taxes, then it is worth it, but why pay for something you can do by yourself. Keep in mind that early filing of taxes may qualify you for tax credits, which can further save you money in the long run.