The busy tax season is upon us once more, and we are now over a month since the IRS announced the beginning of the 2019 tax season (on January 29th). With the tax agency expecting over 150 million individual tax returns filed by the 15th April deadline, do you have your house in order?
Are you ready to pay all the taxes owed by April 15th? Still gathering all the documents you will need to simplify the process?
Below, we look at some of the things you could do to simplify the tax season this year.
1- Start Early
The primary reason why we always recommend taxpayers to start the whole process early is that in addition to saving you from the last-minute stress, it also saves you from scammers planning to make off with your Social Security. These scammers always promise to file your returns fast, but they only end up filing fraudulent returns all in a bid to snag off your tax refunds.
Starting the filing process early also means that you get handle of the numbers. Congress renewed the tax deductions and credits packages towards the end of 2019, which means that you need to familiarize yourself with the numbers to avoid mistakes and to save more in tax refunds.
2- Gather All the Important Documents – Get your W-2 from your Employer
Employers were expected to submit the W-2s by the end of January. If you haven’t received yours yet, you should. The W-2 is an important document that will breakdown everything for you, from the wages earned, Medicare and Social Security taxes paid, as well as the federal and the state taxes withheld.
And if you are an independent contractor, you should be receiving Form 1099-MISC from all the businesses you worked within 2019. This is the same for freelancers and entrepreneurs who may get 1099-Ks to show the payments received, as tracked from their credit and debit card transactions. For retirees, the 1099-R will be there if they are making withdrawals from their 401(k) or retirement accounts.
3- Use Technology
Manually logging in different numbers is slow, and it may lead to erroneous numbers filed. You don’t want errors in your tax numbers, which is why we recommend using the best apps and technological options at your disposal. You could, for example, use the R&D tax credit software to work out the tax credits you qualify for and how to claim them. Look for software and apps that are recommended by the IRS.
Note, however, that even with such software, you have to put in some legwork when it comes to nabbing deductions and credits.
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If you are itemizing different deductions in your 2019 returns, for example, from charitable organizations, you must have your acknowledgment letters ready.
4- Don’t Mix Business with Pleasure
The IRS has simplified the details and items that count as home office deductions, but you need to understand what counts and what doesn’t. For example, if you work from home once weekly, you know that will not count in the deductions. Also, consider keeping separate accounts for your personal and business transactions.