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 state that more than 5% of Americans have failed to file taxes in the year 2018 alone and have amassed about $130 Billion Dollars in back taxes, interests 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 are some tips in making your tax checklist.
Make Sure Your Personal Info is 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 need to write down all of your sources of income in order for you to manage your taxes. These include any businesses, income from investments, and employment. Below is a list of forms you will need when filing taxes.
W-2 forms for the employment income information of you and your spouse.
Received income from alimony.
Social security benefits need Forms SSA-1099.
Pension distributions and IRA will require Forms 8606 and 1099-R.
Different 1099 forms for income from investments.
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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. 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 easily be reduced by income deductions. This can reduce the amount of money you owe.
Pay Attention to Tax Credits
Tax credits are directly deducted from your taxes unlike tax deductibles that work to reduce the amount of income that is taxable. These will need documents in order for you to claim them, however. Here’s a list of 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
Paying attention to your credits will help you secure a tax withholding reimbursement. 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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