Tips for The Average Joe

February 4, 2021

Miscellaneous

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Tax Checklist Management – Things You Need To Add
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 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 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 also advised that you include correct information regarding individuals you have covered under your tax returns. These include your children, your partner, and or other dependants.

Do Not Forget to Include your Income Information

You have to document all of your sources of income if you wish to properly manage your taxes. These include any businesses, income from investments, and employment. Listed below are a list of income forms needed when filing 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.
Different 1099 forms for income from investments.

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Be sure to have the right IRS form of your income sources. You should also report other sources of income such as jury duty, medical savings account, scholarships, and gambling winnings. For income documentation, you can make pay stubs through the use of online pay stub generators.

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Don’t Forget to Include Income Deductions in Your Checklist

Income deductions can greatly help in reducing your amount of taxable income. 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. Here below are a list of common tax credits.

Retirement savings contributions.
Child tax credit if you have children below 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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