Nobody is looking forward to this, yet, unfortunately, that’s something that must be done by all of us. The entire process can be a bit overwhelming and complicated, but still, with the right instructions, you’ll do it in no time.
Sadly, a lot of people make huge mistakes when they are doing their taxes. No one knows whether it’s because they are doing it for the first time, or because they haven’t figured it out entirely.
That’s why you should always have somebody by your side who is going to supervise you and help you out in case you are struggling. Now, if you are entirely alone in this, don’t worry, we are going to assist you with these amazing suggestions!
Best Ways To Do Your Taxes
● Determine Who Is Going To Prepare And File Your Taxes
If you’ve experienced some major changes last year, such as getting married or divorced, or even launched your own company, then keep in mind that doing taxes is going to be a lot more complicated.
In this case, you will have to hire a CPA or any other tax professional who is going to help you prepare yourself for this process. Just do not wait for too long to do it because if you do, it may end up costing you some bucks.
The average fee in 2020 for an expert to prepare and file Form 1040 along with Schedule C, as well as a state tax return was around a staggering 500 US dollars, according to the National Society of Accountants.
● Tax App VS Manual Filing
These two options are at your disposal. If you are in the mood for something faster, more practical, and efficient, then you should definitely opt for tax software. What’s so beneficial about it?
Namely, as we mentioned above, it is very fast, it will check all the errors you’ve made before you file, it is cost-effective and you’ll be able to get a plethora of answers with the help of this app.
Furthermore, there are many applications of this kind on the market, and one of the most popular ones is Keeper Tax. Moreover, tracking your records with Keeper Tax or any other tax software for that matter has never been easier. That’s why this alternative is recommendable.
On the other hand, if you’re more into traditional methods, then you should download and fill out essential IRS forms and then send them to the local collection address. These forms can be found on the official website of the IRS.
Do not worry. These forms are free of charge. When it comes to tax payment, you can either mail a check directly to the IRS, or you can utilize your debit card, credit card, or same-day wire transfer through the IRS online payment system.
Don’t Forget To Take These Steps Too!
● Collect All The Important Income Documentation
You have to make sure you collect all forms that contain income info, especially those from your employers, as well as a financial institution. They should include:
- Form W-2 (wages)
- W-2G (gambling winnings)
- 1099-INT (interest)
- 1099-B (investment sales)
- Combined 1099 (brokerage combined tax statement)
- 1099-MISC (independent contractor work, royalties)
- 1099-R (retirement distributions)
- K-1 (MLP, Partnership or S-Corp share of income)
- SSA-1099 (Social Security benefits)
- 1099-G (unemployment benefits, as well as state tax returns)
- 1099-C (forgiven debt)
- Income Adjustment Documents, along with Form 1098-E (student loan interest); 5498 (IRA contributions); 5498-SA (HSA/MSA contributions); and 1098-T (tuition)
Protect Yourself From Scammers
It’s not unusual to start receiving phone calls, text messages, or emails from individuals that claim to work in the IRS. We cannot stress enough how dangerous it can be, so do not respond to any of these things.
More importantly, you should also stay away from people who are promising you bigger refunds. These types of people are typically scammers who can potentially lead you into serious troubles.
Therefore, you should be extremely careful when it comes to paid preparers. Make sure that the person you’ve hired is well-credentialed. On the official website of the IRS, you will come across a list of registered tax preparers to avoid any scammers.
As we all know, taxes can be very exhausting and a boring thing to do, that’s why we wanted to help you out by providing you with some practical tips that will help you avoid any pitfalls or make any huge mistakes. Good luck!