33% of Americans admit that they wait until the last minute to file their taxes. So if this is typically your strategy, you’re not alone! However, just because it’s common, does not mean that it’s the best strategy. Any tax consultant will tell you that filing as early as you can is the best way to handle taxes. In this article, we’ll explain the benefits of filing your taxes early so you know exactly why sooner is better than later.
You probably don’t need a tax consultant to know that a great reason to file your taxes early is to get your refund sooner.
There are a lot of reasons why filing early means that you’ll get your refund early. Obviously, the earlier you file, the earlier your taxes will be processed and if you’re owed a refund, you’ll get it sooner. However, filing early may also get your refund to you sooner by avoiding potential processing delays that may be caused by filing at the last minute (as many other people do).
If you’re interested in getting your refund as soon as possible, keep these three things in mind:
If you do end up owing taxes, you have until the filing deadline to pay these taxes back. Filing as early as you can allows you to be sure just how much money you owe, come up with a plan to pay it, and pay it back without having to use emergency funds or savings. So even if you know you’re going to have a tax bill instead of a refund, that’s no excuse for waiting to file!
We all do everything we can to protect our private information, including social security numbers, but in this day and age, this information can get into the wrong hands even when you take precautions. If an identity thief gets access to your social security number, they can file a tax return in your name and take your refund.
It’s very common for identity thieves to do this, but filing early can prevent it. The earlier you file, the less time a thief has to file a tax return in your name, ensuring that you’ll get the refund you’re entitled to. You will be able to work with the IRS to clear up any issue if a thief does file a return for you, but it can take months.
Reduce your risk of tax refund fraud by filing early!
You may need financial information provided by preparing a tax return. This is the case for college students applying for financial aid as well as for homebuyers who need to show a completed tax return to prove their household income. In these situations, the sooner you can get this information, the better, which makes filing early particularly important.
Even when you’re not down to the wire to file your tax return, tax season is understandably stressful for most of us!
The best way to lessen this stress? Just get your taxes done and out of the way as soon as you can. Procrastinating will just make you think and worry about it more, leading to increased stress.
Stress can also cause mistakes. Not everyone performs at their best when they’re under pressure. It can make you forget important documents that could potentially lead to issues with your tax return. The rush of filing close to the deadline may also mean that you could miss out on tax deductions or credits that you’re eligible for, just because you didn’t give yourself time to calmly sort out your tax documents.
Finally, filing early will reduce your stress by ensuring that you’ll have plenty of time to schedule an appointment with a tax consultant. The closer we get to Tax Day, the more people will be scheduling appointments, meaning that it may be harder for you to get one. Avoid all of this by filing early and having the peace of mind that finishing a big task provides!
Taxes can be complicated and stressful, but they don’t have to be.
When you let an expert tax consultant from the Phoenix Tax Consultants team handle your taxes, you can be sure that your tax preparation will be completed quickly and accurately. We also pride ourselves on our customer service, which is why we do our best to provide prompt replies to your questions, value-added planning, tax-saving recommendations, and more.
We don’t just process – we plan. At Tax Tacklers, we are disrupting the way people do their taxes. The best part is that with our virtual and in-person filing options, you can do your taxes from anywhere!
With more than 30 years of local tax preparation, tax planning, and audit experience, why would you trust anyone else with your tax preparation? Schedule an appointment today!
Once you are done filing your tax returns, what should you do with all the receipts, forms, and other paperwork? Should you just shred them and reduce the clutter or keep them?
The IRS recommends that you should keep any documents that prove how much income you have earned and any other documents that support deductions or credits you claim. However, if you will get one record (like your W-2) at the end of the year that summarizes all the crucial information, you don’t have to worry about keeping every single document.
The IRS has 3 years after the due date of your tax return or when you filed if later to trigger an audit, so it’s advised to keep the records until that time has passed.
But, in a few cases, you should keep the records even longer. For example, cost basis informations for assets you may sell later.
Pro Tip: You should keep your W-2 forms around for non-tax purposes as well. For example, if you ever need to apply for Social Security Benefits, you will need your W-2 to verify your income.
You should keep your pay slips at least until you can check them against your W-2 forms. If all the figures match, feel free to get rid of the stubs. The same goes for your monthly brokerage statements; only shred them once you have matched them up with your 1099s and year-end statements.
Any documents that support your income, credits, and deductions claimed on your return should be maintained for at least 3 years after the tax-filing deadline has passed. This 3-year rule also applies to the following records:
If you no longer itemize deductions on Schedule A due to the significant increase in the standard deduction in the beginning of 2018, you might not need to save as many records. For example, people who don’t deduct charitable contributions any longer, they don’t need to hold onto the cancelled checks or donation receipts for tax purposes.
If you have failed to report at least 25% of your income, the IRS has up to 6 years to initiate an audit. This is especially important for freelancers and self-employed people; you may earn business income from a variety of sources and may have overlooked some amount.
So, practice caution and keep your 1099s and other receipts of business expenses for at least 6 years.
Have you ever paid taxes to a foreign government? If yes, then you might be eligible to a deduction or a credit on your US tax returns (depending on what you want).
If you decided to claim a deduction in the past, you are allowed to change your mind within ten years and instead claim a credit via filing an amended return.
Also, if you previously claimed foreign tax credit, you have 10 years to correct it.
This is why it’s best to save any documents and receipts related to foreign tax payments for at least 10 years.
There is no official, IRS-recommended way to keep your tax records; just keep them in an organized manner. Some people prefer storing their records digitally while some prefer the old-fashioned paper records.
Consider organizing your documents first by year, and then by category (like income forms and bank statements). If you are going the digital route, just take pictures or scan the documents and store them anywhere you want (in a Dropbox or iCloud).
Or, you can buy a good-quality file folder and store your receipts there.
Keep saving and arranging your records throughout the year so you have everything neat and tidy during the tax season.
The federal government allows states to collect taxes in order to finance public and government services. Health benefits, law enforcement departments, public schools, and other institutions depend on these local and state taxes to keep serving the citizens.
There are different types of state and local taxes, such as property taxes, individual income taxes, sales taxes, vehicle license taxes, corporate income taxes, etc. In this post, you’ll learn how to file these tax returns for the income you earned in 2019.
How Can I File My Tax Returns?
You first need a Wage and Tax Statement (also known as a W-2 form) from your employer(s) where you worked during 2019. If you work as a freelance professional, you may receive a 1099 form from various payers to assist in preparing your return.
According to the IRS, the best way to file tax returns is doing it electronically (online). This also makes it easier to request direct deposit for your refund; people who file online, typically receive their refund within 3 weeks, as opposed to 6 weeks or more (for people who file via mail). At Phoenix Tax Consultants we offer both electronic and mailed tax return options for our clients.
Taxes should be estimated and paid throughout the year but amounts owed at tax time become payable on the 15th of April, 2020. If you have a complicated return and need to request for an extension, you should file this request by 15th April or face penalties and interest charges.
Different Types of Deductible State and Local Taxes
There are four kinds of non-business taxes that are deductible:
In order to be considered “deductible”, you must have paid the tax (that was imposed on you) during the tax year. And you can only claim these taxes as an itemized deduction.
Note: You can only deduct up to $10,000 (if individuals) or $5,000 (if married, but filing separately).
State and Local Property Taxes
The personal property taxes will be based solely on the value of your properties, such your car, boat, a painting, a bike, etc. Even if this tax is collected more (or less) than once every year, it must be imposed on you on an annual basis.
There are some fees and taxes you are not allowed to deduct, including:
State and Local Real Estate Taxes
Most local and state governments charge an annual tax on the entire value of a real estate property. Known as real estate tax, it is deductible if is assessed uniformly at a like rate on all properties throughout the jurisdiction.
If you are paying a loved one’s property taxes for them because they are getting old or are really sick, and can’t afford to do it themselves – it is not deductible. After all, it was not imposed against you.
You have to be the property owner in order to claim the deduction.
State and Local General Sales Taxes & Income Taxes
You can either choose to deduct general sales taxes or state and local income taxes – you are not allowed to deduct both.
You can use the optional sales tax tables or your actual expenses if you decide to deduct the general sales taxes. Most people compare what they paid in state, local and foreign income tax to what they paid in sales tax, and then deduct the bigger amount out of the two.