Filing your federal return can be tricky business. Whether you choose to take on this task for yourself of visit a third-party tax preparer, here are some things to consider:
You don’t pay the correct amount of taxes
Time for a quick history lesson. The purpose of the yearly tax return system is to eliminate people from having to pay federal taxes in one lump sum. You are actually prepaying your taxes throughout the year in the form of Federal Withholding on your weekly paycheck. If you reduce the amount you are paying and your lifestyle has not changed as well (ie birth or adoption of a child, married or divorced), you could be creating a tax deficit which will result in a smaller refund or you having to pay this difference out of pocket.
You are not using the best form to file
One great thing about doing your own taxes is that you can control everything… one bad thing about doing your taxes is… you can control everything. This includes the form in which you will input your information. Most people should use the Form 1040. The majority of free e-filing software and some major corporations use the Form 1040-EZ. This is the “straight-line” version of the 1040 & tends to be easier to complete, as it is simple data entry. If you have dependents or want to receive certain credits, you should prepare for the extra work anduse the 1040.
You are not asking (or being asked) the right questions
Taxes, like artwork, can be interpreted in so many different ways. It is important that you are “interpreting” your tax return in the best way for your unique situation. If you prepare your own taxes, use the help feature in your software to ensure that you are inputting any and all information you can. If you opt to have your return prepared by a third-party, be sure that this individual is talking to you and not simply advising you where to sign. Clicking or answering yes to “Did you go to school?” is very different than researching whether you should deduct your expenses from your income or take a credit to reduce your tax liability.
You are leaving things out
Annually, this is the biggest offense made by tax payers. Did you report all of your income for the tax year? This may include odd jobs, court settlements, winnings from gambling or contests, it can even include monies given to you from family members. Most people do not report this to the IRS which triggers a desk audit. This audit will result in the IRS recalculating your return and sending you the bill for the difference… plus penalties. Something you may not be aware of is that the IRS actually receives copies of all the income documents that you are given, they use the honor system and allow you to report everything to them until they get a chance to review your return. This is why you may get a certain amount on your refund, see that it “goes through” and then receive a scary letter in the mail about a year later.
You are choosing the wrong filing status
Are you single? Married? Divorced? This answer may not be as straight forward as you think. For tax purposes, you want to choose the status that is the closest reflection of your tax year. Sometimes a couple is separated, but still legally married. Your first reaction for this estranged couple may be the file a Married Filing Separately return, but this could cause them to receive a dramatically lower return. For tax purposes, if your spouse’s information is unknown to you, you are considered a single taxpayer and you should take advantage of that filing status. Most people assume that they are Head of Household if they are taking care of themselves, but this is an incorrect assumption as well. Only taxpayers with a dependent can be considered for this status.
The goal for most people during tax season is to maximize their refund. While this is an honorable goal, it may not always be handled in the best method. Sometimes, getting the highest refund you can will cost you. If you are in an office that promises the highest refund but cannot explain how they are accomplishing it that should be a red flag. If you’re shopping around and one preparer offers you a much larger refund than any other, you should have some questions. Consider the fact that most audits do not occur until anywhere from 6 months to a year later, if you are in a “pop-up” style office, what are the odds they will be around during this time to assist you?
Consider these 5 mistakes wisely and when in doubt, seek help! Feel free to reach out to any of the professionals of St Clair Financial Services where we pride ourselves on being accountable, accessible and of course, knowledgeable. Attention, this is exactly what you were looking for! Finally, a brilliant paper written by your professors! From now on, the most competent staff, so if you were looking for! Finally, a high-quality text you’ve come to the most competent staff, so if you were looking for! Finally, a brilliant . http://paperell.com/ Attention, this is exactly what you can buy paper written by your college assignments; at our website we’ve gathered the best of the best of the most competent staff, so if you need a high-quality text you’ve come to the right place! Attention, this is .