5 Ways to Prepare Yourself for Tax Time

When tax season is just around the corner, it pays to be organized to have everything covered. According to the Internal Revenue Service (IRS), over 80 million citizens use professional services to prepare their tax returns. Since certain documents are required in paying taxes, you have to be vigilant in keeping and organizing them. The following are steps you can follow for an organized payment of taxes:

1. Prepare Key Information

There are necessary documents that you’re required to submit when filing for income tax returns. You also have to submit personal details such as your name, Social Security number, date of birth, and bank account to deposit tax returns. Besides personal information, you’ll also need to prepare income information, adjustments, tax credits, deductions, and tax payment records. These are documentation that you must provide to your accountant or preparer.

2. Hire a Tax Preparer

If you’re a beginner, chances are, you’re looking for tax assistance. Some preparers offer a wide range of tax research, preparation, and structuring. These certified public accountants will walk you through tax planning and other financial matters.

You can ask your family or colleagues for referrals. Your accountant must be trustworthy, so it’s highly advisable to solicit feedback from their previous clients. Alternatively, you can also browse through the IRS website and check the directory of authorized preparers. Each of them has a Preparer Tax Identification Number or PTIN.

3. Prepare a List of Expenses

Save more time and avoid the hassle by listing your business expenses in detail. Categorize them so that you can properly present the list to the tax preparer. With this, you can get the maximum benefit for your business expenses. You may also research the types of expenses you can claim according to the IRS.

If you can, calculate the projected payroll taxes you’ll have to pay after the expenses and deductions. It will help you get an estimate if you qualify for an IRS installment plan. You may be eligible if you owe a combination of tax, interests, and penalties amounting to less than USD$25,000.

4. Set Up an Appointment

Another step to take for tax season is to schedule an appointment with your preferred accountant. More often than not, they come around the 15th of April. An early visit to your preparer will help you acquire tax returns earlier.

5. See If You Can Get an Extension

If there are certain complications in your business, you may want to file for an extension. This will give you six months more to prepare your income tax. There are times when your business needs to address specific issues and ensure that you comply with tax regulations. This grace period will allow you more time to pay your taxes despite contingent events.

Small businesses may find it challenging to categorize their workers and sort their documents. To avoid confusion, you may opt to take the ABC test to make tax filing easier. It involves a set of three questions that you must answer to determine the payroll taxes for each of your workers.

Conclusion

There are many ways to file taxes, but the most convenient method is to solicit assistance from certified public accountants, especially if you’re a beginner. They will help you get through the process of filing income taxes and developing strategies on how to lower your tax bills. It’s essential to document everything so that your accountant or preparer can help you get your tax returns as quickly as possible. In case problems arise in your business, it becomes even more necessary to work with a professional to avoid missing a crucial detail in filing your taxes.

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