Can you imagine life without taxes? What do you think are the implications?
The government’s total revenue relies heavily on the taxes of the citizens. Without the revenue taxes, it may run for a while but only to a certain point. All the national projects like access to roads and infrastructure will stop.
National security operations will be put to a halt and all government agencies will collapse. In short, it will be a lot of chaos. Businesses will do as they like and there will be no oversight to any operation in the country.
Taxes make it possible for the government to continue working and all its agencies functioning. Check out this site for more info and tips in filing your tax.
This is the reason why, although paying one’s taxes is a civic duty, the government has made it a point to be required by law. The consequences of failing to settle your tax bills can lead to interests and penalties, asset acquisition, or worse, jail time.
It is therefore important for you to know some basic information and facts about taxes. The Internal Revenue Service is serious in its commitment to implement the taxation policies of the nation. You don’t want your account to be under their audit because you missed some points in your tax return. Although, You can check online about equity release and inheritance tax If you will need them in the future. Inheritance Tax is a tax paid by a person who inherits money or property or a levy on the estate of a person who has died.
Watch Out for the Deadlines
The tax season may come just once a year but it takes a whole year to make sure that you have everything you need to file your taxes correctly.
Always make it a point to file your return on time. Late filing will cost you penalties and interest. One of the most common reasons why taxpayers hesitate on filing their tax returns is the realization that they won’t be able to pay their tax bills.
If this is the case with you, you should remember that this will never work in your favor. You should remember that when it comes to the filing of your tax return, earlier is always better.
Failing to file costs more than failing to pay taxes
Not filing your tax return is even worse. If you think you can’t settle your tax bill, you still need to file your return. Doing this saves you from penalties and interest.
The penalty for failure to file amounts to 5% of the unpaid tax. This can be assessed for five months. On the other hand, the failure to pay penalty is only 0.5% of the tax bill, which is assessed each month.
Time to File Extension
If you think you are not going to be able to file your tax return on or before the deadline, you can reach out to the IRS for an automatic extension. Use the federal form 4868 to file an extension for filing.
However, you need to remember that an extension to file your return is not the extension to pay the taxes you owe. If you think you will owe taxes at the time of the filing, pay it along with your application for extension.
This way, you will avoid added interest and penalties to your account. If you do not have the means to pay for the tax bill, you can immediately work with the IRS to create payment terms you can comply with.
Refunds are Lost After Three Years
Do not let procrastination cost you your refund. It is true that there is not a failure-to-file penalty imposed if your return is eligible for a refund. However, if you wait too long, like three years, to get your return, your refund will be forfeited.
Take Advantage of Tax Breaks and Tax Credits
There are avenues through which you can make reductions in your tax bill. These can be in the form of tuition and school fees, the earned income tax credit (EITC) and advanced child tax credit. You can check the IRS website for more details and updates on tax breaks and tax credits.
Not all income is taxable income
There are streams of income that the government has decided not to tax. These could be financial gifts from individuals or groups not exceeding $15,000, inherited money, life insurance proceeds, and many more. You can access the IRS data for non-taxable income.
Confirm If You Need to Itemize your Deductions
Student loan interest deduction, the IRA deduction, and the moving expenses deduction are some of the tax deductions that you do not have to itemize just so you could claim it.
You can check for more items on your form 1040.
Hire Tax Professionals
Depending on your tax situation or your work schedule, preparing your tax return can be quite, well, taxing. A tax professional strives to stay on top of tax updates like benefits you can take advantage of or tax rates you need to pay attention to. If you think that hiring professionals and experts will work best for your situation, you should definitely go with this route.
You can also use tax preparation software to help you process your returns. These usually come with added services from the brick and mortar tax preparation service companies all over the nation.
Ready for Tax Returns?
The best method for keeping your taxes under control is to prepare on the first day of the tax year. This means you have a set of rules on how to organize your tax documents. receipts, vouchers, and more.
Doing this will help you file your tax return early and face the tax season with a smile. With taxes, there will always be changes in certain policies each year. Be ready and subscribe to the IRS website and news sites dedicated to bringing tax updates.