October 10, 2024
Doing your taxes isn't fun, but if you start early, you can make tax season less stressful. The IRS has provided some tips to help reduce the dread that surrounds April 15.
Create a system that keeps all important information together. Use a software program or store paper documents in clearly labeled folders. Add tax records to your files as you receive them. Organized records will make tax return preparation easier and help you discuss your situation with your tax prepare.
Your filing status determines your filing requirements, standard deduction, eligibility for certain credits and the correct amount of tax you should pay. If more than one filing status applies, you can get help choosing the best one for your tax situation with the IRS's Interactive Tax Assistant, What is my filing status? Changes in family life — marriage, divorce, birth and death — may affect a person's tax situation, including their filing status and eligibility for certain tax credits and deductions. Again, the IRS's Interactive Tax Assistant will provide you with information that will help you work more effectively with your tax preparer.
Your AGI and tax rate are important factors in figuring your taxes. AGI is your income from all sources, minus any adjustments. Generally, the higher your AGI, the higher your tax rate and the more tax you'll pay. Tax planning can include making changes during the year that lower your AGI.
Since federal taxes operate on a pay-as-you-go basis, you will generally need to pay most of your taxes as you earn income. You should check that your employer is withholding enough from your pay to cover your taxes owed, especially if your personal or financial situation changes during the year. To check withholding, you can use the IRS's Tax Withholding Estimator. If you want to change your tax withholding, provide your employer with an updated Form W-4.
You should notify the United States Postal Service, your employer and the IRS of any address change. To officially change your mailing address with the IRS, complete Form 8822, Change of Address, and mail it to the correct address for your area. For detailed instructions, see page 2 of the form. Report any name change to the Social Security Administration. Making these changes as soon as possible will help make filing your tax return easier.
Maybe your employer has a 401(k) plan or you regularly contribute to an individual retirement account. Certain contributions to a retirement plan at work and to a traditional IRA may reduce taxable income. Save your retirement plan statements so you can discuss them with your tax preparer.
If you keep all these points in mind, you'll likely have a better experience come next tax season. Contact your tax advisor today for additional guidance. Larson and Company has developed a suite of services specifically to serve the needs of companies of all sizes in a wide range of industries.
Source: Industry Newsletters ©2024