Know what form to get; know what status to file
One of the easiest mistakes to make is filing the wrong form or electing the wrong filing status. All filing statuses have different tax rates and can mean the difference between paying $500 and $5000.
We have officially entered the 21st century with e-file. E-file is an efficient way to file your return. The IRS and most states notify the tax preparer within 24 hours that the return has been accepted or rejected. Any rejected returns can be corrected quickly and resubmitted. However a word to the wise make sure you do not wait till the last minute to do this option (especially if this is your first time).
If you are a contractor or you buy your own work supplies this can be a life saver. Having your receipts gathered and sorted into months can save you a lot of late sleepless nights.
Make a list of income sources
Before you file make a list of all the forms you are expecting to get at the end of the year. The last thing you want is to forget about a late arriving 1099 when you’ve already filed.
If you qualify for exemptions make sure you take them! Being married having children and several other things can save you big bucks when it comes to taxes. However make sure your exemptions match your filing status.
Itemized deductions can save you thousands when paying taxes. A simple rule: if your expenses equal more than the standard deduction for the year then you want to itemize your deductions.
Adjusted Gross Income
Your AGI means everything when it comes to filing taxes because it doesn’t equal the overall amount of taxes we pay it equals the taxable income after all the deductions/credits/etc. are taken out.
Rapid Refunds can be the kiss of death for the amount you get back in your return as it acts more like a loan than a refund. Be very careful when participating in these programs.
Credits should be looked at as discounts or savings in taxes. You are paying $1500 less in taxes if you get a $1500 credit.
Accountants are Best
If you have complicated taxes are paranoid about getting audited or you want to maximize the amount you get back on your refund nothing beats an accountant. They understand the tax code and can work magic on even the most disorganized taxpayer’s files.
Looking for a new Louisville CPA firm? Schedule a consultation today.