Tax season can be a daunting time for most taxpayers. Filing taxes can be confusing, and many dread the intricacies of the process. However, this need not be the case. By equipping themselves with the right information, taxpayers can breeze through the tax season with ease. In this article, we highlight the top 5 important tax information that every taxpayer should know before filing their taxes.
1) Know Your Filing Deadline
The first and most crucial piece of information that taxpayers should know is their filing deadline. The Internal Revenue Service (IRS) requires all taxpayers to file their taxes by the 15th of April each tax year. However, in certain situations such as natural disasters, the deadline may be extended. Taxpayers should check with the IRS to know their filing deadline.
2) Familiarize Yourself with the Tax Forms
Before filing taxes, taxpayers need to have the necessary forms to do so. The most common forms are 1040, 1040A, and 1040EZ. Taxpayers should choose the appropriate form depending on their filing status, income level, and deductions. It’s imperative to note that the choice of form can have an impact on the refund amount.
3) Understand the Available Deductions
Taxpayers should take some time to become familiar with the available deductions. These deductions can help lower the amount of taxes owed, thereby reducing the financial burden of tax season. Common deductions include charitable donations, medical expenses, and student loan interest. Taxpayers should keep track of these expenses throughout the year and ensure that they have proper documentation when filing taxes.
4) Don’t Miss Out on Credits
Tax credits can be a significant help during tax season. Unlike deductions, credits reduce the tax liability amount directly. Some common tax credits include the Child Tax Credit, Earned Income Tax Credit, and Retirement Savings Contribution Credit. Taxpayers should ensure they qualify for any credits before filing their taxes.
5) Keep Records of Your Taxes
After filing taxes, taxpayers should keep copies of all tax documents, including the tax returns. The records need to be kept for several years in case of an audit or if a taxpayer needs to amend their returns. Some of the essential documents to keep include copies of W-2s, 1099s, and other deductions.
In conclusion, understanding these top 5 important tax information can make tax season less daunting for taxpayers. By keeping records, taking advantage of tax deductions and credits, familiarizing themselves with tax forms, and knowing their filing deadlines, taxpayers can stay on the right side of the law and avoid financial penalties.
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