Steps to Prepare for Taxes | Tax Preparation Checklist is essential to be known. Every individual has to know it for not only paying tax, also it help for the prepare tax refund for free or else.
The United States of America has separate federal, state, and local governments with taxes imposed at each of these levels. Taxes are imposed on the net income of individuals and corporations by these same governments.
Tax returns are reports of liabilities and payments, often including financial information used to compute the tax. These also allow tax-payers to request a refund for the overpayment of the taxes.
One can file for the return on their own or can seek paid professional help. According to the Internal Revenue Service (IRS), there are over 80 million taxpayers that go out and hire professionals to do their taxes.
Though one can hire a professional to file taxes, there are few points which one has to do by themself. This is a pre-tax filing checklist done by individuals to smoothen their tax filing process.
From hiring a professional to filing for a tax return, there is a series of steps that one must follow to have hustle free filing. Below are a few points which one must consider before their tax returns are filed out which can be for tax preparation checklist 2019 . They can also prepare tax return for free.
Tax preparation checklist
These are the tax preparation checklist to Prepare for Taxes which are defined step by step .
1. Looking for a Professional
Choosing a preparer is the first and foremost step in Prepare for Taxes. There are hundreds of individuals and firms available to help you at work. The website of Internal Revenue Services has a directory of preparer which one can refer to while choosing.
You can also seek help from your friends, colleagues, or acquaintances to get referrals for the preparers and find tax preparation near me. This may help as reviews tell you a lot about the work of a professional. You can hire an individual or firm . You can compare them based on the amount they charge.
We suggest that you learn about the payments beforehand and do not go for the forms that ask for the percentage on the returns as their fee. Make sure you check for their credentials and location while looking for the preparer.
To prepare federal tax returns, one must have a Preparer Tax Identification Number or PTIN. Before you choose a preparer, make sure you have seen the PTIN of the appointed professional.
2. Scheduling an Appointment
The IRS has dates and deadlines for everything, from filing tax returns to getting one. It is advised to set an appointment and meet with your preparer as soon as you select them. This will help you save a lot of time and money. The soon you meet them, the sooner will you get your tax refund.
It will help you get your work done if you are looking for an extension. If you get very late in making an appointment with the preparer, you may miss deadlines on reducing your tax bill like deductible contributions to IRA or a health savings account.
Check for all the important deadlines and then schedule an appointment with the preparer ASAP and complete your return file.
3. Gathering Documents for tax preparation service
Preparer has the work of filing your returns as one of the steps to Prepare for Taxes.But you must gather the documents beforehand to avoid hustling at the eleventh hour. You can receive all the necessary documents by the end of January.
These documents include information from banks, mortgages, brokerage, etc. You must file these important documents as your preparer will need these to lower your taxes.
Below are a few forms that you will require while filing taxes. You are advised to check information in these forms with your records to maintain transparency and avoid any mishappening.
Tax Preparation Documents and Tax Preparation Forms for Prepare for Taxes
For the prepare tax return for free or other purposes following tax preparation forms are to be known and filled accordingly and submitted to concerned ones.
- Â Form W-2, if you have a job
- 1099 forms. There are many 1099 forms available. You can take the one that applies to you.
- Form 1099-DIV for dividends received.
- Form 1099-INT for interests received.
- Form 1099-MISC for non-employee compensation paid to contract workers.
- Form 1099-B to report gains and losses on security transactions (Brokers are not required to fill this form).
- Form W-2G, to account for certain gambling winnings.
4. Rounding up the Receipts
Organizing your receipts saves a lot of time while doing the taxes. This substantially reduces the time spent on filing taxes both for you as well as the professional you have hired. This reduction in time in return reduces the cost of the professional and saves you money. Hence round up all the receipts that you think may help in saving money while doing taxes.
In the year 2019, when we see the tax preparation checklist 2019, the standard deduction for a single taxpayer was $12,200 while for married couples filing tax jointly, it was $24,400. For the year, the amount had risen to $12,400 for single taxpayers and $24,800 for married couples filing tax jointly.
You will need the receipts of the payments that will give a great write-off. To know which payments may give you a greater write-off, you will need to compare the itemized deductions with the standard deductions.
Thus you need to maintain a record of all the receipts and handle whether they will give you itemized deductions or standard deductions.
You should look for receipts such as medical bills that are not covered by any insurance, property taxes, or investment-related expenses.
They may give you great returns if they are substantial enough and hence will prove out to be worth your time. You can also itemize any deductions made for charitable contributions. Contact the trust for giving you the acknowledgment receipts for such charities.
You might also need to share your accounting books and records for itemizing the deductions. In such cases, it is always a good option to keep your receipts handy. It is always easy when the time comes for filing the tax returns.
5. List your Personal Information
You may believe that you know everything about yourself. But during the filing of taxes, you need to dig a bit deeper. You may know your social security number. But you also need to know the social security number of dependents that you are going to claim for.
You may know the properties you own or you have sold, but you also need to know the dates of buying or selling a property and the amount received or spent during the transactions. These are the details that will help you while you claim your return.
You may not remember all this information; hence it is advised that you note all this information somewhere safe.
6. Decision for Extension
The government is there to help you with your taxes too. Sometimes all the work can be overwhelming and might be stuck somewhere at the same time. Thus to help yourself, you can file for an extension. This will give you time to collect all the required documents for the filing of the taxes. However, you have to pay the amount that you owe by calculating the taxes before the deadline. This is required to avoid penalties.
7. Plan for Tax Refund
If you are expecting a refund on your taxes, you need to plan how to get that with tax preparation services and calculate tax refund for yourslef. There are several ways to receive that refund as estimate tax refund. Below are a few of the methods you can look for.
Methods of estimate tax refund
- You can receive a refund from the government in the form of a cheque in your name.
- You can contribute a part or whole of the refund to a health savings account, education account, or US Savings bonds through the treasury.
-  You can also apply a part or whole of the refund to next year’s taxes.
- Â You can also split your refund among various direct deposit choices by filling out form 8888.
8. Copy of Last Year’s Return
If you have the same preparer for taxes, you may not have to look for a copy of last year’s return as they may have it already. But if it’s a new preparer, you should provide them your last year’s return’s copy.
This will help them to include the itemized deductions that you may not remember at the time. They may be interests and dividends or charitable deductions.
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Summary
Taxation is an important job. Whether you outsource the job or do it yourself, there is a lot to do before the filing of taxes. Make sure you are ready with all the documents, receipts, and personal information in standard Tax Preparation Checklist 2019 or Tax Preparation Checklist 2020
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