[vc_row][vc_column][agni_image img_url=”2444″ alignment=”center”][vc_column_text]With Christmas in full view and tax season right around the corner, Gurian CPA has complied the 12 Tax Tips of Christmas to ensure that you’re fully prepared when it comes to filing your tax return for the upcoming tax season. This is an ongoing post with a Tax Tip of Christmas posted every business day until Christmas, so make sure that you stay tuned to make sure that you receive all 12 Tax Tips of Christmas!
1st Tax Tip of Christmas
Understand the rules about deductions to avoid penalties & fines.
Tax deductions can be a great way to minimize taxes when the rules are understood and used correctly. Business deductions have been known to be frequently overused and abused by business owners. Because of this, Congress has recently changed the meal and entertainment deductibility. Click Here to read more about these deduction after the Tax Cuts and Job Act of 2017. Business owners can claim business expenses to eliminate taxes for items that have been purchased to further their business. These deductions would include items like capital expenses, client gifts and business travel. However, the deductions would not include the expenses that occurred while you were on a family vacation talking about your business. The IRS has detailed rules on how much of an expense can be deducted, the type of expense that can be deducted and under what circumstance you can use the deduction. If you try to deduct a questionable expense you will most likely be asked to justify it, and if the expense can’t be justified then you will end up paying penalties and fines on the false deduction. Consulting with a professional tax advisor is recommended when it comes to understanding the rules about business deductions to ensure that you avoid penalties and fines.
2nd Tax Tip of Christmas
Keep track of business expenses that can be deducted.
Rather than business owners deducting expenses that don’t qualify, some business owners struggle to keep track of all their business expenses and failing to deduct the expenses come tax season. Creating a separate account and using a different credit card for expenses that qualify for deductions is a great way for you and your tax advisor to be fully prepared when it comes time to file your taxes. Click Here for a list of purchases that you didn’t know were tax deductible.
3rd Tax Tip of Christmas
Choose a reputable professional tax preparer.
It’s always nice to be able to find the cheapest tax service, but sometimes not going to a reputable tax professional can end up costing you extra money in penalties and files because the job wasn’t done correctly. Make sure that you choose a reputable and trustworthy tax professional to handle your money when tax season comes around. You might pay a little more to have it done correctly, but it will end up saving you money in the long run.
4th Tax Tip of Christmas
File before the deadline to avoid fines & penalties.
You wouldn’t be the only one that chose to wait until the last minute to file your tax return, but it is advised that you file your tax return well before the deadline in April. If you choose to wait until after the filing period to file your tax return you are likely to end up paying extra money in fines and penalties for doing so. Also, the later you are in filing your taxes, the more likely you are to make mistakes that you wouldn’t have if you had ample amount of time to file your return. Making mistakes while filing your tax can lead to being audited by the IRS and could cause delays in a tax refund that you might be receiving.
5th Tax Tip of Christmas
Make sure not to neglect filing a return at all.
There are plenty of people that neglect tax laws and don’t file a tax return all together. Many of these people may not actually owe any taxes, whereas some individuals can’t afford to pay the taxes that they do owe and don’t file for this reason. The IRS understands that you may not be able to pay the amount owed in full, which is why you can file an installment agreement request that will allow you to set up a schedule of periodic payments. Choosing to set up an installment agreement to pay the money owed is a much better solution than choosing not to file your taxes at all and being charged with penalties and fees for neglecting to file. You may also choose to file an application for an automatic extension giving you more time to get all your documentation together.
6th Tax Tip of Christmas
Avoid simple mathematical errors.
Just like in grade school, double checking your math can help you avoid mistakes that you could have made. Double checking your math for errors could save you a lot of time and aggravation than submitting your tax return with multiple mathematical errors.
7th Tax Tip of Christmas
Avoid administrative errors.
Just like you need to double check your math on your tax return, you should also double check to make sure that you’ve filled out every box, that you have the appropriate forms and that you have filled in your information accurately. Making sure that all of your information is correct and legible can also save you a lot of time and aggravation.
Areas to make sure you double check:
- Correct Social Security Number
- Correct Bank Account and Routing Numbers
- Signature and Date Lines
8th Tax Tip of Christmas
Stay up to date with current tax laws.
Every year Congress updates and changes the current tax law. It is important to make sure that you are up to date with the current tax law to ensure that you are taking advantage of all of the tax benefits for the current year. If you are doing your taxes yourself, you can subscribe to our monthly newsletter to ensure that you’re up to date on all of the current tax laws and you will also receive valuable tax tips. It is also a good idea to consult with a professional tax advisor. It is their job to stay up to date on tax laws and they will ensure that you are able to take full advance of all tax benefits when it comes time to file your taxes.
9th Tax Tip of Christmas
Use the correct filing status.
There are several filing statuses to choose from and making sure that you choose the best one for your situation is vital. The different filing statuses that you must choose from are: Single, Head of Household, Married filing jointly, Married filing single. Take the time to choose the correct filing status, as choosing wisely can have great benefits, choosing the wrong filing status can make an enormous difference.
10th Tax Tip of Christmas
Hold on to your previous year’s tax returns.
Keeping track of your previous year’s tax returns is a wise idea so that you have that paperwork on you if you ever need it again. Reasons to hold to these documents would be if the IRS comes back and asks questions about a previous year’s tax return or you later realize that you’re entitled to a refund if you file an emended return. The IRS tries to audit tax returns as soon as possible after they are files. However, the IRS can include returns filed within the last three years in an audit. They are also able to go back additional years if they identify a substantial error. Having these documents on hand can also be beneficial if you need to provide them to an attorney, mortgage broker, or accountant.
11th Tax Tip of Christmas
Learn and take advantage of every available deduction.
Overpaying for taxes can be a painful mistake, which is why knowing and taking advantage of every possible deduction is highly beneficial. Going through a list of possible deductions you think you might be eligible for and consulting with your professional tax advisor will ensure that you are able to maximize your tax refund.
12th Tax Tip of Christmas
Use the correct tax form for your filing status.
Most people are familiar with the 1040 and W-2 form but might not necessarily know which form is right for them. The 1040 form works for those who itemize or own their own business. People who are W-2 employees without a lot of complicated factors may be better off using the 1040EZ form. Make sure that once you have the correct tax form for your filing status, that you again, double check your work. If there are errors on your tax forms or other financial forms, make that you have them addressed sooner rather than later before the IRS becomes involved.
These 12 Tax Tips of Christmas are here to make sure that you have a smooth tax season, however at some point you might find yourself facing one or more of the issues mentioned above or something even more troubling than we’ve mentioned. If that is the case, we encourage you to contact our expert tax advisor for professional assistance.
By Paige Knight[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][/vc_column][/vc_row]
