With tax season, there comes much fear and embarrassment. Mostly because 50% of the American population feels overwhelmed by the whole process of filing taxes. It is true, taxes are confusing but that is because the federal tax code is more than 74,600 pages. That’s a lot of information that the average American has never read.
Hire a Professional
We don’t expect you to read the federal tax code yourself. There are professionals out there who have already read the code, know the current laws and changes, and who can advise you in finances. It is perfectly reasonable to ask these people for help, especially if you are easily overwhelmed. These professionals will take the burden off of you and can help you to make sense of what you may find senseless.
Ask questions when needed, whether that is confusion about where certain information goes on the form or what information goes on the form. Learn about where the withdrawals are going. Learn what data the forms hold and what they mean to you. Learn about the tax forms themselves.
Store all important document into an easy access location. We suggest an expandable binder with partitions for each years tax documents. If you are not sure what documents are considered important her is a checklist to consider using.
Here is our condensed checklist for starters.
- Any W-2’s or 1099’s
- Any forms with information about health insurance (form 1095)
- Any tuition statements (form 1098) or collected receipts for textbooks and school expenses.
- Any investment information
Contract workers should be setting aside at least 30% of their yearly income. If you are self-employed, a contract worker, or a free-lancer, you are subject to different tax codes from those who are official employees. Set aside some money when possible to account for any major life events that may happen to you. You could owe money to the government, but having some money in savings will reduce some of your burden.
The worst thing that you could do in regards to your taxes is to delay. Procrastination leads to outright not filing. And can result in harsh penalties. Keep life simple, file early and beat the deadline of April 15. Because with those deadlines payments also become due, so give yourself time to set aside money to handle those possible payments.
When in doubt, turn to another human for understanding. At Private Tax Solutions we will help you to understand all the forms and rules, enabling you to have peace of mind that your taxes are being handled by the best.