Tax Tips After January 1st

Tax Brackets 2020

Are you someone looking to understand how the IRS tax structure can work to your advantage after January 1st?

Do you know how early planning can help you seek better deductions in your retirement savings and other investments?

Have you looked at some of the best tax tips after January 1st to ensure you are able to get the best deal on your taxes?

If you are someone who is confused and finds tax calculations complicated, welcome to the club. I have hardly found anyone in the world who likes to go through the IRS paperwork, the innumerable forms and enjoys parting with their money.

However, there are rules and regulations and authorities, which we need to adhere to. Failure of compliance can result in hefty fines and penalties. In this article, we speak to leading taxation experts and ask them about credible tax tips after January 1st that can be followed.

List of 5 Best Tax Tips to Follow After January 1st

1. Plan for your Retirement Account to seek Deductions-

While most people tend to ignore this aspect, it is critical that you look into it for deduction purposes. In other words, the IRS allows you to submit funds into your retirement account up until April 15, 2021. If you are able to make a contribution to your retirement fund, you will be able to significantly decrease your tax bill for the year.

However, you need to be sure of Tax Brackets 2020 before you proceed with this. Professionals who work in a company have a different bracket as compared to self-employed professionals. There is also a difference in terms of federal brackets and state taxation brackets.

2. Estimated Taxes are great and should be undertaken at the Last-Minute-

As most of you know, there are two ways the IRS calculates taxes. One is from the income you have accrued for the past year. The other one, which is for self-employed people takes into account estimated taxes, which can be predicted from your earnings last year.

If you are looking to pay estimated taxes, you will save yourself from the IRS Tax Liability Bill. Another reason why estimated taxes work great is that they help you legally evade underpayment fines in the case of your self-employed business.

3. Be Prepared and Organized with all the Paperwork well in advance-

Do not make the mistake of thinking that the IRS will miss on some paperwork. They are skilled individuals who will chase you around for any unaccounted income throughout the year. This is why prior planning and preparation can save against last-minute mistakes in taxes.

Ensure that you always follow proper documentation regarding all the stocks you have sold, their prices, the investments you have made, and gather rental income records if you have any. Forms 1099s and W2s should be ready and prepared to allow you a hassle-free experience.

4. Don’t forget to mention Dependents on your Tax Forms-

A common mistake that a lot of people do is not to mention dependents on their tax filings. This is especially true if you are filing your taxes at the last minute. However, if you are able to mention that you have three or four dependents and give in their IDs, you will be entitled to far greater dependent credits by the IRS.

Make sure you point out whether you are divorced or not and if your spouse has already filed in your children as dependents. This is because the IRS only allows for one parent to file children for dependent credits. You just need the SSN or Social Security Numbers of the dependents in your tax filings.

5. Use Online Channels to Pay your Taxes and look for Resources-

No matter what you are looking for, you will find them on the IRS website. This includes all the downloading of forms and documentation, ranging back to the 1980s. In terms of filing as well, you can do the same online.

This process is very convenient, safe, and allows you to gather all the paperwork in one place. The IRS will offer you an acknowledgment or a receipt after you have made the payment. You can use debit cards, credit cards, or net banking to pay your taxes electronically.

The Final Word

We hope that using the above tax tips after January 1st will make your tax filing process a whole lot easier. If you wish to know more about different processes, please feel free to write to us in the comments section below. 

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