There is one day every year that more Americans stress in the planning of than the entire Holiday Season: Tax Day. It may seem as though you dedicate the whole year to keeping on top of your taxes so that you aren’t overwhelmed with paperwork in the weeks running up to the dreaded date in April but knowing your obligations and responsibilities when it comes to paying your taxes can make the whole process a lot less stressful.
Here are three things you should know that can significantly affect your bottom line when it comes to submitting your tax returns.
Not everyone receiving an income during the calendar year has a duty to file a federal income tax return at all. In fact there are a number of factors at play including how much you earned, where you earned it from, your tax status and of course your age.
That said, even if you don’t have to file your federal tax return, it still may work out to your advantage to do just that in terms of tax breaks and credits. Your tax credits are calculated reductions in your tax obligation based on your level of income. Say for example you’re still in school; you may still be able to offset your tuition fees and expenses against your tax obligation and receive a credit that saves you money.
More and more people are self-employed these days than ever before and usually, when it comes to tax they make estimated payments. The IRS operates on a ‘pay as you go’ basis so that if you are employed, you’ll get taxed at source before you receive salary payments whereas, if you work for yourself you can only estimate how much you will earn and pay the relevant amount. That means you could be eligible for a rebate or on the other hand another bill, should you earn an income that exceeds your estimates.
Possibly one of the most important things to know about your tax responsibilities is that you should always file a return on the due date, even if you haven’t got the funds to meet your tax bill. Filing late will only incur more penalties and when they start ramping up, it’s easy to get yourself into a mess. By coming clean with your tax obligation and then making an arrangement to pay that you can afford, you can afford all manner of financial problems. The main thing to remember is that it is more of an offence to make a late submission than it is to not be able to afford your tax bill.
Don’t Lose your Head over Tax Day and Keep your Finances in Check
For many Americans, the prospect of managing their own finances is a little overwhelming, particularly if they are holding down jobs and managing families at the same time. Hiring someone to take care of it for you gives you enormous peace of mind and ensures that your filing is always made on the due date and any financial difficulties dealt with before they arise. Knowing what your tax position is throughout the year is important and hiring a good tax attorney is the best way of keeping on top of your taxes.