Tax season is here and most of us are busy in collecting relevant information and preparing for filing our tax returns on time. Most of the times we are kept haunted by our sub-conscious on not to missing out of something crucial. But more often than not we do miss out on petty things in the rush and build up to the end of tax season. The best way to avoid missing these small things is getting organized. Further here I have listed few things which you must check before filing your IRS tax return each year.
What exactly do you need? Let us start by finding answer to the question what exactly we require to complete our tax preparations. Income tax return primarily is a statement of your income generated during a tax year. Based on the provisions of IRS the income is further classified are taxable, partially taxable and non taxable. There is a list provided on the website of IRS that describes each of these income types which will help you accurately assess and prepare your income statement for the year. This statement should also comprise of qualified expenses, deductions and tax credit benefits which you can utilize. If in any doubt take professional advice or help. Do not hurry in coming to a conclusion and submit your tax return.
Why do you need supporting documents? Each and every item (be it income or any expense) would have supporting documents to substantiate your claims. Without proper records you are bound to make errors. If you have all your back up papers in order there are high chances that you would make fewer mistakes. For individual things are still simple and can be managed in lesser time. For corporate it is essential that they must follow a good accounting methodology throughout the year to generate credible supporting documents. Any mistake on your part could mean hefty fines and penalties being imposed on you.
What is the right source of getting information? For individuals form W-2 and form 1099 would constitute the basis of their income tax return. These supporting documents almost have it all that you would require for filing year end tax return. You should be able to receive these two documents by end of January each year.IN case you have not received these documents on time you must ask your employer to provide them as early as possible. For Business houses their financial reports in form of Profit & Loss accounts, balance sheets, payroll reports etc. form basis of getting right information.
So above are few things that one must check each and every year before submitting their tax returns.