It doesn’t matter how hard you try, there some things in your life which you just can’t avoid and tax is one of them. Every year, the tax season gives an alarming sign for people so that they can file their taxes before the deadline. Nowadays, the whole process of tax filing has changed and technology has played a major role in it. Just like technological solutions like managed IT solutions, there are now technological advancements in tax filing as well.
Whether you are running a business or not, filing taxes successfully is very important for everyone and if you miss to file taxes before the deadline, then you will have to pay penalties and fill a form through which you can file taxes before the next deadline. But it is always a good idea to file taxes before the major deadline as it will help you in avoiding any type of penalty. Just like this, there are many points which you need to keep in mind while filing taxes and that’s what we are going to discuss in this blog post.
Deductions and Credits
Most of the people blame IRS for making the tax system very complicated but only a few people give credit to IRS for its credits. After all, IRS doesn’t give you only two or three options to give a fair break come tax time, but they offer you tons of ways of save money.
Before filing taxes, it is very important for you to understand the difference between credit, deduction, refundable and non refundable. All these ways will help you in saving money but it is very much necessary to understand the difference between all these methods in order to use them wisely.
Deductions help you in lowering your tax income while credits decrease your total tax liability. A nonrefundable credit means you can minimize your tax income as low as it can go. This means you will not have to pay any taxes if you have enough nonrefundable credit. The refundable credit either lowers down your overall tax liability or increases your refund amount if it goes below.
E-filing is necessary
In this modern world of digitization, everything has shifted on the digital platform and your taxes are no exception to this. Every year, a lot of people fall prey to the scams and frauds just because they file taxes on pen and paper. This traditional method of tax filing is outdated and it is vulnerable to frauds and identity theft. But you can save yourself from such types of frauds and scams through e-filing which means filing your taxes in digital format rather than submitting papers.
You can use a cloud hosted software solution like Sage 50 hosting and then file your taxes safely. You should know that filing taxes by using the traditional method of pen and paper is very complicated and difficult to manage. In addition to this, traditional tax filing method is prone to errors as well since most of the task involved in it is done manually. So, always choose e-filing above traditional tax filing system.
Checking dirt dozen every year
You should never miss to check the dirty dozen list issued by IRS every year as it will help you to stay away from each and every type of scam and fraud. The dirty dozen list is issued by IRS every year before the tax season and it contains latest frauds and scams which are placed in the list according to their popularity and use. The scams and frauds used by criminals keeps changing every year and checking the dirty dozen list will help you in knowing what’s trending in the scammers market and what are the latest techniques being used by criminals in order to steal your data and money.
So, these are the three important things that you should know before filing taxes. If you want to file your taxes seamlessly then you should properly maintain your account throughout the year. If you will not do so then filing taxes will become a hassle for you and you may even miss the deadline. Be informed and make tax filing a pie.