With April 15th just a month away, it’s time that you started getting your finances in order for tax day. The earlier you start organizing your books and collecting all the relevant documentation into one place, the smoother the tax filing process will be. With unorganized financial records, you’re 80% more likely to get fewer refunds and rebates on your payments—that is if you’re not penalized for misrepresenting your financial information.
The IRS is intense about any mistakes made in the tax filing process. They charge 0.5% of the money owed every month—this can go up to 25% of the entire amount owed depending on how long you delay correcting your tax returns. Some ways that you can side-step these penalties include:
1. Get in Touch With an Accountant
Never take it for granted that you can manage all tax filing requirements by yourself—there’s no telling how the IRS will come after you. Don’t risk making mistakes during the filing process, and speak to an accountant who can tell you exactly what documents you need, what your taxable income is and what is the amount of taxes owed. With their experience and expertise, they’re the best people to guide you.
2. Get your Documents Organized
One of the biggest problems people face during tax season is tracking down all of their receipts and keeping track of all their payments. You should look over your accounts to see if you have any payments due, whether someone owes you money and close your records to make the whole process simpler. Once you know what exactly your financial flows look like, it’s a lot easier to complete the rest of the tax filing process.
3. Finalize your Budget
Once you get your documents organized, you should use it to create a budget for the coming year and ways to assess your financial performance. With this information, you can streamline your financial flows, predict what expenses you’ll incur, what your future revenues are and how you should document your finances such that you minimize your tax liabilities.
4. Pay-Off Your Debt
The difference between the amount of money you borrowed and how much you paid off counts as income and will be taxed. So even though you have interest and principle payments left from your loans—the IRS will ask you to file returns on the left over debt, reducing the repayments you’d otherwise be owed. So wipe your debts clean before filing, it’s one of the first steps to reducing your tax burden.
5. Finalize Your Financial Goals for Financial Stability
Steady financial streams are easier to manage because your can predict what your tax liabilities will be. The only way to attain financial stability is to organize your financial activities such that you make steady income is by setting goals that you consistently strive to meet. The better you plan out your goals and setting accurate timelines, the easier it will be to plan out your taxes.
3Alpha Data Entry are leading BPO and FPO services providers for business owners throughout the United States. We work with expert tax advisors and financial consultants to help organizations with timely tax preparations. Get in touch with us today for more information on our services.