Essential Tips For Smooth Income Tax Preparation
Tax planning is the legal and efficient examination and arrangement of a person’s financial condition to maximize tax advantages and reduce liabilities. Tax regulations might be confusing, but learning and applying them to your advantage can influence how much you wind up paying (or receiving) when you file. For the most efficient tax planning, get the help of CFO services in Atlanta, GA.
Here are some crucial tax planning and strategy fundamentals to grasp before making your next financial move.
- Start early
Like most people, you probably put things off, but procrastinating is never a good thing, and it may be harmful when it comes to doing your taxes. Over 20% of taxpayers are estimated to fail to file their taxes on time and incur IRS penalties. Do not wait until the last week before the deadline to gather the necessary tax filing paperwork. Under pressure, inaccuracies and errors occur, which might lead to more trouble with the authorities.
When completing your taxes, you may be required to furnish information and papers you would not normally have. Collecting them may take some time, so the best advice is to get started early and not put it off. When all tax documents are complete, everything will operate more smoothly, and you can focus more on growth.
- Stay organised
Keeping organized throughout the year will help tax season go more smoothly. Keep your paperwork and tax records together to know where to look when your tax preparer asks for anything. And if you are ever audited, you would not have to wonder whether or not an item was filed.
- Know the deadlines
The structure of your company determines your timeline. The deadline to submit a Form 1040 with a Schedule C for a sole proprietorship is April 15. The deadline for an S corporation is a little early. You must file Form 1120S and pay your income taxes by March 15. You must distribute a Schedule K-1 (Form 1120S) to stockholders so that they can compute their shares, deductions, and credits.
If you miss a deadline, the IRS will charge you a penalty fee of 5% every month, up to a maximum of 25%. The penalty is calculated from your deadline to the tax return filing date. Therefore, it is advisable to file as soon as possible. Your tax accountant can request an extension if you cannot obtain all the essential documentation. An extension extends your filing deadline by six months.
If you want to request an extension, consult with your tax expert as soon as possible; if you wait too long, they may be in the thick of tax season and unable to obtain the extension.