If you are yet to calculate your taxes and pay them, don’t panic. Worrying about how you’re going to finish your tax calculations or stressing about it will only lead to mistakes and errors while preparing and filing your tax returns. Here are a few tips to help you file your taxes correctly at the last minute.
Get your facts right
It is very important to know all the right facts and information while preparing to file your taxes and returns. In the past two years, 2020 and 2021, the IRS had extended the tax return filing deadlines due to the COVID-19 pandemic. For 2022, tax returns was filed on or before 18 April 2022. This deadline was not be extended, so make sure all your forms are ready well before this date.
Also, it is important to keep these tips in mind when you get your tax refunds.
What to keep in mind when you file taxes
That said, there are a few factors to be kept in mind related to the pandemic. If you have received any Advance Child Tax credits or stimulus check payments earlier during the year, consult with your tax advisor and make sure that you got the actual amounts you were supposed to get.
If you got a Paycheck Protection Program (PPP) loan, any expenses that you have paid with the proceeds from this can be deducted while calculating your taxes even if your loan was wiped off. A tax expert will be able to help ensure that you follow all the IRS requirements regarding this.
If you own a business, you can get a refundable tax credit on your share of Social Security tax. This is one of the benefits of the Employee Retention Credit program formulated as a result of the pandemic. Under this program, if you are eligible, you can get a tax credit of up to $21,000 for each employee in your company.
Make sure your deductions are maximized
Don’t miss out on the deductions that are legally available to you. There are many people who don’t make use of these provisions and end up paying more tax than they should. Tax deductions are not loopholes, but rather, they are provided by the government to encourage people to spend money on things that benefit society in general and then give the taxpayers the benefit of claiming such expenses as tax deductions.
If you have not tracked your expenses to see which of them are eligible for deductions, do so right away. Some of the eligible deductions include:
- Contributions made to charities
- Child care expenses
- Home office expenses
- Business travel expenses
- Costs incurred for training and education
- Student loan interest costs
- Automobile expenses
Get your tax advisor to guide you on your tax-deductible expenditure so that you make the most of them.
See if you have a pass-through entity (PTE)
A pass-through entity is a business in which the profits of the organization flow through to the income tax of the members and owners individually. Many companies in the United States are PTEs. Check if your state has an incentive for a PTE business (elective pass-through entity tax). The rules may be different in every state, so it is important that you know them well. Again, your tax advisor should be able to help you make the most of this.
Get a professional tax advisor
The importance of getting a good tax advisor should not be undermined. It may be difficult to find one so close to the tax filing due date, but still try and get a really good advisor. An expert tax advisor will come with all the knowledge and experience required to help you prepare your tax returns in the most optimal manner so that you maximize the deductions available to you and pay as less tax as is legally allowed. This is important for your wealth-building goals both personally and if you operate a business.
Request an extension if needed
If you think you will not be able to make a proper return by 18 April, ask for an extension. However, if you owe additional tax, make sure you pay it. If you cannot pay the full amount, discuss with your tax advisor on the best course of action and if you are eligible for waivers if any.