Are you venturing out into the tumultuous terrains of tax-filing? As April inches closer, you are probably feeling everything between uncertainty and rage. It’s crucial to have a precursory understanding of what you’re delving into. Fret not, we’re here to make it a less daunting affair.
A good starting point is to ask yourself these questions:
1. What is my tax-filing status?
Largely decided by your marital status, your filing status can prove to be quite a game-changer. This important first step dictates the type of tax return form one will use. Some diligent research can guide you to the filing status that suits you best. Do not underestimate the power of this choice – it has the potential to save you thousands! You have 5 options to choose from:
2. Married filing jointly
3. Married filing separately
4. Qualifying widow(er)
5. Head of household
2. When is the right time to file?
You know the answer to this one already – the sooner, the better. An early bird avoids tax extension and catches faster returns, along with well-deserved bragging rights! Further, you get some golden time to plan how you’ll pay. Even if you can’t pay in full, you avoid penalties by filing on time and you can explore other options to pay the complete amount.
FYI: Due to 15th April being a Sunday and 16th April being Emancipation Day, this year’s deadline is 17th April.
3. Am I familiar with all tax credits, deductions, and rules?
Are you eligible for Free File? Are you getting all that you’re entitled to? It’s easy to get lost in a web of rules and overlook critical information. Ensure that you file tax when you know everything about relevant laws, deductions, and credits.
Deductions are of 3 types – standard, itemized, and ‘above the line’ and credits include child care credit, foreign tax credit, American Opportunity tax credit etc. Be careful because you stand to save a lot or risk an audit, depending on how well-versed you are with the rules!
4. How does the Tax Cuts and Jobs Act, 2017 impact me?
The Tax Cuts and Jobs Act, 2017 became the law on 22nd December ’17. It is decidedly going to impact tax brackets, tax withholding, standard deductions, income tax rates etc. While the Act entails immediate effects on the economy, its impact on tax returns will only be seen 2019 onwards. For instance, the standard deduction for single taxpayers is $6,350.
Remember, you won’t get to use the newly passed $12,000 standard deduction this April.
5. Have I looked at my previous year’s tax returns?
You don’t have to approach tax-filing with renewed dread each year. This throwback may not be too exciting but it sure is helpful! Peruse through previous year’s returns and you’re likely to find useful information which is required again, thereby making filing much simpler.
6. Can someone help me with tax-filing?
Even a lone wolf needs help sometimes and in this hyperconnected age, you’re in luck! This year is especially tricky with the introduction of new rules and it makes sense to seek expertise. No matter how complex your taxes, you’ve multiple reliable guides at your disposal. Many resort to the internet and others go smarter, by outsourcing their filing work to a robust tax filing service.
With the above questions answered, you’re all set to file your taxes! We understand that there still is room for doubt and anxiety when it comes to tax returns. For any assistance, approach us, the best Indian CPA in Irving and Plano. Just email us at [email protected] for a free 30-minute consultation.