Don’t File Your Taxes Until You Have These 7 Things
Before you file your taxes this year, make sure you grab these documents.
Before you file your taxes this year, make sure you grab these documents.
When you have mortgage debt forgiven due to a short sale or foreclosure, will you be liable to pay for the forgiven amount when it comes to tax time?
The post Will You Have To Pay Taxes On Forgiven Mortgage Debt Or Principal Reduction After A Foreclosure Or Short Sale? appeared first on Bible Money Matters and was written by Peter Anderson. Copyright © Bible Money Matters – please visit biblemoneymatters.com for more great content.
Time is running out if you haven’t already filed your 2021 federal tax return. For most people, the tax return filing deadline is April 18 this year (residents of Maine and Massachusetts get one extra day). So, for all you tax procrastinators out there, it’s time to get moving. One of the first things you should do is collect and organize your tax records. If you’re going to file your own 1040, you should also check out tax software options. If you need more time to file your return, request a tax filing extension (although you’ll still have to pay any tax you expect to owe). And, no matter when you fill out your 2021 tax return, you first want to familiarize yourself with the tax law changes that may impact it.
Many (but not all) of the new items on the 2021 1040 form come from the American Rescue Plan Act, which was enacted last March. This Covid-relief bill made changes to the child tax credit, child and dependent care credit, earned income tax credit, and more. Other changes stem from the expiration of earlier Covid-related provisions that expired at the end of 2020. There are a few modifications to some of the main 1040 schedules, too. And, of course, there are the normal inflation-based adjustments that occur every year.
There are many reasons why you should know and understanding these changes up front. First and foremost, it very well may result in a larger tax refund or a smaller tax bill. You’re also likely to get through your return faster if you’re already aware of any new twists and turns. If someone else prepares your 1040, it will be easier to catch any errors when you review the return. But since “Tax Day” is right around the corner, you don’t have much time left to get up-to-speed on what’s new and changed for your 2021 tax return. So take a look at our list below and study up now so you know what to look for before tackling your 1040.
Itâs the most wonderful time of the year: tax season! All jokes aside, a 2020 study found that the majority of taxpayers dread doing their taxes. Taxes take time, can cost money, and many people find them confusing. Theyâre basically like homework for adults.
But taxes donât need to be so terrible. Through years of experience and repetition, I have gained efficiencies to speed up the process. While you may not be at that level, here are seven ways to be more organized for tax season â so you can stop dreading the paperwork and get back to your life. Â
Collect all tax-related information in one place as it arrives. When you receive an envelope in the mail with a tax document enclosed, add it to that spot immediately. Youâll be able to easily find it later on, which will help make your tax filing a smoother process.Â
Keep previous yearsâ tax information in a central location. In most circumstances, your tax filing this year will be largely similar to the previous year. For this reason you may want to reference previous tax documents to confirm specific numbers or even to see which documents were relevant. You can store your tax information in a folder on a bookshelf, a file in your safe, or even a âBox of Knowledgeâ in the closet. Pick one and stick with it.Â
If you are technically inclined, get your tax statements electronically. Itâll be faster, better for document retention, and help you streamline your taxes in future years.Â
Think about where your money is stored and any companies that may have a long-term relationship with your money. Check each of these places for tax-related information. For reference, if you have any of the following, you may need a related tax statement for each:Â
The sooner your taxes are filed, the surer you can be that they were submitted properly ahead of the deadline and that you wonât get any surprises from the IRS later on. Filing earlier may also lead to a quicker turn-around time on your refund.Â
If youâre dying to know the status of your refund, the IRS has an online tool for that: the âWhereâs My Refundâ portal. Otherwise, if you have a tax question, it can be difficult to get a hold of the IRS. They are understaffed, catching up with many rule changes, and processing a lot of tax documents â including from the 2020 tax season. For this reason, you may receive a letter from the IRS that doesnât make sense. Donât panic. Thereâs probably a good explanation for it.
If you need to call them with a question, be patient and expect a long wait time. You can also check the IRS website to access tax records, see whether you owe the IRS any payments and whether they have processed your payments or tax returns.Â
The IRS doesnât want to see mistakes on tax forms. If they catch a mistake on your form, it could cost you time, money and stress to get it resolved. Many tax-filing software programs are good for straightforward circumstances, but you may not receive the full refund you deserve. Being a business owner, having a higher income, and investing are among the factors that could complicate your tax-filing status.
The more complicated your taxes are, the more it makes sense to find a tax preparer (the IRS also has a preparer directory). A tax preparer or tax adviser can ensure your taxes are filed properly, that you take advantage of tax breaks when available, and can also correct mistakes with the IRS on your behalf. Itâs a win-win!
Taxes donât have to be scary ⦠they only come once a year. They are not meant for you to panic or have anxiety. Being organized and a little professional help can take that stress away. Find a strategy that works for you.Â
If you picked up any of the income or property on our list, make sure you declare it on your next tax return.
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In most parts of the country, having a car isn’t optional. Without your own vehicle, it can be extremely difficult to get to work or provide for your family, but at the same time, car ownership can be a challenge. If you find yourself having trouble making your car payments, you could end up losing your… Read More
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NOTE: Due to the COVID-19 coronavirus pandemic, the IRS has extended the federal tax filing and payment deadline to July 15, 2020. The recent relief package passed by Congress may have additional tax implications. Please contact a tax adviser for information you may need to complete your taxes this year. Learn More. Note: This article is… Read More
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