Make this year the year that you avoid the income tax rush. Tax season is here and although it may be a bit early, NOW is the time to complete your return and submit it. There are many benefits of completing your tax return on time and way in advance of the deadline.
I’ll tell you how filing early can help you to spot errors, avoid last minute filing stress, enable you create a plan if you owe the government money, help you to receive your refund a bit earlier and avoid unforseen penalties. Keep reading to see how I avoid the income tax rush every year!
Reduce or Eliminate Errors
The last thing that you need is an error on your tax return. Errors can delay your refund and in some cases may be costly. By avoiding the last minute income tax rush, you can reduce or eliminate errors with your tax return. Some of the errors that you can avoid by filing early include:
As a person whose name is often misspelled, I am always on the look out for these types of errors. The spelling of your name should match the name on your birth certificate and social security identification. Misspelled names can result in a host of other errors that can delay your refund.
It happens. You mistakenly transposed two numbers or you forgot to include an important figure in your calculation. These errors are minimal now with the use of electronic filing, however if manual calculations are to be made, you can end up with the wrong figure. Always reconcile your figures with the supporting documents in front of you.
Social Security Numbers
Mistakes are inevitable when it comes to numbers and a mixed up social security number is not far fetched. Check the social security number on your tax form against your social security card and as well those of your dependents. Finding mistakes like these before the income tax rush can save you time and frustration.
I can admit that I’ve made errors on my tax return when I was not sure about the which deductions and allowances I qualified for. People have also been known to make errors with respect to tax such as withholding tax, taxable income and estimated tax payments. If you’re not sure, the best thing to do is to contact your local tax department.
Stating an incorrect bank account number on your tax form may not end well. If you are getting a refund and you opt for a direct deposit (bank transfer), ensure that you check that your account number, wire routing information and the name on the account are correct.
Avoid Tax Deadline Stress
Ideally, if everyone files their tax return early, then the timing of the income tax rush may change. However, because the chances of this happening are not that favourable, you are in a unique position to file early and avoid the tax deadline stress.
Keep Your Financial Records in Order
In most jurisdictions, tax season comes the same time each year. If you keep your financial records in order throughout the year, you will not have to be scrambling when it is time to file. Invoicing software like Freshbooks can help you to keep your finances organised. Remember that even after you’ve filed your taxes, you must retain the documentation.
File Your Tax Return Early
This is the best piece of advice that I will give you today because it can change your outlook on the dreaded tax season. Do not wait until the last minute to file your tax return. I’ve been a victim of this in the past and I’ve learnt my lesson. I’ve encountered system errors which reject the return because of an overactive system.
Ask For Help in a Timely Manner
If you know that you will need help with your tax return, do not procrastinate. Contact your local tax department or tax preparer well ahead of the deadline or as soon as possible.
Plan for Your Income Tax Payment
Many tax professionals will tell you that advanced planning is critical to how you deal with your tax bill. In the event that you owe money, you should have enough time to create a plan on how you will pay off what you owe.
If you find that your tax payment is too much a of a burden, there are a few things you can do to reduce the next year’s tax bill.
Give to Charity
Charitable contributions can reduce your tax bill, but the details of how you should list it on your tax form, should come from your local tax agency. These contributions include donations to charitable organisations, churches, shelters and other organisations that support the needy.
Use Green Energy
It is not surprising that with so much focus on green living and renewable energy, allowances are given for alternative energy systems. Solar electricity generation, solar water heaters and wind turbines are some of the systems that qualify for tax credits.
Contribute to a Retirement Plan
Depending on where you live, contributions to a retirement savings plan are not taxed and can reduce your taxable income. These funds are usually deducted from your gross salary or wages before government taxes are applied.
Benefits of Avoiding the Income Tax Rush
In addition to avoiding the tax deadline stress, there are other benefits which you can enjoy by avoiding the last minute income tax rush.
Get an Early Refund
Getting back an early tax refund is like a surprise birthday gift that you did not expect. When you file early, you many be able to get your tax refund a lot earlier than expected. Tax staff can start processing the forms and payments in a timely manner.
Avoid Late Filing Penalties
Tax filing penalties can be steep. When you avoid the income tax rush and file early, you do not have to worry about paying penalties because your return was submitted after the deadline.
International Income Tax Deadlines
Here is a list of websites where you can find information on income tax deadlines in various countries around the world.
How are you shaping up this year? Will you be able to beat the last minute income tax rush? Let me know below in the comments.
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