Are you aware that failure in filing your taxes on time has a penalty of 5% unpaid tax monthly? If you file your taxes 60 days past due then you are also obligated to pay $135 minimum or how much money you owe the government in total, whichever is lower.

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IRS reports state that more than 5% of Americans have failed to file taxes in the year 2018 alone and have amassed about $130 Billion Dollars in back taxes, interests and penalties.

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Not having the proper tax checklist can make filing taxes a stressful endeavour, but with careful preparation it can be done with ease. Consider these 5 tips in making your tax checklist.

Clarify Your Personal Info

The IRS will require you to fill in the proper personal information, your social insurance, and your date of birth. It is a must that you include detailed and accurate information regarding individuals that are covered under your tax returns. Individuals such as your partner, your children, and other dependants.

Do Not Forget to Include your Income Information

You must record all of your sources of income for proper tax management. Things such as investment income, businesses, and employement. Listed below are a list of income forms needed when filing your taxes.

W-2 forms for the employment income information of you and your spouse.
Income from alimony.
Social security Benefits will require Forms SSA-1099
Pension distributions and IRA will require Forms 8606 and 1099-R.
1099 forms for any income received from investments.

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Be sure to secure the correct IRS form that corresponds to your specific sources of income. Other sources of income such as jury duty, winnings from gambling, scholarships, and medical savings account, also need to be reported. For income documentation, you can make pay stubs through the use of online pay stub generators.

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Your Tax Checklist Should Also Include Income Deductions

Your taxable income amount can easily be reduced by income deductions. This will help increase your refund and lower the amount of money you owe.
Keep an Eye for Tax Credits

Tax credits are directly deducted from your taxes unlike tax deductibles that work to reduce the amount of income that is taxable. But, you require documents in order to claim them. Here below are a list of common tax credits.

Saver’s credit
Child tax credit for when you have children under 17 years of age.
Education credits like tuition fees.

Keeping an eye on your credits can greatly help in getting you a refund of your withholding tax. Credits can either be non-refundable or refundable. If your refundable credit exceeds the amount of your taxes, you get a refund of the difference. Discover more here now.

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