Posted by The TaxAdvocate Group, LLC

Filing Taxation & Precaution

Filing Taxation & Precaution

Tax returns can be overwhelming, so if you're wondering how to file your taxes online or on paper for 2021, here's a tip sheet on how to file taxes and how to make it easier.

While it is general practice to report our returns through a financial advisor; electronic filing of financial statements made the whole process fully integrated. Below is a list of 6 things to consider before filing taxes this season;

1. Collect and keep adequate records of all supporting documents, such as,

  • Passbook/ bank statement

  • Certificate of interest

  • Investment test for which deductions will be requested (sec. 80 C et seq)

  • Accounting and balance sheet and income statement A/c (if applicable)

  • Leases and rent, among others

Although no document should be attached to the income return, it is instrumental in the event of an audit.

2. Before completing the return, please download form 26AS and confirm the TDS/TCS/Tax paid. If discrepancies are found, take the necessary measures to reconcile them.

3. If a tax is paid according to the tax return, it must be paid before filing it; otherwise, the refund will be treated as a defective tax return.

4. When submitting your data schedule, make sure the details like PAN, address, email address, bank details are correctly correlated with the details mentioned in the PAN database.

5. Many taxpayers who choose to file the return online feel that after submitting the return online without a digital signature, completing the ITR-V form is a simple formality that can be completed at any time. It's a wrong notion. A duly verified ITR-V form must be signed and sent if the declaration is submitted online without a digital signature.

6. An essential thing is to avoid the practice of filing a late return. Delays in filing your tax return can often hamper overall tax planning. Some of the consequences are listed below:

  • Loss (except for the loss of ownership of the dwelling) is not transferable.

  • Interest tax, according to article 234A

  • A penalty may be charged under Section 271F.

  • There are no exemptions/deductions in sections 10A, 10B, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, and 80-IE.


Do You Have To File Taxes? 

If there is a need to file a tax return this year depends on your income, the status of your claim, your age, and other factors. Another determinant is if someone else claims you as a tax team member.

Even if there is no need to file taxes, you might want to do so anyway - you might be eligible for a tax exemption that could result in a refund. Therefore, seriously consider filing your taxes if:

  • Income tax has been deducted from wages.

  • You have made estimates regarding the payment of taxes or applied for the refund from the previous year to the tax estimate for this year.

  • Eligible for certain tax credits.


When Can You Start Filing Taxes For 2020?

The IRS has set the start of the tax season for February 12, 2021. This is the date that returns processing for the 2020 tax year begins.


Are You Presenting Taxes In 2020 In 2021?

Yes. The objective for the fiscal year 2021 is to declare taxes for the fiscal year 2020.


Choose How To Send Your Taxes

There are three basic ways to file taxes: complete IRS Form 1040 or Form 1040-SR by hand and mail it, use tax software, record taxes online, or hire a human tax preparer to make the tax work ready for you.

A. File your taxes online with the tax software

If you've used tax software before, you already know how to prepare and file your taxes online. Many of the major tax software vendors also offer access to human trainers.

For example, Turbotax, H&R Block, TaxAct, and TaxSlayer provide on-demand, on-screen, or online support packages or options for tax professionals who can answer questions, view tax returns, and even file taxes online for you.

The IRS Free File program may provide free tax preparation software.

B. Employ and work with a tax preparer

While it has never been easier to do your taxes using software, as your financial life becomes more complex, you might be wondering if something is missing, and you should hire someone to prepare and help you file your taxes. If you have a healthy business or job or want help figuring out all the forms, you can seek professional advice.

If you don't want to meet with a tax preparer in person, there is a way to file your income tax returns without leaving home. A secure portal allows you to share documents electronically with a tax preparer. Usually, the preparer will email you a link to the portal, set a password, and then upload images or PDFs of your tax documents.


Understand How Your Taxes Are Determined.

The government decides how much tax is owed by dividing taxable income into parts, also called tax brackets, and each interest is taxed at the appropriate tax rate. The beauty is that no matter what category you find yourself in, you won't be paying that tax rate on all of your income.

The progressive tax system means that taxpayers with higher taxable income are subject to higher federal tax rates, and taxpayers with lower taxable income are subject to lower federal tax rates.


Collect Information For Your Tax Filing.

You will need to do this whether you are hiring a tax preparer or doing it yourself. The goal is to obtain proof of income, tax-deductible expenses, or tax credits, as well as proof of taxes that you have already paid during the year. Our tax preparation checklist has several guidelines, but here's a short version of what it should sum up:

  • Social security number (SSN)for you and your spouse and dependents, if applicable.

  • Form W-2 shows how much you earned last year and how much you have already paid in taxes. (If you possessed more than one job, you could have more than one W-2.)

  • Forms 1099 is a record that an entity or person other than your employer gave or paid to you.

  • Contributions to the pension account.

  • Property taxes and mortgage interest.

  • Charitable donations.

  • State and local taxes you paid.

  • Study cost.

  • Medical expenses not reimbursed.

  • State and federal income tax returns for previous years.


Make A Deal With The IRS

If you default

  • There are many ways to send money to the IRS. Electronic payments, bank transfers, credit and debit cards, checks, and even cash are some of your options.

  • If you can't settle all of the taxes simultaneously, one option could be an IRS payment plan, an agreement you make directly with the agency to pay federal taxes over a while. There are generally two kinds of IRS payment plans: short-term and long-term plans. Either way, you usually make monthly payments to pay off what you owe.


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