Ultimate Guide on How to Prepare for Tax Season

Apr 15, 2024
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Ultimate Guide on How to Prepare for Tax Season

Are you ready for tax season? If not, don't worry - we've got you covered. In this ultimate guide, we'll show you how to prepare for tax season so that you can maximize your refund (or minimize your tax bill).

The tax season usually starts on January, so you have plenty of time to get your return submitted on time. It typically lasts until the 15th or 18th of April, but in some situations like the pandemic, it can extend up to several months, depending on mandates from congress.

Before we jump off the cliff, let’s first check the issues that might keep you struggling during tax season.

Issues During Tax Season

Here are some of the known problems that you may encounter as soon as tax season begins:

1. Tax filing errors.

With tax filing season quickly approaching, it's essential to avoid common tax return errors. Though the consequences of making an unintentional mistake on your taxes may be minimal, in some cases, the Internal Revenue Service (IRS) may choose to audit you, which can lead to hefty fines and other penalties.

2. Changes in tax rules and laws.

Every year, changes are made to the US tax rules and laws. The changes are made to create a fair and just society that provides necessary services to its citizens. A good set of rules will ensure everybody is paying their required share while at the same time providing incentives for people to invest and save money responsibly.

These changes are a challenge to tax filers and might cause some level of confusion across the board. 

3. Security of taxpayer information.

The security of taxpayer information is a priority and should be taken seriously by both individuals and businesses. Every year, millions of Americans have their identities stolen and their tax records compromised by hackers looking to access confidential data.

4. Lack of documents.

Always keep accurate documentation and records regarding legal, business, and personal matters. Critical decisions can only be adequately supported with proper documentation, essential data can become lost or distorted, and processes may need to be completed.

Incomplete documents in your tax filing might cause a delay to you and, worse, your business operations.

5. Amended returns.

Amending a filed return is necessary if you have made any errors or if there are changes to your tax situation, such as credits or deductions. Filing an amended return will make sure that your tax filings are accurate and up to date.

The benefits of filing an amended return include receiving a refund from the IRS if taxes were overpaid, reducing the chance of being audited, and avoiding future issues with the IRS for noncompliance or critical mistakes.

It's important to remember that there is no penalty for filing an amended return as long as it is submitted before the applicable statute of limitations. So don't procrastinate - amend today and let the IRS put money back in your pocket!

These issues can be prevented if you are prepared for the tax season. What can you do to make sure everything will run smoothly on your end? Let’s tackle these below. 

How to Prepare for Tax Season

Tax season does not need to be a stressful time of the year. By following these steps and being aware of the potential issues that may arise, you can make sure you have a successful tax season.

1. Get organized.

The more organized you are, the easier it will be to calculate your taxes and complete all the necessary forms. Make sure that you have collected all relevant documents and have them readily available.

Your accountant or CPA can also help you organize by providing advice and guidance.

As a general list, here are the necessary documents you need:

  • Your Social Security Number
  • W-2 Forms (if you are currently employed)
  • 1099-G (if you are unemployed)
  • 1099 forms (for self-employed)
  • Investment Records
  • Savings Records
  • Documents that are eligible for a tax deduction, such as medical expenditures, charitable donations, educational fees, and much more
  • Child tax credits, etc.

2. Know your deadlines.

Getting your taxes done early can also help avoid processing delays or penalties if you file late. Mark critical dates in your calendar, such as the deadlines for submitting payment and paperwork, so you know exactly when they are due.

In 2024, the tax season started on January 23 and will end on April 18.

3. Understand the laws and regulations.

Tax regulations change yearly (depending on your locality or state), so it's important to stay updated with the latest laws. Make sure you understand any new legislation and how it will affect your filing process.

Additionally, the type of business you operate will determine what type of tax you will pay. As a general list, here are the five kinds of taxes you may be transacting to depending on the nature of your operations:

  • Income Tax
  • Estimated Taxes
  • Self-Employment Tax
  • Employment Taxes
  • Excise Tax

The IRS website is an excellent source of information, and you can also consult with a tax professional to make sure that you are well-informed on everything you need to know.

4. Consider hiring a virtual assistant.

If you don't have the time or resources to handle your taxes alone, consider hiring a virtual assistant. Virtual assistants can help file documents and correctly enter data before submitting it to your accountant.

At Virtudesk, we help businesses manage their taxes by providing virtual assistants that may be able to assist in tax preparation and other administrative tasks. When hired, they can collate all the necessary documents for the filing of tax returns.

5. Double-check everything.

Make sure that all information provided is accurate and up to date. This includes checking for typos, data entry errors, and document inconsistencies.

Double-checking everything before submitting your returns can save you a lot of trouble in the long run. It will also reduce the chances of incurring penalties if mistakes are made during the filing process.

The tax season must not result in stress and anxiety. To successfully overcome tax season challenges, many business owners hire virtual assistants to get the work done.

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