Tax season is here and there are some big changes to digest. This past year was unusual for millions of tax filers due to the Covid-19 pandemic.
The IRS pushed back the tax filing deadline to May 17th because of all the changes. New wrinkles to the tax season included stimulus checks, expanded unemployment, and many other changes to help the American people. Many of these changes are expected to roll over into 2021.
With so much uncertainty and changes, it is wise to rely on the help of a tax expert. Read on to learn about tax preparation in Sarasota, FL. Explore 5 key steps in the tax preparation process that will help you navigate a challenging time.
The most important step to a successful tax season is calculating the correct withholdings. Failure to withhold an adequate amount of federal and state taxes each paycheck is going to lead to a huge tax bill.
In 2020, the IRS released a new W-4 form. The biggest change is that the new form no longer uses allowances to calculate withholdings.
To its credit, the new W-4 form is simple. It asks you to claim dependents and supplemental income.
You can also withhold additional taxes on each paycheck. Tax preparation services can help you withhold the correct amount to avoid a big bill from Uncle Sam.
2. Collect Receipts
Many tax filers make the mistake of waiting until January to start collecting documents. Instead, the best advice is to keep your receipts over the course of the tax year.
This way, an experienced tax preparer can maximize your refund. For example, you may have medical expenses to deduct from federal or state tax returns. If you operate a small business, certain home office and transportation expenses may be deductible.
3. Collect Tax Documents
Once the year ends, you will start receiving tax documentation in the mail or online. Tax preparation services require these documents to complete your filing.
This includes 1098 forms for expenses incurred over the course of the year. For instance, student loan and mortgage interest are reported on 1098 forms. Make sure to save any forms that are official IRS documentation.
4. Value Your Donations
Millions of Americans make charitable donations throughout the year. Many do not realize that the clothes or furniture they donate serve as a tax benefit.
These donations fall under itemized deductions and may reduce your taxable income. Tax preparation involves assessing the value of your donations.
Also, the CARES Act allows tax filers to take a $300 deduction for cash donations. You do not need to itemize to claim this deduction under the CARES Act.
5. Determine the Filing Method
Now that you have all the documentation, it is time to file. What filing method are you using?
Online tax preparation requires software to help you file. There are many different programs out there to file taxes electronically. You will have to download and install a software program.
Tax Preparation in Sarasota, FL, Can Increase Your Refund
After a rough year, many Americans are looking for a nice tax refund. The best way to maximize your refund is by thorough tax preparation.
Services for tax preparation in Sarasota, FL, are available to help. If you are looking for tax preparation assistance, contact us today to schedule an appointment.
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