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The workforce tax, cover-up tax and capital gains tax paid during the year and the tax prepayments are only payments on a person’s final tax liability. This can only be determined if the taxable income at the end of the year is fixed. This annual final statement with the IRS is called income tax assessment. The basis for the income tax assessment is the income tax return that a person submits.

The important reasons for reimbursement listed:

  1. A person has had expenses for household help or services and wants to get the tax benefits for this.
  2. A person’s income-related expenses are higher than the employee’s lump sum: In the case of income tax deduction, your employer automatically only takes into consideration the cost of employment in the amount of the employee’s lump sum.
  3. A persons salary varies: your employer’s payroll tax calculation program assumes twelve monthly salaries and takes into account one-twelfths of free allowances and lump sums. Therefore:
  • If a person only worked for a few months, then their actual annual income and your tax rate are lower than expected. In addition, for example, they are always entitled to the basic allowance and the employee lump sum in full.
  • Pupils and students with summer jobs often get the entire withholding tax. High tax refunds also occur in the year of transition from school or studies to employment and vice versa.
  • If a person’s salary varies during the year, for example, through overtime, salary increases, the 13th monthly salary or change of employer, then the tax deduction in the months with higher earnings is too high. However, if a person’s employer makes an “employer’s wage tax compensation” at the end of the year, he corrects this inaccuracy.
  1. As a double-earner couple, you both have tax code IV (no factor), even though a person did not earn exactly the same amount.
  2. A person has selected an unfavorable tax class combination from a tax perspective. This can be useful, for example, to optimize the parental allowance.
  3. If a person paid too much capital gains tax (withholding tax) or interest withholding tax (until 2008) during the year. This can happen for a variety of reasons, for example, because a person has not granted or have given too low an exemption order for an account, or
  • because the bank has deducted withholding tax from your investment income, but their individual tax rate is lower (discounted);
  • Because a person has other income in addition to income from employment, at least part of which withholding tax has been withheld (capital gains). If this additional income is less than 410 Euro or between 410 Euro and 820 Euro, you will receive all or part of the withheld withholding tax back via the Compassionate Allowances or the extended Compassionate Allowances.
  1. A person has special expenses above the lump sum: donations, church tax, expenses for persons own vocational training, etc. taken into account by their employer with income tax deduction only with the special expenditure lump sum for married people. Moreover, that is over quickly.
  2. A person’s insurance premiums are higher than the provisioning allowance: their employer will already consider certain insurance premiums for the monthly income tax deduction for allowance.
  • Civil servants and pensioners only receive a lower pension plan. Therefore, proof of the actual insurance contributions in the tax return can lead to a high tax refund.
  • In the case of employees subject to pension insurance, a higher provisioning allowance is applied. Nevertheless, it may be worthwhile in certain cases to recognize the actual pension expenses in the tax return.

If a person has completed a pension, this is not included in the monthly tax deduction. So they can expect a tax refund.

  1. They have contributed to the pension, which has a special effect (favorable test).
  2. They have high exceptional burdens, for example, due to illness, disability, divorce, need of care or support a needy relative.

 

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

When filing your tax return electronically, you can be a victim of fraud, which would make your balance in favor fall into the wrong hands. Keep reading to know how to protect yourself.

Although the Internal Revenue Service (IRS) has done everything possible to protect your information, it is possible to be a victim of fraud by filing a tax return electronically. This can happen when another person enters the IRS platform to make a tax declaration using your data, in this way you can request that the deposit of the balance in favor be made to the account of who is committing the fraud.

To avoid being a victim of such crimes, the IRS recommends:

  • Do not share your password. Never give your password or FILE electronic signature to another person as it is the easiest way they can access your profile on the SAT. Your password is private and personal, so it is not transferable.
  • If you notice strange activity or see that your password has been used by a third party, report it to the Public Prosecutor’s Office and at the SAT office closest to you.
  • Change your password periodically. A simple way to reduce the risk of your data being vulnerable.

If you physically or salaried person, remember that the deadline for filing the statement annually is April 30; If you fail to comply with this procedure, the fine could reach over $1,200.00.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Time for Taxes Planning Money Financial Accounting Taxation Businessman Tax Economy Refund Money

In A Nutshell

Preparing tax returns is no easy feat as it requires specialized expertise and skills in accounting. In the tax season, every business is supposed to file a federal income tax return under law and, those who fail to do so, face heavy penalties and fines. When specifically talking about costs, they vary according to the complexity and comprehensiveness of your tax information. Moreover, tax professionals have a different fee structure that needs to be duly tracked prior to making a contract. Costs vary widely for tax preparation, from DIY tax prep software to professional tax preparers. With so many options, you need to set your priorities based on your tax situation in order to create a clean tax filing record.

The Thought of Preparing Tax Returns can be Daunting

It can be quite an achievement when you come across and conceive an exceptional business idea, to which you are sure will work well for you. Your entrepreneurial skills and wisdom have created a business venture that is sure to yield significant gains at some point in time. Amidst all of this excitement comes a point when you have to file a federal income tax return in the tax season and you may have no idea how to deal with it. This is where the real misery starts and businesses shudder to lose their conscious and fall apart into pieces. In order to prevent this occurrence, businesses need to either hire tax professionals to prepare their tax returns or use DIY tax prep software to evaluate how much they are liable to pay to the government.

DIY Tax Prep Software vs. Tax Preparers

Depending on the complexity of your tax information, you need to decide which option is right for you and best suit your business’s tax needs. Preparing business tax returns is not as simple as it seems. It requires technical knowledge, skills, and expertise, which most of us lack. Most likely, it is ideal to spend a little portion of your hard-earned money on hiring the seasonal services of tax professionals if you expect to file a clean tax return and save yourself from the hectic process of the tax return process.

The point is, whatever you invest on, tax professionals will pay off in the long course of your business’s journey. Generally, for preparing a simple federal income tax return, tax professional may charge anywhere around $100-$150. However, they may add more fees to your final invoice or settlement if the complexity and depth of your tax refund grows. 

DIY Tax Prep Software

If you own a small-scale business, you may not be able to afford hiring a tax professional to prepare your tax returns. If not, you can use DIY tax prep software as an ideal alternative. It largely depends on the frequency of financial transactions and accuracy of taxable bookkeeping records. There is a wide variety of DIY tax prep software and online options that calculate accurate tax returns. Moreover, they are affordable, fast, and user-friendly, which means you can trust tax prep software, especially if you can’t hire a tax professional. The best thing about DIY tools and software is that they are cost-effective and anyone can afford to acquire them with very little or no subscription fee.

Conclusion

For fairly simple and straightforward tax calculations, DIY tax prep software can be used. However, for complex financial transactions, hiring tax professionals to prepare your tax returns is a smart choice. It is important to evaluate the effectiveness of your software and weigh its value of tax preparation against the cost prior to making the final decision of which option to go with—either DIY tax prep software or hiring tax professionals. Without a doubt, a well-organized yet clean tax filing can save you a lot of money and stress.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

tax form with notepad, pen, pencil and calculator
The average American taxpayer has quite a few options when it comes to preparing a tax return. Those with a modest income, employees, tenants, and low investment owners are better off filing their taxes online through tax preparation websites. The online services are quick, inexpensive, and offer a convenient solution for your basic tax needs. Certain brick and mortar tax preparing services have now launched their own websites for such clients.

However, not all tax situations are similar. If you own rental properties, run a business, or have other investments, preparing a tax return is a lot different and, in many cases, will require the services of an expert. A professional tax preparer will ensure that your deductions are maximized and you end up with a significantly lesser tax burden. However, even an expert requires tidy bookkeeping and certain items to help you file a return to the best of their ability.

Identification

You are required to have a photo identification that would appear on top of the form 1040. Any type of identification document is sufficient to go through this step. A social security card is the most important identification document when preparing a tax return. If you have a spouse or family and are planning to file jointly, everyone’s social security cards are required. Married individuals need the signature of their spouse on their tax returns before they are submitted to the IRS.

For US citizens, a social security number works just fine. However, in some cases, other nationality holders are required to file income tax returns. They need to acquire an ITIN (individual taxpayer identification number) and bring that to the tax preparer’s office so that the process can proceed.

Proof of Income

The purpose of income tax is not only to inquire about what you earn at your place of employment, but income from other sources as well such as investments, businesses, the sale of property, etc. Not all of your income is taxed at the same rate and some won’t be taxed at all. However, you have to disclose everything. Earned income will be taxed separately from unearned income.

You must have an official income statement from each of your income sources. Your employer reports your earned income as a W-2, while self-employed individuals report it as a 1099-MISC. You must bring all of these income documents to the expert’s office to prepare your tax return. Below are some types of incomes that you should report to the IRS.

  • Earned income
  • Income from business
  • Rental income
  • Social security benefits
  • Royalties
  • Gambling earnings
  • Rental income
  • Income earned as dividends on stock
  • Alimony

Once you have acquired everything that is needed, you can proceed with the deductions and exemptions.

Proof of Expenses

The most vital reason for hiring a tax expert is to increase your deductions in compliance with the rules and regulations of the IRS. All taxpayers are permitted for a standardized deduction. However, if you really want to reduce the tax burden, there is a lot that can be achieved by providing substantial documentation of your expenses when preparing your return.

This is why it is important for you to always keep receipts as they are the sole proof of your expenses. Businesses are often liable to the most amount of deductions in the form of business expenses. Though, there are deductions like medical bills, childcare expenses, mortgage interest, and charitable contributions that can be included in individual expenses.

Proof of Disaster, Theft and Other Unexpected Losses

If someone has encountered an unexpected situation and suffered heavy losses, you must not think that the IRS is going to get you. Several provisions in the tax code are designed to help such individuals and businesses who have incurred heavy damages.

To claim a loss or theft, you will have to provide a proof of ownership as well as the details of how it was taken away from you. If you have claimed part of the damages with your insurance, that must be clearly stated. In the majority of cases, victims of natural disasters are totally exempt from taxes by providing a proof of lost property and rebuilding expenses.

Conclusion

Individuals who are able to produce all of the above-mentioned items have no need to worry when it comes to preparing a tax return. You just need to find a good tax preparer and get this taken care of before the due date with solid deductions.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

 

 

 

 

 

 

tax return form income calculator irs individual
The end of the year is always marked by thinking about your taxes. However, it should be understood that the earlier you file your returns, the less worries you’ll have related to the the tax deadline.

You might be wondering about the necessary documents related to the filing process. The more information you provide to your accountant, the more streamlined the process of filing will be. There are certain documents that you need to have. Here is a list of them to make matters easier and less confusing for you.

Identification Details

Your accountant must possess the required documents that are necessary for verification of your identity. Your social security card will need to be provided and there is a requirement to know the social security numbers of your family members.

In order for you to be able to claim dependents on your tax returns, you must provide social security numbers along with the date of birth and full names of your family. There is a necessity for these details to be accurate so that the IRS doesn’t reject your application. Statistically speaking, hundreds of thousands of applications are sent back because the names and social security numbers don’t match. To make everything smoother, you can include a secondary form of identity verification such as a driver’s license or any other form of state-issued photo ID.

Most Recent Tax Return

You will need a copy of your most recent tax return. If you are working with a new accountant, this will help them better understand certain information and deductions. You can also find any discrepancies that might exist in your previous year’s tax statement.

Salary Statements

You should get a tax statement Form W-2 from your employer if you are currently working somewhere. If you don’t’ get this form before January 31, you should consult your employer to avoid any complications. Contractors and freelancers are entitled to receive Form 1099-MISC from the clients they have worked for. You should bring all such forms to your accountant so that they may include this information in the returns they file.

 Any Other Statements That Highlight Income

If you’ve accrued any other additional income during the year, you should bring this information to your accountant. Interests you get from fixed deposits, dividends from investments and welfare income are all a part of your additional income. It is recommended that you bring all of this information to your accountant for completing the details for the returns. You can also consult your tax preparer to know which information is relevant for filing.

Property Details

You can become eligible for a lot of tax deductions in regards to the real estate you own. It is recommended that you provide all information and documents to your accountant which outline the properties you own. These include the proof of paid real estate and mortgage, personal property taxes, home purchases and the interest paid on home equity loans. All of this information is relevant when it comes to filing returns.

Expenses

You may have no idea what kind of expense information will be relevant to your tax returns. It is always a good idea to save your receipts and invoices. Other proof of expenses such as charitable donations, education expenses, medical bills, IRA contributions and expenses incurred while finding a job and so much more can make a huge difference. The more expense information you provide to your accountant the better.

Come Prepared

It can get confusing when it comes to filing your returns. The process can get very frustrating. It is better to have an accountant handle your tax returns, especially if you have many avenues of revenue and expenses. Take this information to an experienced professional and you’ll be able to save yourself from the hassle and headache.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Calendar with reminder for taxes due on April 17th
Filing a tax return is a yearly activity that is undertaken as a moral and social obligation by every citizen of the country. Whether it’s a business or an individual, everyone is liable to file returns because these are the means for the government to define the amount and plan the expenditures of it’s citizens. It also offers a stage for the filer to claim refunds and other forms of relief from taxation as they become eligible for it. A specific amount or percentage of your income has to be paid as taxes and failing to do so can result in penalties and other severe repercussions.

Legal and Social Implications of Filing a Tax Return

There is generally a fixed date at the end of each financial year to file tax returns. Although, for cases that need to be audited before filing, the date may be a little later. When you file the returns, you basically define a legal sanction for your income to be used, however and wherever. Similarly, inability to pay taxes on time can result in legal action against you, depending on the amount that is due. However, generally, the repercussions of late payments are related to higher interest rates and penalties.

In addition, it is your social duty as a citizen to file a tax return. Because you use facilities provided by the government every day such as roads, public transport, parks and others, which require regular maintenance, it is in your own interest to pay tax bills on time. Complying with your social duties makes you a responsible citizen of the country and, with time, your social status improves.

Loans and Registrations

When you apply for a home, education, or any other type of loan, it is mandatory to show your returns to the lending institution, as it is their standard operating procedure. We all require loans from time to time, whether for business or individual purposes, so maintaining a good tax history can ensure that you are approved every time you are in need. Also, ensure filing a tax return before your VISA processing, as there might be certain travel restrictions imposed by the government on people who have not filed their returns.

Registration of your immovable assets, in certain states, requires you to show tax returns and, without it, the specific property or asset cannot be registered in your name. If you have filed your returns, the whole process can be a lot easier for you. Also, issuance of certain credit cards and the use of other bank facilities are banned for non-filers. Therefore, if you want to avail these benefits, file as soon as possible.

Filing a Tax Return for Government Tenders

For someone who has a business that involves dealing with government institutes and also some private corporations, tax returns must be filed. In some cases, you may have to show the receipts for the past 5 years because they like to ensure that they are dealing with an individual or business who has a good track record. However, this is not a hard and fast rule and, in some cases, you may get the tender without showing the returns. Therefore, it actually depends on the institution that you are dealing with.

Faster Refunds

Refunds in taxation work on a first come, first serve basis. The earlier you file your return, the sooner you will get your refund. When you are filing a tax return, you basically disclose everything that you have earned in that financial year. The IRS reviews your returns and, individuals who filed earlier, are eligible for the reimbursements quicker than others. Filing early also ensures that, if you had made a mistake, you have enough time to review it and correct the errors.

Therefore, there are numerous benefits of filing a tax return in time and, as a responsible citizen of your country, it is your moral obligation to ensure that you do so.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.