Tax time is something that we know is coming each and every year, yet many of us end up totally unprepared for the big day. A big part of the stress that people feel around tax time has more to do with their preparedness level than the actual result of the filing. In order to be better prepared this time around, think about what you are going to do. Are you planning on doing your taxes yourself using software, or do you plan on paying a little extra to visit a pro? The complexity of your return should be a factor in answering that question.
The benefits of using tax software for your federal income tax return is that it’s relatively inexpensive and you can do it on your own time. That said, if you are unsure of the tax laws and what can or cannot be claimed, you could run into some problems. Yes, you will pay more to have a professional take care of your taxes for you, but if all of your paperwork and documents for the year are handed over, you can be sure that they will deliver an accurate return.
It is considered standard knowledge, but it still bears repeating that the deadline for filing your federal income tax return is on April 15th. If that date happens to fall on a weekend, the date is pushed back to the next business day. The vast majority of people either get a small return or are required to pay a small amount to the government.
One of the biggest issues tends to fall on those people who are self-employed, as they may not properly tax themselves, if at all, throughout the year. What can then happen is all of the taxable earnings they made during the years ends up needing to be paid when they do their tax return. This can be a sizeable amount if the individual has had a particularly successful year, so it really does pay to set money aside as you earn it throughout the calendar year.
If there is a positive to be taken from the fact that you might get hit with a large sum to pay back, it’s that the IRS will work with you to set up a payment schedule that is suitable to you both. You have probably heard IRS horror stories, but they really aren’t that common. While they do want to get the money that they are owed, they are happy to try and negotiate a decent repayment schedule. Keep in mind, though, that if you fail to follow the agreed payment plan, the government does have the right to garnish your wages.
While it is natural to have a little trepidation heading into the tax season, there really isn’t that much to worry about if you have taken steps to pay the appropriate federal income taxes throughout the year.