When the time comes to pay your taxes, there are so many things to do that you may feel overwhelmed and forget about some of them. Here's a short list of what you'll have to do so you can check that you've remembered everything!
First of all, you should already know what taxes you'll have to pay for your income. This includes what you've earned throughout the year, without taking your full-time job into account. As it's such a wide category, you'll find that you'll be taxed on what you receive for freelance work, self-employment, on investments (as dividends), and more. Even gambling winnings count as taxable income!
Before Tax Day arrives you should be well aware of all these sources of income. As long as you've kept track of what you earned and how you earned it, you'll be prepared for whatever taxes you need to pay. Not only will this be harder to trace back if you forget something, but you'll get stressed for an easily avoided mistake. Learn some of the most common tax myths and avoid them!
You should also look for and keep every necessary piece of paperwork to file your taxes. If you're organized, you won't have to rush through websites and workers to get these at the last minute. Save what your bank, investment firm, and mortgage company gives you. Don't get rid of W-2 or 1990s forms! Here are other tips to survive your tax returns.
If you're planning on applying for tax reductions, you'll need documentation as well. The IRS won't believe that you've donated some of your income to charity if you don't have a receipt! Research what the most common sources of tax reductions are and follow them to save some money.
Once you’ve received a return, the work isn't done! Check the documents you got and see if there are any mistakes. While the possibility to get audited is fairly low, you should amend your return if you find an error in it. Add the correct or missing documents to your Amended Tax Return (Form 1040X) and file it! However, if the case comes, here’s what to do if you get audited.
On the other hand, if you've received a high amount of money back after, wait before you celebrate. It could be a sign that you're paying too much in taxes on your paycheck during the year. Lucky for you, making this right isn't hard: simply go to your employer, ask for a new W-4, and raise the number of your claimed exceptions. You can read this article to know what a W-4 form is and how you should complete it.