Tax Season Guide: What You Need to Know

tax season guide

Are you dreading tax season? The end of the year is always a stressful time for people who have to deal with taxes. Thankfully, there are plenty of tools and resources available to help make your tax preparation easier and more enjoyable. This article will go over some tips that will help make your next trip less painful.

What is Tax Season, and When Does It Begin and End?

Tax season begins on January 31 and ends on April 17. This is the deadline for all Americans to file their federal taxes due by April 15th. Taxpayers may have state or local taxes that they owe, but these deadlines vary depending on location.

The IRS provides several tools online to help taxpayers prepare themselves for filing tax returns with ease. The site offers free fillable forms (FAFSA), e-file options, calculators, and tips to make sure you get every deduction you deserve. Hiring an accountant can also be a good idea, as they will have the technical knowledge of tax law to help you maximize your deductions.

For startups, hiring an accounting firm may still be off the budget. However, most entrepreneurs may think: “is hiring a cpa near me, or an accounting firm, worth the expense?” The answer is yes. A professional accountant can ensure that you’re maximizing your tax deductions and not forgetting any opportunities to save money on taxes.

List of Tax Terms and Definitions:

Tax terms are often confusing for many people who don’t work in this field. The following is an alphabetical list of some common words that may come up during discussions about taxes so you can understand them better.

Books: If someone mentions books when discussing their finances or business income, they could mean record-keeping journals that document financial transactions like checks written or deposits made into different accounts on a bank statement. 

They might also mean balance sheets where companies keep track of assets, liabilities, and equity within the company at any given time (like cash, inventory, and property).

Cash Flow: Cash flow is the movement of money in and out of your business. It can be an essential indicator for how well a company or entrepreneur is doing financially because it measures their ability to pay off debts, loans, salaries, bills, etc., which are all expenses that require cash. 

A high-quality financial statement will show where the net income came from (all sources) and what happened with any retained earnings (profits not distributed to shareholders). The bottom line is also called “net profits.”

Income Tax: Income tax refers to taxes imposed on both individuals and corporations by governmental agencies who collect revenue so they may provide public services such as police protection, firefighting, education, health care, and transportation. It is typically a progressive tax where the wealthy pay higher percentage rates than those with less income or wealth through various methods like brackets or percentages.

Income Tax Brackets: Income tax brackets are the levels at which taxes can reduce your itemized deductions. For example, if you make $151,000 in a year (2016), then you will fall into one of these four different categories depending on how much money you earn annually before any adjustments to that figure:

  • $37,650 up to $90,150 – 15%
  • $90,150 up to $189,300 – 25%
  • Above $189,300-$413k – 28%
  • Above $413k-$415k – 33%

How to File Your Taxes

There are several methods you can use to file your taxes. One is by mail, where the taxpayer sends in their information with all relevant forms and checks or money orders for payment using IRS Form 83 postmarked on April 17th (or earlier).

This option may be more time-consuming as it requires waiting for the return envelope from the U.S. Post Office containing an acknowledgment that they received your filing before you will receive credit for having filed timely and correctly. 

The other options include e-filing, which allows taxpayers to send their tax returns electronically through various websites or prepare them themselves online at no cost (aside from paying for any applicable third-party software).

How Can You Simplify Your Tasks For Tax Season?

It’s essential to be aware of all the tasks that you need to complete for your taxes. Here are a few tips about how you can simplify this year’s process:

  • Remember any necessary deadlines and timelines- once they pass, there is no turning back, so don’t wait until the last minute! The good idea is to have an ongoing calendar with deadlines in pencil where you track when things are due. This way, if something slips through the cracks, it will remind you soon enough before anything gets too late or missed.
  • Plan ahead and set up appointments for everything from making sure your records are ready and gathering documents to understanding what type of deductions might apply for this year (always remember these depend on your types of income).
  • Make sure to understand the tax bracket that you may be in and what deductions might apply. If you are not sure, it’s best to talk with someone who can help guide you.
  • Get organized! It is easy for all sorts of documentation from old bills or receipts to get misplaced over time, so make a plan now about where these will go during filing season.
  • If possible, start saving up some money for any estimated taxes that might come due at the end of the year by making adjustments as needed based on your final paychecks before anything is done with them

Final Words

Regardless of how much information there seems to be out there–it can seem daunting if we don’t have a plan in place. It’s essential to stay organized and have a general idea of what needs to get done to taxes so that the process can be as easy as possible.

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