Last Updated on May 20, 2021 by MoneyVisual
Tax is a terrifying word for most people. When is the due date to file tax? How much tax do I need to pay this year? What if I may not be able to pay? How many penalties will be imposed? And if I couldn’t pay penalty, would I be going to jail? So many questions spring to mind and people envision all kinds of frightening possibilities when they think about tax.
It is said that death and taxes are inevitable, however, you can cheat death, but taxes, no, not a single chance. It may be a little scary, but it doesn’t have to be. With the right guidance, planning, and knowledge of the amount you owe by using the tax calculator, tax can be made more bearable.
Besides the professional advice, here are some quick tips which can save you from your tax fears and help you escape the psychological tax abyss.
Knowledge is Power
It is human nature to fear and worry about things that they are not familiar with. Knowing your taxes can help you have a better understanding of them. Whether you are eligible to pay tax on your income is the primary concern of most people. Taxable income includes salaries, wages, income from self-employment, investments, rental property, and many other sources.
Preparing for Your Tax Return
You should have information regarding your income. You can find your income amounts in your pay slips.You should also consider interest income, return from investments and any tips received.
Online Filing of Taxes
This is excellent as you can file your taxes on your schedule as juggling between home and work takes the majority of your time and scribbling bit by bit into tax forms is a tedious task. Online tax return software uses the latest technology which is user-friendly and requires less data entry, is also far easier to make corrections to your tax return using tax software than it is completing individual tax forms.
Take Benefit of Tax Credits
You should take full advantage of the available tax credits. Tax credits reduce your income tax dollar by dollar based on specific eligibility criteria. You should concentrate less on what you owe and more on what credits you qualify.
The more the number of deductions, the smaller tax bill. Deductions help reduce the payment of taxes you owe. It is a well-known way to reduce your taxes. You can either claim the standard deduction or the itemized deduction which includes home mortgage interests, charitable contributions, and property tax.
Filing Status Advantage
Not many people know but choosing the right filing status can have a big effect on taxes. The filing status of tax returns is Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Widow/er. Your filing status can you help attain certain exemptions, deductions, and credits.
Keep Track Record of Your Money
In this era of technology, tax software applications are invented every other day and you can always make use of tax apps available to record your earnings and expenditures. Keeping a database will be of great help while filing taxes.
Use Tax Tools
A vast number of tax tools such as the Tax Calculator, the Daily Expense Savings Calculator, the Retirement Comparison Calculator and many more are available on websites for free to help you with your taxes and making them less intimidating for you.
These are easy use and do not require a large number of statistical details. Millennials take a smarter approach towards their taxes by usingtax applications. With the above-mentioned aid, you can breathe a sigh of relief and deduce that taxes are not as scary as you think.
Knowledge, preparation, good recording and awareness of smart tools can help you handle your taxes effectively without getting spine chills, its time for you to get tax savvy, why be tax terrified when the right tax tools can make your life simple.