5 Ways to Stay on Top of Your Taxes
We have passed all major tax deadlines for this tax year. If you missed any of these deadlines, even after the extension, it might be time to reevaluate your strategy.
While getting more organized is good advice – there is not a lot of substance to this statement. What exactly do you need to do to stay on top of your taxes?
Here are five things you can do to stay on top of your taxes and successfully meet deadlines.
#1: Document Your Income as Soon as You Receive It
After you deposit a paycheck, it’s tempting to continue paying off necessary expenses without stopping to take notes. Nevertheless, one of the best (and simplest) ways to stay on top of your taxes is by immediately documenting your income as soon as you receive it.
When the tax filing deadline comes, you won’t need to dig through unorganized filing cabinets or scratch your memory searching for necessary data.
#2: Keep All Paystubs
Keep a record that archives every piece of your income; take note of the date of payment, amount, client details, and type of completed work.
Paystubs are especially important for freelancers, as they don’t have a paycheck but multiple forms of income.
Additionally, whenever you need to negotiate with the IRS, one of the primary items they will ask for is your three most recent paystubs – so have them handy.
#3: Keep All Receipts
Misfiling your taxes is enough cause for the IRS to hit you with penalties. A great way to prevent yourself from making a mistake on your taxes is by keeping all of your receipts.
Keeping your receipts will also help you accurately deduct expenses from your income.
#4: Keep Previous Tax Returns
Keeping copies of your filed tax returns will help you when preparing future tax returns. Copies also help with amending filed returns.
Generally, you want to keep all your tax-related documentation for at least three years and at most seven if you claim worthless securities or bad debt deduction.
The IRS states that the length of time you should keep a document depends on the action, expense, or event which the document records.
#5: Become Complaint With the IRS
IRS compliance is based on your current tax filing status. If you have unfiled tax returns, then you are not compliant with the IRS and will not be able to qualify for any type of IRS Fresh Start Initiative relief programs.
If you need assistance with filing your taxes, you can contact a TaxRise specialist at 833-419-RISE (7473)
Any new or systemic Liens and/or Levies will also be suspended for the time being.
For taxpayers who are considered “seriously delinquent”, the IRS will suspend any new certifications for the remaining period. Any taxpayer who falls into this category in reminded and encouraged to enter into an Installment Agreement or apply for an Offer In Compromise.
The IRS will not forward any new delinquent accounts to private collection agencies at this time.
Taxpayers have until July 15, 2020 to verify to the IRS they are qualify for the Earned Income Tax Credit or to confirm their income. If the taxpayer is unable to verify their credentials or provide appropriate documents for this credit, they are encouraged to notify the IRS before the deadline. No cases will be denied this credit for failure to provide requested information until July 15.
Case workers will continue business as usual. However, most case work will be conducted remotely (video/over the phone conferences). Any requests for documentation sent by the Office of Appeals should be responded to in a timely manner to ensure a smooth process.
The IRS will continue to take the appropriate measures to stay compliant and protect the applicable statutes of limitations. In situations where certain statutes may be compromised, taxpayers are encouraged to extend such statutes. Otherwise, Notices of Deficiency will be issued by the IRS and similar actions will be pursued to protect the interests of the government in preserving such statutes. Where a statutory period is not set to expire during 2020, the IRS is unlikely to pursue the foregoing actions until at least July 15, 2020.
Practitioners are reminded that PPS wait times may be significantly longer, depending on staffing levels and allocations going forward. The IRS will continue to monitor this as situations develop.
“The IRS will continue to review and, where appropriate, modify or expand the People First Initiative as we continue reviewing our programs and receive feedback from others,” Rettig said. “We are committed to helping people get through this period, and our employees will remain focused on these and other helpful efforts in the days and weeks ahead. I ask for your personal support, your understanding – and your patience – as we navigate our way forward together. Stay safe and take care of your families, friends and others.”
Learn how easy it is to qualify for tax savings.