The beginning of a new calendar year has now also initiated the process of getting ready for the new tax season. The enactment of the different bills such as the CARES ACT in 2020 has made significant alterations to many elements involved in tax calculation and filing requirements. The series of measures that were brought-forth last year with the pandemic outbreak will also have some impact on the tax planning and compliance aspects of the new year. Initor Global brings for you some significant pointers to comprehend as you venture into the new tax season of 2021.
Appropriate Tax Planning remains Critical
Adequate tax planning is relevant to ensure a smooth process without pressure and confusion. Bear in mind that you need to acquire tax knowledge and modifications to avoid the tax burden. It is favorable to organize a record of all previous momentous events like marriage or home property purchase to circumvent unnecessary fallouts. Complications in COVID-related legislation has already created a black eye in IRS automated services, and they are still struggling to revive from the pandemic-induced lockdown.
Important planned or unplanned events similar to this can inflict major tax implications. Thus to effectively manage these consequences, you can deploy tax preparation outsourcing services. These services will inquire questions that will help you identify major tax-deductible areas to reduce income tax weight. They will help you to uncover potentially neglected deductions or credits.
There are several tax loopholes for honest taxpayers. Calculating and figuring tax savings can be a daunting task as tax laws are constantly changing. You can utilize productive outsource tax preparation services to ease the task for you. They will monitor your current tax withholding and provide optimal results using yielding tools and calculators. There are several compensations that you can receive without being taxed. You can also enumerate your annual income using the recent pay stub. One can consider tax preparation outsourcing services to ease the tax planning process for 2021. Most tax preparation outsourcing services are designed to accommodate your entity’s evolving needs, which shall enable you to function seamlessly.
Tax Preparation and Recordkeeping Tips from Professionals offering Premier Tax Preparation Outsourcing Services
While preparing tax records, tax pros recommend that taxpayers encompass the data of at least the past three years, especially if they have audit compliance. You must have in place a proper record of all crucial information.
- Keep Forms W-2 from employers where you report your salary information and various taxes withheld from your paychecks
- Maintain Forms 1099, where you record your income from banks and supplementary payers
- Other income statements and reports of virtual currency transactions
- If you received Economic Impact Payment in 2020, then you should include Notice 1444, which gives data on the amount of payment, how it was made, and how to report any unearned payments. You might have received it after 15 days of the payment. By keeping this Notice, you can earn extra credits if your eligible for the same.
- Individual taxpayers can view important information like the amount you owe, balance details, payment histories, most recent tax return details, payment plans, online copies of IRS notices, etc.
- Remember to inform IRS if there are any address shifts and notify Social Security Administration about any legal name modification.
- Most income is taxable even if it is unemployment income, refund interest payments, sharing economy money, or virtual currency.
- Individual tax identification number(ITIN) issued by internal revenue service may have already expired on December 31, 2020, if you haven’t used it for tax returns at least once in the last three years.
- If you want to apply for a tax refund in 2020 now, then you need to submit a Form W-7, Application for IRS Individual Taxpayer Identification Number, to renew your ITIN. You can always utilize the outsource tax preparation services if you struggle to maintain such information.
- To withheld federal income tax from the paycheck, you can use the tax withholding estimator. This tool distinguishes the tax estimate from your recent tax withholding and gives suggestions if you need to alter your withholding by submitting a new Form W-4 to your employer. You can also get a tax refund as IRS data shows almost 100 million Americans benefiting from refunds, and the standard refund estimate is $2,400.
Things to avoid while doing taxes
As we know that, the tax return for the year 2020 should be file by April 15, 2021. One need not panic if he misses the deadline because if one has already filed for an extension, he will have time till October 15, 2021, to file his return digitally.
Yet, it will prove to be in your best interest not to miss the deadline. Make sure you pay even if you are struggling. This is because the late IRS filing penalty is greater than the penalties and interest for not settling with your taxes on time. If the payment for taxes outstanding is more and you paid it far after the due date, then late payment penalties can also increase.
Not paying on time and not filing are two distinct problems. Thus the amount of penalties involved for each of the two are also separate. Even if you do not own money, there are multiple ways to pay the taxes like monthly installments, offer in compromise, or temporarily delay paying. Pay whatever you can because the IRS calculates penalties and interest on the unpaid amounts. So a small amount can make a huge difference.
You can also choose to outsource tax preparation services to avoid such penalties and punishments. Companies offering pocket-friendly outsourcing tax preparation services will aid in keeping everything on track.
Another thing to remember is unwanted retributions from legal authorities. You should not add tax credits that you do not authorize to contend. Tax fraud is a crime, and it can initiate IRS to track your prior tax behaviors like claiming unqualified deductions, and you will be charged immediately. It can create a hefty tax bill, and in addition to that, you will be compelled to pay penalties and interest. It can also delay your future refunds and increase your audit risk.
All records of your charitable donations that are made this year should be maintained. IRS expects you to retain cash donations, canceled checks, bank statements, credit card statement, or written statement from the charity that exhibit the date and amount of the contribution, as well as the name of the charitable trust. Remember IRS will not allow you to claim the donation’s deduction if you do not possess the receipts. Therefore, it is ideal that you maintain all the receipts of whatever payments you make just in case of an audit.
In this new year, it is important to note that the taxpayers should have renewed or registered their Preparer Tax Identification Number (PTIN) before December 31, 2020.
- To obtain a new PTIN or renew the old one, you must pay a non-refundable fee of $35.95
- According to the Federal Trade Commission, taxpayers should make sure their written information security plan is ready.
- Once started, the process can be hectic, so ensure your digital equipment are virus-free.
- To secure susceptible filing, one can check and verify whether the PPS or Practitioner Priority Service will provide the aid.
Recovery Rebate Credit
To allege the Recovery Rebate Credit on the 2020 tax season, you must fulfill certain criteria.
- Firstly, if you should not have received an EIP payment, and
- Secondly, the Economic impact payment you received is less than $1,200 and an additional $500 for each eligible child you had in 2020.
You can begin tax return filing at the outset of January 2021 itself. The earlier you start, the more optimized your tax strategies and ultimate liability shall be. One can use the support of tax preparation outsourcing services to ease these compliance requirements.
Stay well-prepared for the tax season 2021 with the backing of reliable tax preparation outsourcing services!
Professional help can help you make the best use of deductions, credits, and exemptions on your taxes. If you wish to duly retain your hard-earned money, you should make sure that you do not delay your tax payments and return filing. You can always find the best outsource tax preparation services. It can reduce the stress and keep you updated about the constantly changing tax necessities. Tax preparation outsourcing services will ensure you will not miss any of your deserving deductions as well as they will secure your payments by all means.
Choose to outsource tax preparation outsourcing services to Initor Global and see the difference!
If you see the task of managing the tax compliance needs for 2021 as an upheaval, tax preparation outsourcing services can act fruitful. Prominently, the accounting firms and CPAs located in the US may be extra burdened to handle multiple clients’ tax planning and compliances. That’s they must consider the low-cost and quality-driven services of top outsourcing entities such as Initor Global. The availability of a virtuous tax team and intensive tax preparation outsourcing experience makes Initor a paramount choice for many. Consult our tax specialists to know more about our tax expertise.