If you live in the US and are unsure of how to go about preparing your taxes, Barry Bulakites has great ideas to discover a few handy tips on how to prepare your taxes on an annual basis. As if you fail to properly calculate the amount which you may owe the US government, you may end up having to pay extremely high penalty rates and may even be criminally prosecuted for tax evasion.
4 Tips on preparing your taxes in the US:
1. Make sure to keep track of how much money you earn in a single year
If you earn a salary or a wage, it’s highly likely that your employer will automatically send your tax contribution from your primary source of income to the government. However, this doesn’t guarantee that you won’t owe the government further income tax, as you’ll also need to pay tax on any funds which you earn outside of your job, each year.
As an example, if you bring in additional income as a result of working online or completing odd jobs around the neighborhood, you’ll also be required to declare any additional income which you’ve earned. Which you will then be liable for paying income tax on. These additional funds may also cause you to be classified under a higher tax bracket, than if you were to just work one job.
Remember that to be able to pay the US government, the right amount of tax at the end of the fiscal year, it’s critical to keep track of all of the money which you bring in over a single year.
2. Figure out which tax bracket you currently fall under
Once you’ve successfully figured out which tax bracket you fall under, you’ll be able to accurately figure out which percentage rate, you’ll need to use to figure out your tax contribution for the past year! Unfortunately, the higher your income is the higher percentage of your income which you can expect to pay in tax contributions.
3. Consider handling your tax obligations yourself
While many individuals may choose to hire the services of a local professional accountant, you can also choose to download an inexpensive DIY tax program, which will help you work out your tax obligations, with just a few clicks of your mouse. So if you like the idea of being able to handle your tax obligations yourself, it’s definitely well worth teaching yourself how to use a popular DIY tax program!
4. If you’re an investor it’s highly likely that you’ll have to pay taxes on any profits which you make
Some individuals forget that if you make money on any investments which you may own, you’ll also be required to pay tax on any profits which you may make as returns on your investments.
Hopefully, after reading through the four handy tax tips listed above, you’ll have a far better understanding of how to go about managing your tax obligations in the US. As it’s well worth considering downloading a DIY tax program and handling your taxes on your own. Instead of hiring an accountant.