Your Income Taxes: What to Know
Although tax season rolls around only once a year, you should be preparing for your income taxes all year long. By staying financially organized every month, you’ll reduce the time and headache of paying your taxes or receiving your tax refund. In order to make tax filing as stress free and seamless as possible, consider these four steps:
Know Your Filing Status: If you are an employee, your state and federal taxes are generally automatically withdrawn from each paycheck. Make sure that your taxes are being withheld appropriately by referring to your last paystub and checking the IRS’ withholding calculator. If you are an independent contractor, you will need to keep track of and pay your own taxes, which should be done quarterly.
Know What Documents You’ll Need: You will need to collect documents detailing your income during the year. Typical forms for income include W-2 or 1099 forms. Keep in mind, taxable income may also include unemployment income, royalty payments, and gains from the sale of stock or property.
Anticipate and Save: If you are an independent contractor who will be responsible for paying your own taxes on a quarterly basis, you will need to set aside a portion of your income to cover your anticipated taxes. Push yourself to save as much as possible in order to prepare for your quarterly tax payment. That way, you reduce the chance that you will get behind and need to pay penalties or interest.
Use Your Refund Wisely: In the event you qualify for a tax refund, when you receive it, consider applying the funds toward your greater financial goals. For example, add your refund to your emergency fund or pay down debt high interest debt instead of making a new purchase.
Have more questions about how to make wise financial decisions? Visit the Syncis blog at www.syncis.com/blog to learn more.
Syncis, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.