Tax Prep Tips
According to J. Paul Getty, “If you get up early, work late, and pay your taxes, you will get ahead — if you strike oil.”
Few of us will strike oil, but most of us will file tax returns. To make it less painful and more productive, I’ve gathered some tips for you. First, be honest. Never give false information or numbers you can’t support with documentation. Second, organize your paperwork in one place. Include W-2s,1099s, property tax, vehicle registration, charitable contributions, medical expenses, and more if you itemize. Third, know the law. Unemployment income is taxable and must be reported. If you worked remotely, you may have to file multiple state income tax returns. Typically, one’s filed in your state of residence and another where you work. Stimulus checks don’t count as taxable income for 2020. However, money taken out of retirement accounts to help with pandemic costs must be paid back in 3 years to avoid penalties.
Don’t rush! A big mistake is recording incorrect Social Security numbers. Slow down, review your work and consider having someone else double-check your entries. For the fastest refunds, file electronically and use direct deposit. Beware of tax scams through phone calls, text messages, or emails. Irs.gov has a page devoted to the problem. Romans 13 tells us to submit to the governing authorities. If you owe taxes, then pay them. Just limit yours with careful planning.
And if you’re overloaded with credit card debt and have taxes to pay, I highly recommend Christian Credit Counselors. They can create a debt management plan that works for you. For more information, visit online at crown.org/ccc.