As tax season approaches, the Internal Revenue Service (IRS) has introduced a checklist designed to make the tax filing process easier for 2023 returns. The checklist includes a mix of traditional preparation tips and provides new technological aids. The IRS’s updated guidance follows the country’s tax authority’s increased scrutiny of taxpayers with more audits.
Preparation Is Key
Before you start filing, gather all necessary documents, such as Social Security numbers, banking information, and income documents for everyone listed on the return.
Ensuring all paperwork is at hand can prevent common errors that delay processing and refunds.
Comprehensive Income Reporting
Remember to report all income sources, including those from online sales, investments, and gig economy work.
Overlooking any income can lead to IRS notices or bills, complicating your tax situation.
The Fast Track to Refunds
While it is still possible to file taxes manually, electronic filing is the quickest way to get back any potential refund with direct deposit straight to one’s bank account.
Minimizing Errors
An added benefit of electronic filing with tax software is that it also simplifies the entire process by automating calculations and minimizing errors, thanks to guided questionnaires.
Still Waiting on Previous Returns
For those with a hold-up on 2022 returns, the IRS advises entering $0 as the previous year’s adjusted gross income to ensure 2023 returns can be processed smoothly in any case.
Leveraging Free Resources
The IRS Free File program is a great choice for taxpayers earning $79,000 or less, offering free tax software options.
Higher earners, on the other hand, have access to Free File Fillable Forms, which are suitable for those comfortable with self-preparation.
Choosing the Right Filing Method
Everyone has different needs, so choose the filing method that matches your comfort level and situation, whether it’s filing personally, using online services, or consulting a tax professional.
Professional Help
For those unsure about preparing their taxes alone, professional help can be invaluable.
Choosing a qualified tax preparer from the IRS’s directory ensures reliable assistance.
Avoiding the Wait
Online resources for tax assistance are now available round the clock. These tools can answer questions, check refund statuses, and facilitate tax payments without the need for lengthy wait times on phone calls.
Staying Informed
Keeping on top of tax updates is now easier than ever, thanks to the IRS’s presence on social media and its IRS2Go mobile app, providing valuable information on tax changes and alerts.
The Risks of Non-Compliance
Remember that non-compliance with IRS rules can lead to severe consequences.
In the last few years, the IRS has significantly increased taxpayers’ audit rates, especially for higher-income earners.
Increased Audits
Specifically, taxpayers earning between $500,000 and $1 million saw their audit rates double to 0.6%.
For the $1 million to $5 million category, audit rates more than doubled to 1.3%.
And most notably, taxpayers earning more than $10 million experienced a fourfold increase in audit rates, reaching 8%.
Despite Limited Resources
Despite resource constraints, the agency has continued ramping up audits, making accurate tax filing even more important. Remember, mistakes or omissions can lead to processing delays, audits, and penalties.
The Digital Shift
The shift towards digital platforms for tax filing is increasingly convenient, but it also demands technological knowledge to ensure you’re submitting accurate returns.
Free Filing for Eligible Taxpayers
Programs like the Free File program, which provides free access to premium tax software, and The Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs offer free tax help to support taxpayers in need.
Understanding Tax Changes
With tax laws constantly changing, staying updated through IRS resources is vital. These updates can significantly impact tax filings and strategies.
The Bottom Line
While filing taxes can be overwhelming, it is becoming easier each year with the proper preparation and resources.
While the IRS may not be everyone’s favorite, they are actively working to make the process of efficient and accurate tax filing more accessible to everyone.
The post IRS Unveils Game-Changing Checklist for Refunds and Audits first appeared on Thrift My Life.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.