Investment is a major leap of faith out of which people expect positive returns. It can be on different things such as real estate which is a fast growing sector in today’s economy. Regardless of the investment mode, you have to pay your dues to the revenue authorities after a fixed period of time. Failing to do so could lead to accumulated debt and a case in the court of law. If you are filing your taxes for the first time, you may not have concrete information on how it should be done and how to ensure you do not have any outstanding taxes.
To get you through the paperwork and the difficult decisions, here are tips to enlighten you on investment and tax payment.
• The IRS offers tax payment plans for future use by the taxpayer. This can be done by filling a 9465 Form which allows the taxpayer to select the date and amount payable per month. The payment plan is approved depending on the amount of money owed to the IRS. If the payment date is approaching, you can request for an extension if you do not have the whole amount. Even so, you should still file all your taxes on time. This will avoid the penalty imposed of 5% of the money owed per month.
• When filing your taxes, it is more convenient to use the tax software. This is because it reduces the chances of missing some of the tax deductions since you are not aware of all the tax laws. The software is updated with all the current tax laws which minimize the mathematical errors by a large margin. The software will save you the struggles of filing your taxes in future.
• When it comes to investment, your stock value determines your tax levels. If you have sold stock at a higher value and you have some that have depreciated over time, you can dispose of the less valuable shares to offset the gains from the other sales. This way, you will not owe taxes since the capital gain loss will even out the profits. It is a good plan since you can buy back the low value shares later on.
• Keeping your tax reports organized is one way to ensure that you pay them on time and that there are minimal errors. Avoiding procrastination will also save you the penalties which may not seem like much but will affect the final amount of money you owe the IRS.
• When investing, take advantage of the 0% investment rate on low income groups. This means if you are in the high income bracket, you can get your low income friends or family to handle your shares. If they are in the 10% or 15% bracket, they get a 0% tax rate on capital gains as long as they were held for more than a year and one day.
Keep track of the Earned Income Tax Credits which could save you a lot of money from taxes. Saving money on taxes can be simple when you have the right knowledge to get you through.
Originally posted 2013-06-18 14:52:11. Republished by Blog Post Promoter