Tax season is here, and you want to make sure you’re getting the maximum refund possible. The average Australia tax refund in 2021 was $2,797, so why not keep as much of your hard-earned money as you can by hiring a tax agent from Stephen Cole FCPA Accountant?
Keep these seven things in mind before filing your tax return:
1. Enter All Your Income Information Correctly
The first step to getting the biggest refund possible is making sure that all the income information is correct. This means you’ll need to have all your W-2s and 1099s available when you file your taxes.
Many taxpayers forget that they qualify for certain deductions, which can lower their adjusted gross income (AGI) and overall tax liability. For example, my wife works as a teacher and is paying for some classroom supplies out of pocket. She’s able to deduct up to $250 of this expense when she files her taxes because she is a teacher.
2. Take Advantage of Tax Credits
Tax credits are even better than deductions because they reduce your tax bill dollar-for-dollar unlike deductions which only reduce your taxable income by a percentage of the deduction amount.
3. Double check your income
This is the most important thing to do because if you don’t report all of your income, you could be audited. You should compare the total income listed on your W-2 forms with what you’ve entered on your tax return. If there are differences, then something is wrong. Your only other sources of income that aren’t listed on W-2s are self-employment income or investment income. Make sure you’ve accounted for these as well.
The form 706-NA is a form that is used to report the estate’s or trust’s income, deductions, gains, losses, and credits for the tax year. The form is also used to calculate the estate’s or trust’s net taxable income.
4. Check Your Filing Status
When filing taxes, it’s important that you select the correct filing status for yourself. Depending on your life circumstances, you could choose from among four different filing statuses: single, head of household, married filing jointly and married filing separately.
5. Use The Right Tax Forms
In addition to ensuring that you use the right filing status while preparing your tax return, it is also important that you use the right forms while filing taxes. For example, if you’re a freelancer or self-employed individual who earned more than $400 in net earnings as a freelancer during 2018, then you would need to use Schedule C form along with Form 1040 while preparing your tax return.
6. Last year’s tax return
Depending on how complicated your return was last year, this could be as simple as finding your old W-2s or 1099s (if you had them filed away) or digging through last year’s tax returns form to see what deductions or credits you claimed last year so that you can do so again if necessary.
7. Organize your financial records
You probably already have most of the information you need. But if you’re a freelance consultant or own a small business, for example, there are likely expenses that may be deductible on your tax return, but aren’t obvious from bank statements. Receipts can help you take advantage of deductions for office supplies, travel expenses or other items. It’s also important to keep track of charitable contributions throughout the year so that you can take advantage of the itemized deduction for charitable giving.