Although tax planning is an integral part of a proper financial plan, the fact is that many people do not concentrate on tax planning. Tax Planning has been something which many people have found out to be very difficult as it involves involves conceiving of and implementing various strategies in order to minimize the amount of taxes paid for a given period.
We rush to our tax consultants at the end of our financial year so that he can guide us as to where can we invest so that we can save the maximum amount of tax . As everyone with an income has to pay a tax, everyone wants to do it without any trouble. Here are a few tips that can help reduce your chances of grief from the IRS
* Maintain good records.
Keeping good records can keep you out of trouble. Regardless of whether you are audited or not, keeping good records can certainly help. In most cases, your deductions will be disallowed unless you produce records substantiating them. Keeping records will help you be prepared and also help you respond quickly and thoroughly.
* Value those 1099s.
With the IRS, there is a lot of information return matching, and a continuous correlation of taxpayer classification numbers and payments. The slightest variance will be caught and can set off larger troubles. As there are different Forms 1099 for miscellaneous income (Form 1099-MISC), interest (Form 1099-INT), etc., what is important is how you handle them all through the year.
Dont just keep them aside them you receive them. If you receive an incorrect 1099 , get in touch with the prayer that issued it. Explain the error and check a copy has already been sent to the IRS. If that is the case, then it becomes necessary to get a corrected 1099 (theres a special box for this). It's important to maintain a system to record and track 1099s as that is precisely what the IRS does.
* Segregate business and personal records
Its safer to separate your business and personal lives. Simple but effective. Tax issues are much likely to be easier if you avoid morphing personal into business, including:
* Deducting the cost of your divorce because your business is at risk
* Deducting a miserable vacation with a client or
* Claiming your hobby was really for profit.
Taking advice from the professionals will save you from paying extra taxes and with adequate precaution and advice from a professional you can be free of your tax burdens, and certainly keep the IRS away!
We rush to our tax consultants at the end of our financial year so that he can guide us as to where can we invest so that we can save the maximum amount of tax . As everyone with an income has to pay a tax, everyone wants to do it without any trouble. Here are a few tips that can help reduce your chances of grief from the IRS
* Maintain good records.
Keeping good records can keep you out of trouble. Regardless of whether you are audited or not, keeping good records can certainly help. In most cases, your deductions will be disallowed unless you produce records substantiating them. Keeping records will help you be prepared and also help you respond quickly and thoroughly.
* Value those 1099s.
With the IRS, there is a lot of information return matching, and a continuous correlation of taxpayer classification numbers and payments. The slightest variance will be caught and can set off larger troubles. As there are different Forms 1099 for miscellaneous income (Form 1099-MISC), interest (Form 1099-INT), etc., what is important is how you handle them all through the year.
Dont just keep them aside them you receive them. If you receive an incorrect 1099 , get in touch with the prayer that issued it. Explain the error and check a copy has already been sent to the IRS. If that is the case, then it becomes necessary to get a corrected 1099 (theres a special box for this). It's important to maintain a system to record and track 1099s as that is precisely what the IRS does.
* Segregate business and personal records
Its safer to separate your business and personal lives. Simple but effective. Tax issues are much likely to be easier if you avoid morphing personal into business, including:
* Deducting the cost of your divorce because your business is at risk
* Deducting a miserable vacation with a client or
* Claiming your hobby was really for profit.
Taking advice from the professionals will save you from paying extra taxes and with adequate precaution and advice from a professional you can be free of your tax burdens, and certainly keep the IRS away!
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