As the first quarter of the year has started, the paperwork needs to get organized for filing tax returns of the citizens of California. Proper planning for your taxes is very crucial for easy filing of the tax return and more savings. As of us are well aware of the fact, that US taxation laws are highly complicated and stressful.
Therefore, it is highly recommended to hire a tax advisor or financial experts to make the entire process easier and hassle-free. These experts have decades of experience in this industry and are capable of adding dollars to your account by their tax preparation strategies.
We have listed some of the points to be taken care of, to make the entire process easier:
1. Collect Personal as well as Expense Information
In order to make the process hassle-free, it is very essential to keep it systematic by organizing and sorting the data into the categories that we have listed below :
- Personal Information
This includes the details as well as legal names of the individual , spouse’s and all the dependents in the family. Along with this, it comprises the date of birth and social security numbers of all the members. You need to keep your bank account, routing numbers, and transaction details handy.
- Income Documents
1. W-2 forms from any employers you worked for in 2020.
2. 1099 forms for any contract work you completed if you earned more than $600 total.
3. Investment for unemployment or social security benefits.
4. Total revenue generation from the previous year’s state and local tax returns.
5. Income generated from any rental properties you may own.
- Business Information
If you are self-employed and perform freelancing jobs or business, you need to keep this aside from your personal details as different deductions are offered in both categories. You can hire a tax advisor in Los Angeles for proper assistance during the initial process of sorting while filing taxes.
2. Check Out The Personal Deductions
Standard deductions are provided to the people in order to reduce their taxes to some extent. In California, citizens can either itemize their standard deductions or their tax deductions. However, if any married couple is filing the taxes separately, both the people should either opt for standard deductions or tax deductions.
For the year of 2020 deductions up to $4,601 are offered for single filers or married/registered domestic partners filing separately, and $9,202 are provided to married/registered domestic partners filing the return jointly and the same is offered to the head of household or qualifying widow/ widower. You can download the prior year’s transaction details and highlight the areas where you can avail deductions easily.
3. Personal Exemptions
Personal exemptions refer to the amount that can be claimed by a US Citizen against their personal income, as their tax deductions. Under United States tax laws, a resident taxpayer can have a personal exemption up-to $122 each for taxpayers or their spouses and $378 for up to three qualifying dependents. However, there are many other exemptions available for physically challenged and for older aged citizens.
Many charitable and non-profitable organizations can also apply for tax exemptions, if their earnings are not related to a single individual or any private shareholders. This organization should not have any involvement in political campaigns or political connections and it should serve a noble cause. You can seek the assistance of a tax Advisor in Los Angeles to check your eligibility for tax exemptions.
4. Try to Avail Tax Credits
Tax credit reduces the total amount that needs to be paid while filing your income tax. On the other hand, tax deductions are used to reduce the amount that is subjected to taxation. These credits can be obtained by taking the help of Tax accounting individuals as they are very well aware of all the credits and their eligibility.
We have listed some of the popularly known tax credits for tax avoidance :
- Student Tax Credit :
These credits help the students to pay their tuition fees and lets them concentrate on their studies.
- Child adoption costs:
In case of any qualified adoption, 50% of the cost is offered from the year adoption started.
- Earned income tax credit:
This credit is meant for people with lower incomes, if a citizen falls into this criteria, the tax credit will entirely depend upon their income and no of qualified children they have.
- Nonrefundable Renter’s Credit:
In California, if you have a personal income tax liability and you pay the entire rent on your own, you might get eligible for this credit.
If your property has gone through some renovations recently, you can get some of the credits which will help you to save hundreds and thousands of dollars while filing taxes.
- Credits for business owners and the Self-Employed:
If you have a small-scale business, you can save lots of money with the help of credits during filing taxes.
5. Hire A Tax Advisors
Professional Tax Advisors can help you to save more along with your tax deferral and make the entire process stress-free. They are highly experienced in filing complex tax returns which will ultimately help the taxpayers to avail credits and deductions for themselves. They have a deep knowledge in tax accounting and experience in financial matters.
If you have a large business empire, it is highly advised to avail best tax preparation services in order to draw a bigger picture of your organization. To be precise, tax advisors are dedicated towards minimizing the taxes of the running year as well as for upcoming years. In fact, the main aim of the Tax Accounting Services is to minimize the impact of income tax in order to improve the financial conditions of their clients.
6. Fill the Taxes Virtually via Secured Portal
Due to the outbreak of global pandemic, if you are not able to meet your tax advisor physically, you can fill your taxes virtually by staying back at your place. The US taxation department has approved a secured portal that allows the citizens to share their original documents and receipts over electronic media, by seeking the help of their tax advisor for best Tax Preparation Services
The entire process starts with an authorized link to the portal which is mailed by your tax advisor. You need to set up a strong password to ensure the security of your account. After setting up the password, you can upload the PDF with scanned copies of your original documents.
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In addition to this, this portal helps users to access the entire tax reports for reviewing and rectifying their mistakes. The last step of the process is the signature of the taxpayer, this can be done virtually via e-signatures or by signing on a page and uploading it with the PDF on the portal.
7. Track your Tax Refund
The government of California facilitates its taxpayers by offering them a tool to track their refunds and credits. Errors such as calculation errors, incorrect forms, missing or incomplete information, improper details can delay as well cancel the amount of refund.
TogetherCFO is known to offer the best Tax Consultant in Los Angeles , with many years of experience in the finance industry. We have a team of highly dedicated tax advisors and financial experts, who are always ready to offer the best tax preparation tips to their clients, in order to preserve their wealth and add extra dollars to their account.