December 28, 2023

Tax Season 2024: How to Prepare

Tax season is fast approaching and there's no time to waste! Here are a few tips on how to get your finances in order and make the most of your tax return. With a little preparation, you can make this tax season a breeze.

There may be changes to taxes laws and regulations in 2023 that could potentially affect the size of your 2024 tax refund. To ensure you’re prepared, it’s a good idea to stay informed on the new regulations and provisions that take effect throughout the year.

You Might Receive a Form 1099-K

Form 1099-K, Payment Card, and Third-Party Network Transactions are to ensure that people are paying their taxes. Information from the 1099-K is used to track how much money is coming in and going out of someone's business or organization. This information also helps the IRS know how much tax someone owes. Companies that have used a third-party network to make or receive payments, or have used a payment card, should make sure they file the right paperwork with the IRS. This includes filing Form 1099-K on time.

Doing this helps businesses and individuals avoid penalties and interest for unpaid taxes.

If you are a business owner or self-employed, you should be aware that you might receive a 1099-K form. This form can help you calculate your income taxes when tax season rolls around in 2023. The 1099-K is an essential document to keep track of since it records your earning potential, which then affects the amount of taxes that are paid to the federal government.

FAQ's Regarding 1099-K's

  1. Who must file a 1099-K? Businesses that make payments through credit cards, debit cards, or third-party network transactions.
  2. When is a 1099-K due? The 1099-K is due to pay on or before January 31st of the year following the calendar year in which the payments were made.
  3. How do I file a 1099-K? The 1099-K can be filed electronically or by paper. To file electronically, you must use the IRS's Filing Information Returns Electronically (FIRE) system. To file by paper, you must use Form 1096, which is available on the IRS website.

Organize Your Tax Documents and Find What You Need

The key to filing a complete and accurate tax return is being organized throughout the process.

There are certain documents you should have on hand when filing including:

  • Forms W2-- from employers
  • Forms 1099 from banks, brokers, and other financial institutions.
  • IRS or other agency letters
  • Charitable contribution receipts

These are just a few of the documents needed for filing. Having these documents readily available makes preparing an accurate tax return a much smoother process. Knowing where to look and what to keep helps with having all the necessary information on hand when submitting your taxes.

Avoid Refund Delays

Refund delays can be a frustrating issue for taxpayers; however, there are steps that you can take to minimize the risk of identity theft and refund fraud. Filing your return as soon as possible is the best way to ensure that identity thieves don't have enough time to beat you to it and file fraudulent returns in your name.

Additionally, checking with your tax preparer or the IRS website regularly for updates on the status of your refund helps keep track of it so any issues will be promptly noticed and dealt with.

Did You Withhold Enough Tax?

Slipping up when it comes to withholding taxes can leave you with a large bill and penalty fees come April 15. To make sure that you are adequately prepared for tax season, it's important to accurately estimate your annual taxable income as well as the amount of taxes you'll need to pay for the year. Many taxpayers think that over-withholding is harmless, but it can present some unintended consequences that could result in paying a penalty. Withholding the perfect amount requires planning and a good working knowledge of federal and state tax regulations - being diligent in this area can help save time, money, and frustration in the long run.

Use the Tax Withholding Estimator to help you determine the right amount of tax to have withheld from your paycheck.

For estimated tax payments, individuals can make quarterly payments. This may be a wise decision for those who are receiving a substantial amount of non-wage income, such as self-employment income, investment income, or taxable Social Security benefits. If you get money from a pension or annuity, you might have to pay taxes on it. Make sure you pay on time so you don't get in trouble with the IRS. Try to estimate how much you will owe ahead of time so you can plan and save money.

It’s important to understand what a 1099-K form is and what it means for your taxes so that you can be prepared come tax season. Be sure to organize your tax documents as you go throughout the year and have them readily available when it comes time to file. Avoid any delays in processing or receiving your refund by withholding enough money from each paycheck, if possible.

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