2020 has been an interesting year.
While there have many different moving parts to the year, perhaps the biggest disruption has been a global pandemic. Because of the pandemic, people have lost their jobs, started new jobs, applied for unemployment, received stimulus payments, and more.
In a nutshell, 2020 has likely changed the state of your finances drastically.
With the year ending and tax season around the corner, you might have a few questions about filing and paying taxes for 2020. The change in your finances might have resulted in a change in your overall tax strategy.
If you are not sure what to expect when filing and paying your 2020 taxes, here are a few tips to get you started.
Start Preparing Early
A great tip for how to pay taxes is to start preparing early. Gather all of the documents you may need to file and keep them in a safe place. The better you prepare, the easier time you’ll have when filing your taxes.
Know the Deadlines
It’s important to know the deadline to file your 2020 taxes. Generally, you can file as early as mid-January but no later than April 15th for an individual return. However, depending on your situation, your deadline may be later than April 15th.
Understand Your Tax Bracket
All of the changes of 2020 might have resulted in your moving to a different tax bracket than you were in before. Your tax bracket ultimately determines how much you will pay for your 2020 taxes. Make sure you know your tax bracket before getting started.
Claim All Available Deductions
A tax deduction is an expense you incurred during the year the reduces the amount of taxes you have to pay. While your deduction may be similar every year, you might be in a much different situation for your 2020 taxes. Make sure you carefully consider the deductions available and claim everything that applies.
Opt for E-Filing
If you want some help with your taxes, consider an e-filing service. These services provide an easy DIY solution that involves answering questions about your finances and entering your financial information. You can file and pay federal taxes online by using an e-filing service.
Consider Hiring a Tax Professional
If your taxes are too complicated for you to DIY, consider hiring a tax preparer. By hiring a tax pro, you can drop off your documents and leave the job to the professionals. Make sure to review your return before signing and never sign a blank tax return.
If you need to officially form your business before the tax season starts, you can learn more about how to do so here.
Follow These Tips for Paying Taxes in 2020
By using these tips for filing and paying taxes, you can take some of the confusion out of your 2020 taxes.
Start by preparing early and knowing your deadline to file. You should also understand your tax bracket, claim all available deductions, and opt for using an e-filing service. If you are feeling overwhelmed and need some help, consider hiring a tax professional.
Follow these tips and you have an easier time filing and paying your 2020 taxes.
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