Expat tax filing is a complex process. Millions of people live in the USA as expats. If you are one of those and dread the mere thought of filing taxes, then don’t worry, you are not alone. There are many who believe that tax filing should be simpler, but the world of taxes is complicated and it doesn’t work the way we want. So, how can you reduce the stress of taxes?
To get you started, Perfect Tax and Finance has collated seven brilliant taxation tips that you must know as you prepare for tax filing this season.
Register with the IRS – First things first, you need to obtain an SSN (a social security number) for yourself, your spouse and for all your dependent family members, and get registered with the IRS. If you couldn’t get an SSN, then applying for a TIN (taxpayer identification number) is important. In case you are an employer with at least one employee, or in case you pay the excise tax, then you will also need an EIN (employer identification number).
Keep your paperwork organized – All your financial documents must be well organized if you wish to file your taxes without any difficulty. From your bank statements to credit card statements, mortgage interest statements and investment related documents – everything should be kept in a folder and must be arranged date wise for easy retrieval. You might be surprised to know this but there are many people who take documentation quite seriously and keep their tax-related paperwork in a single place for years.
Understand the law of the land – This may be a no-brainer, but there are many who fail to adhere to the taxation rules for expats as stated by the US government. By just sparing a few minutes and reading the taxation procedure in the USA, you can save yourself from big troubles afterward.
Know your deductions – Who doesn’t want to save a few thousand dollars from their hard-earned money? Well, we all want to do that. So, when it comes to taxation, don’t forget to keep a check on the deductions that are available to you. You can save a lot of money with genuine tax deductions from your income.
Don’t forget the state and local tax – When it comes to paying taxes in the US, don’t forget that your tax may be due on more than just federal government level. You have to keep in mind the tax for the individual state that you live in, and at times, you may even have to pay local tax. Figure out the amounts for all these taxes to get a clear picture of your tax filing situation.
Always keep a track of the important dates – In addition to keeping a track of the important financial documents, you must also keep a track of the tax filing deadlines. This will help you avoid penalties and paying higher interest on your delayed tax payments.
Don’t skip the filing process – No matter how hard you may try to remember the important tax filing dates, there are chances that you may forget them. As a matter of fact, every year, there are many people who forget to file their US tax return, but it is never too late to pay what is due. Simply being late doesn’t give you the privilege to ignore the taxes completely. It is always better to be a late taxpayer rather than being a defaulter on purpose. So, as soon as you realize that you are behind your tax filing procedure, work and file your taxes. You will be glad you did that.
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