Every year, taxes come around and just one little thing was forgotten. These little things tend to actually make a big difference, and it’s a good idea to get a head start on your taxes now while you still have time to correct any accidental mistakes. Here are a few of the most commonly made mistakes. If you’re not sure if any of these apply to you, remember that there are trained tax professionals at all of our Check City locations can help.
If you have been released from a position within the past year and have been receiving unemployment benefits in compensation for a lack of salary, a portion of that is still considered taxable. There are two ways to avoid the shock when taxes come around. Before you receive any benefits you can opt to automatically lose 10 percent of every check to the IRS by filling out a Voluntary Withholding Request (W-4V). If, when the time comes, you don’t feel that you can part with all of the tax money you owe from unemployment, you can pay estimated taxes.
Often with the stress of divorce, taxes seem like little to no importance and you forget that the alimony you receive must also go towards taxes. To prevent all of your alimony and other untaxed income to go to the IRS in a big chunk in April, look into estimated tax filings. If you also receive child support in addition to your alimony, those are not taxable and you do not have to worry about losing a cent of it to the IRS.
How fair would it be if you won a competition and got all of the prize money? Well, it does seem fair but the IRS doesn’t play that way. That money is still considered taxable, and in all the hubbub you are likely to forget how much of it you are really due. This also applies to any property you win, and you have to pay taxes on the fair market value of it. Whoever you won the prize from will give you a form declaring how much the prize is worth and you must report it in your taxes. If you are caught underreporting what you earned, you will most likely become subject to an investigation.
Money earned from gambling is taxable as well, however you can subtract any losses you may have sustained gambling from your winnings, which may even out how much you have to pay in taxes.
Social Security Benefits
If you are receiving Social Security benefits as the only source of your income, you have nothing to worry about and the money isn’t taxable. But if you have another source of income, those benefits are considered fair game to the IRS. They can tax up to 85 percent of your Social Security
checks. Much like the unemployment checks, you have two options. Either automatically have the tax money deducted from the check when you get it, or pay estimated tax payments.
If you have any questions about your taxes and how much you owe, talk to a professional. All of our Check City locations offer tax services so don’t be the one to make the mistake that will cost you big time when tax season comes around.