Filing income taxes is small fries for people who aren’t generating income that is equivalent to substantial proportions. However, the matter of income and taxes are a huge deal when you are making a lot of money. This is especially true for high-income individuals who pay over 28% for every dollar that they earn. When it comes to filing income taxes there is no room for mistakes as errors in calculations can increase the tax that you owe. Here are some examples to look out for when filing a tax return.
Inaccurate Reporting of Income
Income tax preparation can be a very challenging task that requires attention to detail and accuracy to get it right. It is important to understand the filing requirements and how apply the correct tax rules. Uncertainty around tax laws increases the error in income reporting. What it all boils down to is good accounting and communication with money managers. These are the people who track, report, and monitor financial activities. They need to know exactly what is going on in the business that impact finances and taxes. Schedule regular appointments to update those responsible for your money such as your accountant, financial consultant, and tax advisor.
Omitting Income from the Tax Return
Many people receive income during the year that they do not know is taxable. So when they file, their returns are missing income that when audited leads to owing additional taxes. Some examples of income that is commonly omitted from tax returns include income received by an agent on your behalf, fringe benefits, and bartering income earned in the course of business.
Miscalculating Gains and Losses
Wealth-minded individuals understand the importance of investing for the future. Their Balance Sheets are often filled with assets that they purchase to generate short and long-term income. In cases where investments do not pan out and produce the returns they expect, portfolios will be readjusted to sell poor performers in exchange for more favorable options. When it comes to investments and taxes the rules vary with the type of assets that you own. It is important to know the tax laws regulating the sale or disposal of the things that you own because mis-applying them can create a huge tax bill in the end.
And if you’re not sure where to start when it comes to the tax code contact an accountant or tax professional. It is better to get good advice before you file than to pay more than you should in taxes.
Positioning You to Prosper!
Benita Tyler: Tax, Accounting and Women Owned Business Consultant
www.tbsusa.com | firstname.lastname@example.org | 313.377.1080
Benita Tyler, known in the Small Business Community as the Financial Messenger, founded TBS USA in 1999 to provide tax and accounting advisory services to business owners. In 2003, Benita pioneered the “Wealthy Place Appraisal” a proprietary seven-step process that she uses to help business owners determine which decisions are moving them closer to wealth goals and which are causing them to lose ground. After many requests to share her insights on what women business owners can do to improve business efficiency, Benita created a step-by-step program called “Position to Prosper™”. Her concepts have been quoted regularly in media outlets, blogs, and radio shows. Benita is an avid writer and is the author of her soon to be released book entitled, “Woman of God, Step into Your Wealthy Place.”