Five Things You Should Know Before Tax Season
Every year, tax season brings questions, doubts, and opportunities for millions of Hispanic families in the United States. Whether it’s working as an employee, running your own business, or combining multiple incomes, preparing ahead of time can make the difference between a straightforward tax process and a stressful one.
Here are five key points I recommend keeping in mind before filing taxes this year: 1. Gather your documents in time to avoid errors and delays: One of the most important steps is to gather all your documents before you begin. This includes forms such as the W-2 (if you are an employee), 1099 (if you are a contractor, freelancer, or have income such as bank interest), and other proof of additional mortgage payments, educational expenses, and donations. In the Hispanic community, many people combine multiple sources of income — for example, a primary job and freelance jobs — so it’s critical to make sure you’re reporting everything correctly. Having documents ready will help you avoid mistakes that could delay a refund or trigger IRS notifications. 2-Don’t leave money on the table: take advantage of credits and deductions: Every year, thousands of taxpayers lose money by failing to claim credits and deductions to which they are entitled. Some of the most relevant for Hispanic families include: • Child Tax Credit • Earned Income Tax Credit • Credits for educational expenses • Dependent Care Credits If you are self-employed, you could also deduct expenses related to your business, such as part of the use of the home, telephone, internet or transportation, if they meet the requirements. With the right tools — or with the help of an expert — you can identify opportunities to reduce your tax burden or increase your refund. 3. If you are self-employed, plan for additional taxes: More Hispanics are generating income as contractors, content creators, delivery drivers or small business owners. If you receive 1099 forms, it’s important to remember that taxes weren’t automatically withheld, which means you could owe federal, state, and self-employment taxes. The good news is that, as we mentioned earlier, you can also take advantage of specific deductions for self-employed workers, such as operational expenses, work tools, and part of your basic services if you work from home. These deductions will help reduce your taxes, including self-employment tax. The key is organization and planning: keeping receipts, keeping clear records, and reviewing your expenses throughout the year. 4. Filing electronically and using direct deposit speeds up your refund: If you’re hoping to receive a refund, the fastest and safest way to get one is to e-file and choose direct deposit. In most cases, e-filers receive their refund in less than 21 days. Plus, you reduce the risk of manual errors and can monitor the status of your tax refund more easily. For many Hispanic families, a refund represents an important income to pay off debt, save or cover essential expenses, so speeding up the process can be a great advantage. 5. If you owe taxes, there are options. Don’t panic: About one in four people end up owing taxes when they file their return. If this is your case, remember that you are not alone and that there are alternatives. You can explore payment plans with the IRS, request extensions to file your return (although payments still need to be made on time), or seek advice to understand which option is best for your situation. The most important thing is not to ignore the debt: acting early helps you avoid penalties, additional interest, and future problems. * Miguel Burgos is a spokesperson for TurboTax. Visit https://turbotax.intuit.com/personal-taxes/en-espanol/ to learn more about the new tax law changes and how you can benefit. |