WHAT IS "THE" PERFECT TAX RETURN?

Tax season happens every year, and every year, many individuals and families expect a check of a significant amount for their continuous contributions to the government maintenance through their tax payments. This belief in itself has spurred the growth of the tax preparation business as a whole with many professionals advertising their services through their abilities to provide these said refunds - some at the cost of preparing fraudulent returns.

Though more regulations are in place to correct this problem, I am using such an opportunity to share some knowledge and insights about the concept of filing a tax return. Now let’s jump into it.

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A tax return is mainly used to issue a report on your tax liability to the appropriate tax authority. Per the general rule, we are all required to pay taxes (Individuals and Business Included) unless we meet exemption rules that are already in place. In a perfect world, a taxpayer would remit the exact amount of tax to the authority such that no taxes are owed at the end of the year, meaning that a perfectly filed tax return would show $0 as tax liability or refund.

Let’s put it this way:

You owe $500 to a friend and make payments for it throughout the year. In the next year, you meet with your friend to determine whether you have made the necessary number of payments. When this happens, you do not want to find yourself in a situation where you still owe $45 dollars because you were not making enough payments nor be in a situation where you paid $45 extra as this is part of your money that was in your friend’s hand for that long.

The same analogy works with the IRS (except for the fact that the IRS is not your friend): When you don’t pay enough taxes throughout the year, you end up owing money to the government and when you receive a refund from the IRS, it mainly means you let the government save your money INTEREST FREE! Of course, with the appropriate tax credits and various deductions, you may find yourself in a scenario where receiving a refund is actually good. But for a taxpayer not receiving any credits nor claiming certain deductions, the amount of a given tax bill would be $0 (and that is a perfect scenario).

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People, you need to make sure to select the proper settings that will allow you to be as close as possible to file a perfect return. Here at Firenzanita, we frequently receive customers who not only owe at this end of the year, but who also expect to receive a BIG REFUND as they believe tax season to be a time to receive some extra money when in fact not everyone falls into that category.

Should you need some help to properly set yourself up for success, we offer some consulting aiming to offer you a tax planning strategy and if you already have one, potentially optimize it.

Do not hesitate to give us a call as we are always excited to serve you!

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Firenzanita out!