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1 in 3 Americans Not Confident About Filing Their Taxes Amid Pandemic, Despite Delayed Deadline

One-third (33%) of people across America say they’re either unconfident or neutral about their ability…

  • July 15, 2020

One-third (33%) of people across America say they’re either unconfident or neutral about their ability to file and pay their taxes in 2020, according to a new survey from Clutch, a B2B ratings and reviews platform.

The level of filing discomfort was surprising, given that the new tax deadline provides three months of leeway. The wiggle room, however, was enough for 67% of people to file and pay with confidence.

Joshua Rodenborn, CEO of real estate company Jax Nurses Buy Houses, expressed relief about the delayed deadline.

“The extended tax deadline is helpful because it reduces the stress of filing right now,” he said. “Business is currently stressful enough as we emerge from the quarantine and start to rebuild the economy.”

For those filing taxes for the first time amid the pandemic, however, the financial challenges can easily compound the stresses of filing and paying by July 15.

Clutch spoke to finance and tax experts to aggregate the most helpful tips and common tax mistakes to strengthen small business confidence during this unprecedented, challenging tax season.

Clutch found the top six tips for filing taxes are:

  1. Hire an experienced accountant
  2. Correctly classify your business
  3. Record and keep detailed cash flow records
  4. Apply for a business credit card
  5. Amend your tax returns up to 3 years after filing
  6. Be aware of relevant deductions

Three common tax mistakes to avoid are:

  1. Waiting until the last minute to file
  2. Forgetting different tax rules for different states
  3. Letting business and personal expenses mix

Avoid Tax Penalties with Professional Assistance, Proactive Filing

According to a 2018 IRS report, companies paid more than $6.4 billion in civil tax penalties that year.

Avoiding waiting until the last minute can keep businesses from facing preventable penalties such as charges for late filing and late payment.

Professional accounting expertise isn’t found within most in-house teams. Hiring help can reduce stress about potential errors and penalties. Suzanne Vanzant-Ladas regularly works through tax stress with first-time filers with Professional Public Accountants, LLC.

“Most clients who own a business and are filing taxes for the first time experience a certain amount of anxiety due to the unknown,” she said. “This is normal, but speaking to a professional who can direct you is a great start to relieving that anxiety.”

Cut Costs With Classification, Deduction Expertise

There are cost-cutting benefits associated with classifying one’s business as an LLC or S-Corp rather than a sole proprietorship or C-Corp.

In addition to typical expenses (vehicle, home office, equipment) that can be deducted, businesses can write off expenses relating to starting their company, explains Sherry Mae, CMO of aquarium company Tankarium.

“Business owners should declare their startup expenses, including but not limited to accounting fees, legal fees, licensing, permits, advertisements, employee training, and equipment procurement or rental,” she said.

Companies can benefit further from possible carryover deductions from startup expenses.

Read the full report here: https://clutch.co/accounting/resources/filing-taxes-for-first-time.