Income tax time is stressful for many people. Tax management involves minimizing the effects of taxes in order to help maintain a lifestyle compatible with your goals and aspirations. It is important that you take every opportunity to minimize your tax bill. Remember, you don’t have to pay more in taxes than the law demands. Paying less in taxes by carefully planning and using the tax laws is wise and legal, but you must pay what the law requires.
If you keep records throughout the year, filing at the end of the tax year is easier. However, if the Internal Revenue Service (IRS) questions your figures, the burden is on you to prove they are incorrect. The most acceptable forms of proof are your records and receipts, such as canceled checks, vouchers, sales slips, statements of earnings, dividends and interest. If you cannot back up your figures with these or other means, you may be required to pay more taxes, as well as penalties and interest.