Five things you need to know before tax season

Every year, tax season brings questions, doubts and opportunities for millions of Hispanic families in United States. Whether working as an employee, owning your own business or combining multiple incomes, preparing ahead of time can make the difference between a easy tax process and a stressful one.

Below, I share five key points I recommend keeping in mind before filing your tax return this year:

1 - Gather your documents early to avoid mistakes 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), the 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 main job and freelance work, so it's critical to make sure you report everything correctly. Having your documents ready will help you avoid mistakes that can delay reimbursement or generate IRS notices.

2 - Don't leave money on the table: take advantage of credits and deductions:

Every year, thousands of taxpayers lose money by not claiming credits and deductions to which they are entitled. Some of the most relevant for Hispanic families include:

If you're self-employed, you may also be able to deduct expenses related to your business, such as part of household use, telephone, internet or transportation, as long as they qualify.

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 and 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 were not automatically withheld, which means you could owe federal, state and self-employment tax.

The good news is that, as mentioned above, you can also take advantage of specific self-employment deductions, such as operating expenses, work tools and part of your utilities if you work from home. These deductions will help reduce your taxes, including self-employment tax.

The key is organization and planning: keep receipts, keep clear records and review your expenses throughout the year.

4 - File electronically and use direct deposit to speed up your refund:

If you expect to receive a refund, the fastest and safest way to get it is to file electronically (e-file) and choose direct deposit.

In most cases, e-filers receive their refund in less than 21 days. In addition, you reduce the risk of manual errors and can monitor the status of your tax refund more easily.

For many Hispanic families, the refund represents important income to pay debts, save or cover essential expenses, so speeding up the process can be a big advantage.

5 - If you owe taxes, there are options. Don't panic:

Approximately one in four people end up owing taxes when filing 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 what the best option is for your situation. The most important thing is not to ignore the debt: acting early helps you avoid penalties, additional interest and future problems.

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