How to Prepare For Filing Your Taxes
Dealing with taxes is tricky and overwhelming, but it’s a necessary part of adult life. You can choose to file your taxes on your own, or you can enlist the help of a professional tax service to assist you. No matter which method you choose, it’s important to first gather and organize the necessary paperwork and information you’ll need to complete the process.
If you plan to go it alone, you must know how to do your taxes correctly or you risk getting an audit by the IRS. Keep in mind, you may owe federal income tax, as well as state income tax when filing. When you pay federal income taxes, you’re giving a portion of your earned income to the federal government. This allows the government to pay for important operations, such as law enforcement, education or federal employee wages.
If you live in a state that collects state income tax, you owe an additional percentage of your income earned to your state government. These taxes are used to fund state government operations. The amount you owe in state taxes depends on where you live, the amount of income you earned, and the tax bracket you fall into.
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You may be wondering “What do you need to file taxes?” Most likely, you’ll need to submit your tax return to the IRS to claim the income you earned over the past year. Your tax return is a report of your income and a calculation of the taxes you owe or the money that should be refunded to you. However, you are not required to complete a tax return if you qualify for an IRS exception, such as if you earned less than the standard deduction or you’re a dependent who earned less than a certain amount of income. If you think you qualify for a tax refund or you owe taxes, you must file your tax return.
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How to Do Your Taxes
Before you make your mind up that you’re doing your own taxes, it’s important to review your specific situation and what you’ll need to turn into the IRS. In some cases, it may be best to seek the assistance of a tax professional to ensure you’ve completed the necessary steps correctly.
Consider your familiarity with taxation terminology before attempting to prepare your own taxes. The IRS often uses complex wording in its forms, which can lead to unintentional errors or frustrations on your part. If you have complicated taxes to file with excessive paperwork, deductions or exemptions, a tax professional may be worth the investment. Not only can these forms be confusing, but you can also spend an exorbitant amount of time attempting to complete them.
Filing Your Taxes Through a Professional Service
Tax preparation professionals charge fees for their services. However, their assistance when filing your taxes can be crucial to minimizing errors on your return. A tax professional can make this process simple, easy and fast. Keep in mind, you’re still required to provide the professional with the necessary paperwork, including W-2’s, bank account statements and other forms.
Doing Your Own Taxes
If you decide you’re doing your own taxes, you’ll need to choose which method you’d like to use to file your tax return. You can choose to mail in your return to the IRS or you can electronically file your taxes. If you want to mail in a hard copy of your tax return, you must gather the paperwork needed and complete your return, including your signature. You’ll need to find out where to locally file your tax return once you’ve completed all forms.
It’s become more convenient to e-file through the IRS or to use other online tax preparation software to submit your return online. While you’ll still be responsible for obtaining the necessary documentation and information to complete the return, you will not be tasked with turning in hard copies to the IRS. This is usually the most convenient and simple way to file your own tax return.
What Documents Do You Need to File Taxes?
When learning how to do your taxes, you’ll find that gathering documentation and information about your expenses and income over the past year is the most crucial first step. The exact information you will need is dependent upon your situation. For example, if you made tax-deductible charitable donations this year, you’ll need to gather proof of these donations, such as receipts from the charity. You may also need to obtain the following forms and documentation to file your taxes:
- 1099 Form;
- IRS Form 8283 for Charitable Donations Over $500;
- Bank or financial institution statements;
- Last year’s state refund amount;
- Information on your dependents or joint filers;
- Healthcare coverage documentation;
- Property tax receipts.
When Do Taxes Have to Be Done by?
Generally, your tax return is due by April 15th each year, unless you are exempt from filing. If you owe taxes and do not pay the IRS on time, you are susceptible to late tax payment penalties and interest charges in addition to the taxes that you owe. However, if you know you will be unable to file your return or provide your tax payment by the deadline, you may be eligible to file for an extension.
How Long Do Tax Returns Take?
The sooner you complete your tax preparation and file your return, the sooner you will receive your refund, if one is due to you. If you are doing your own taxes, keep in mind that e-filing your return is usually faster than mailing it in.
In most cases, the IRS processes, verifies, and issues tax refunds within 21 days of electronically filing and within six weeks of receiving mailed tax returns. However, the amount of time it takes for you to receive your refund may depend on your financial institution and its payment posting guidelines. Your tax refund may also take longer if:
- You have a complicated tax return that includes multiple forms.
- Your form is incomplete.
- There are errors on your tax return.
- Your situation requires further review by the IRS.
If the IRS needs to make changes to the return you filed, you will be notified of your updated tax refund amount before deposit.
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