The IRS has about 800 forms available for tax filers to use when they file income taxes. That’s how cumbersome and confusing the tax code is.
Filing your income taxes is a daunting experience. It doesn’t have to be that way. You just to know the steps to file your income tax return.
Read this guide that shows you how to file your tax return and have a low-stress Tax Day.
1. Get Your Documents Together
The key to filing taxes is organization. You should have a filing system for your financial documents and tax-related documents.
If you’re employed, you need your W-2 form. A self-employed person needs 1099 forms or a full accounting of income earned during the year.
You’ll also need documents for settled debt, gambling income, investment income, student loans, and interest statements.
You should receive these forms from banks and your mortgage provider.
2. Choose Your Filing Status
In some cases, you can choose your filing status. It can make your tax life a little less complicated.
You can be married and file separate tax returns. You can file jointly as a married couple, too. It could be advantageous to file as head of household.
It’s always best to consult with a tax professional before making that decision. Find a tax professional that specializes in personal income taxes, such as Zuleta Associates Inc.
3. Know Your Deductions
You may be entitled to tax deductions and credits to reduce your tax bill. For instance, if you paid student loan interest, you can make a deduction.
Homeowners can deduct local taxes, mortgage interest, capital gains, and much more. You should consult with a CPA to ensure you’re maximizing your deductions.
4. Pay On Time
Personal income tax filers can file for an extension, which allows you to file your income tax return in October.
That gives you space to catch up on your taxes, but there will be consequences if you owe money. You still have to pay owed taxes by Tax Day, even if you file an extension.
If you don’t pay on time, you’ll have to pay interest and penalties, too.
5. Always Plan for Taxes
Most people approach tax season as the first quarter of the year. That approach usually means surprises in April.
The best way to approach your personal income tax payments is to plan for them. Anytime you make a big purchase, like a home, think of the tax implications.
If you get a new job or start a business, think of the tax implications. If you don’t know ask your CPA.
Don’t Be Afraid of Your Income Tax Return
It’s no secret that most Americans dislike taxes. It can feel like this abyss of forms and confusing laws. Plus, those laws tend to change.
Now that you read this guide to filing taxes, you are prepared to file your income tax return. Hopefully, this guide took some of the mystery out of filing your taxes and you have the confidence to face tax season.
For more helpful tips to manage your finances, check out the other great articles on this site.