In this world, we can be certain of two things: death and taxes.
Beyond that, not much is known for sure, including exactly how to file those taxes. It's not something that many of us look forward to, but it has to be done.
Can you file your taxes on your own?
By collecting the appropriate information and keeping it organized, it is more than possible to file your taxes on your own. However, many tend to turn towards software or a professional to file for them to avoid any miscalculations or additional mistakes.
In this article, we'll go over the basics you need to file your taxes without breaking a sweat.
How to file taxes
Whether you're an independent contractor or an employee, filing your taxes can be confusing and overwhelming, but in the age of technology, it doesn’t have to be.
Below, we’ll go over the people that need to file their taxes, what kind of information you should have handy while you’re filing, and how to send your forms for a return.
How much do you have to make to file your taxes?
The quick answer is that it depends on a few things: your age, your filing status, and your income. Below, we’ve created a simple chart detailing everything you need to know before moving forward. If your income is more than the amount at the end of the row that describes you, you are required to submit a tax return.
Below are the tax brackets and rates for 2020, adjusted for inflation.
|Rate||Single Individuals, Taxable Income Over||Married Individuals Filing Joint Returns, Taxable Income Over||Head of Household, Taxable Income Over|
Source: Internal Revenue Service
If your status and income amount are at or higher than what appears on this chart, you need to file taxes, no matter the rate.
What information is needed to file taxes?
When preparing to file a tax return, there are a lot of different forms that you’ll begin to receive, which are extremely important to keep organized if you want to file your taxes properly. Simply keeping them in an appropriately labelled folder is the least you can do. When it’s time to file taxes, these forms will help both you and the government keep track of everything that’s being filed. Forms needed for a tax return are:
W-2 – A W-2 form will come from your employer and will detail things like the amount of money you’ve earned and the amount of income tax that has been withheld from your paychecks.
1099 – If you work as a freelancer, a 1099 form will be sent to you, as well as if you’re earning income from rental real estate or other things besides your job.
1099-INT – If you earn interest from a savings account or earn dividends from investments, you’ll receive this form.
Essentially, any and every form sent to you by someone you’ve worked with within the past year should be stored somewhere safe, together with the rest of the forms you’ve received so that when April rolls around, you’re ready for it.
In addition to these forms, be sure to have information like your Social Security Number and last year’s federal and state tax returns if you have them handy. Essentially, anything that can be considered proof of income should be on hand.
Fill out the proper tax form
The 1040 form is the standard federal income tax form that most people use to report their income and claim deductions, as well as calculate the amount of their tax refund for the year. In addition to this standard form, there are several others that you may or may not have to fill out. It all depends on the deductions and credits you want to claim and your overall financial situation.
Submit your forms
There’s more than one way to do this. Below, we’ll go over the three ways that you can submit those forms you’re filling out.
|NOTE: Taxes are due April 15, 2020.|
Submit your tax forms through the mail
Submitting your forms the old-fashioned way hasn’t gone extinct yet. Paper forms can be completed and mailed to the appropriate IRS location. Note that mailing in your forms via snail-mail may take up to 6-8 weeks, delaying the time it takes to obtain a tax refund. If you can afford to wait a while, this isn’t a bad way to go.
E-file your forms
An increasingly popular way to submit your forms, e-filing is faster, easier, and more fool-proof than sending your forms through the mail. If you’re earning less than $66,000 a year, know that there are some software programs that you can use to file your taxes at no cost.
These programs are designed to ask you questions in a simple manner to identify the deductions and credits that you qualify for, as well as walk you through the process of filling out any forms that are required.
If you make more than $66,000 a year, there are software programs like Intuit and TurboTax for you if you’re not sure how to file on your own, but they might not be free.
Get a little help
There are professional accountants whose job it is to help you with your taxes. If you can afford their services, take advantage. They won’t just fill out the forms, they’ll help you maximize your refund.
Find the best tax service providers:
It’s just around the corner
Once you’ve sent in all of the appropriate information to the IRS, don’t forget to keep a copy for yourself. That copy will come in handy next year, when you’ll have to do the same thing all over again. And again. And again.
Filing your personal taxes is one thing. Filing your small business taxes is a whole other story.