6 important things about US taxes & tax filing

Here’s a brief explanation of each filing status

Single

You can file as single if you are unmarried, divorced, or legally separated as of the last day of the tax year.

Married filing jointly

If you are married, you can choose to file jointly with your spouse. This filing status combines your incomes and deductions, and both spouses are equally responsible for the tax owed.

Married filing separately

Married couples can also choose to file separately. This filing status may be beneficial if one spouse has a significant amount of deductions or credits that could be lost if combined with the other spouse’s income.

Head of household

This filing status is for unmarried individuals who have dependents and pay more than half of the household expenses. This status allows for a higher standard deduction than filing as single.

Qualifying widow(er)

If your spouse passed away within the past two years and you have a dependent child, you may be able to file as a qualifying widow(er). This status allows for the same standard deduction as married filing jointly.

Here’s a more detailed list of the tax documents you may need to gather

W-2 forms

You should receive a W-2 form from each employer you worked for during the year. This form shows your total wages earned and the amount of taxes withheld.

1099 forms

If you are self-employed or received income from other sources, you may receive 1099 forms. There are different types of 1099 forms, such as 1099-MISC for miscellaneous income and 1099-INT for interest income.

Investment income statements

If you received income from investments, you may receive statements from your broker or financial institution, such as Form 1099-B for stock sales or Form 1099-DIV for dividends.

Deduction and credit documents

You should also gather any documentation related to deductions or credits you plan to claim. This could include receipts for charitable donations, mortgage interest statements, or documentation of education expenses.

State and local tax forms

Depending on where you live, you may need to gather state or local tax forms in addition to your federal tax documents.

It’s important to keep all of these documents organized and in a safe place so you can easily refer to them when preparing your tax return.

Here’s a more detailed explanation of the three tax preparation methods you can choose from

Prepare your taxes on your own using tax software

Many tax preparation software programs, such as TurboTax, H&R Block, and TaxAct, are available to help you prepare your taxes. These programs will guide you through the tax preparation process and help you identify deductions and credits you may be eligible for. This method can be a good option if you have a relatively simple tax situation and feel comfortable using technology.

Hire a tax professional to prepare your taxes

If you have a more complex tax situation, or if you prefer to have someone else prepare your taxes, you can hire a tax professional such as a certified public accountant (CPA) or an enrolled agent (EA). These professionals can help you navigate the tax code and identify deductions and credits you may have overlooked. They can also represent you if you are audited by the IRS.

Use the services of a tax preparation company like H&R Block or TurboTax

If you want the convenience of having someone else prepare your taxes, but don’t want to hire an individual tax professional, you can use the services of a tax preparation company such as H&R Block or TurboTax. These companies have tax professionals on staff who will prepare your taxes for you based on the information you provide. This method can be a good option if you want the convenience of outsourcing your tax preparation but don’t want to work with an individual tax professional.

Here’s a more detailed explanation of the three ways you can file your taxes

File your taxes electronically using IRS Free File

If your income is below a certain threshold, you can use the IRS Free File program to file your federal tax return electronically for free. This program is available to eligible taxpayers through a partnership between the IRS and private tax software companies. You can choose from a variety of software options based on your income, age, and other factors.

E-file through a tax software program

If you prepared your taxes using tax software, you can usually e-file your return through the software program. E-filing is a secure and convenient way to file your taxes and can help you receive your refund faster. If you owe taxes, you can also choose to have the payment electronically withdrawn from your bank account on a specified date.

Mail in a paper return

If you prefer to file a paper return, you can print out the forms and instructions from the IRS website and mail them in. However, keep in mind that paper returns take longer to process and may result in delays in receiving your refund. If you owe taxes, you will need to mail a check or money order along with your paper return.

It’s important to make sure you file your taxes by the deadline, which is usually April 15th of each year. If you need more time to file, you can request an extension by filing Form 4868 with the IRS. However, keep in mind that an extension to file is not an extension to pay any taxes owed. You will still need to estimate and pay any taxes owed by the original due date to avoid penalties and interest.

Here’s a more detailed explanation of how to pay any taxes owed

Pay online

You can pay your taxes online using the IRS’s Electronic Federal Tax Payment System (EFTPS), which is a free service provided by the U.S. Department of the Treasury. You can also use a credit card or debit card to pay your taxes through a third-party processor, but keep in mind that there may be a fee for this service.

Pay by phone

You can pay your taxes by phone using the IRS’s automated phone system or by speaking with an IRS representative. You will need to provide your bank account information or credit card information to make the payment.

Pay by mail

If you prefer to pay by mail, you can send a check or money order along with your tax return to the address listed on the IRS website. Make sure to write your social security number and tax year on the check or money order, and include a payment voucher if required.

It’s important to pay any taxes owed by the tax deadline to avoid penalties and interest. If you can’t afford to pay your taxes in full, you can still file your return on time and then set up a payment plan with the IRS. The IRS offers several options for payment plans, including short-term and long-term plans, and you may be able to reduce or eliminate penalties and interest by paying your taxes over time.

Here are some of the key documents you should keep

Your tax return

This is the main document that shows your income, deductions, and credits for the year. Make sure to keep a copy of your federal and state tax returns for at least three years.

W-2s and 1099s

These documents show your income from wages, salaries, and other sources. Make sure to keep a copy of all W-2s and 1099s you receive for at least three years.

Receipts for deductions and credits

If you claim deductions or credits on your tax return, make sure to keep receipts and other documentation to support your claims. This includes receipts for charitable donations, mortgage interest, and medical expenses.

Business records

If you own a business, make sure to keep all records related to your business income and expenses. This includes receipts, invoices, and bank statements.

Investment records

If you buy and sell stocks, bonds, or other investments, make sure to keep records of your transactions, including purchase price, sale price, and any dividends or interest earned.

By keeping copies of these documents, you can ensure that you have the information you need if you ever need to amend your tax return or respond to an IRS audit or inquiry. You can keep physical copies of these documents in a safe place, or you can store them electronically using a secure cloud-based service or external hard drive.