How to file taxes: What you need to know
If you have been having a hard time understanding tax filing, we are going to help you with that. Read this article and learn what you need to know.
Just learning how to file your taxes? We’re going to show you how to do it easily
Filing taxes can be intimidating, but there are ways to make it easier. In 2023, there are several options for tax filing, including free options for those who meet certain income thresholds or have simpler tax returns.
Online software programs are a popular choice for filing taxes for free. Also, the IRS sponsors a program that provides direct help from tax professionals who volunteer.
These services can offer significant cost savings, which is particularly helpful for taxpayers with simpler returns. This can save them hundreds of dollars they would have spent with national tax preparation companies.
It’s important to consider your financial situation when choosing a tax filing option. For example, if you have a more complex return, you may want to consider hiring a professional tax preparer.
This can ensure accuracy and avoid potential penalties. However, for many taxpayers, the free options available can provide a simple and cost-effective way to file their taxes.
In this article we are going to share with you tips on taxes. Read on and learn what you need to know about it.
Do I need to file this year?
Several factors determine whether you should file tax returns. Some of these factors are income, tax filing status, and age.
If someone else can claim you as a tax dependent, that also impacts your tax returns. However, even if you do not have to file taxes, it is worth considering.
The reason for that is that you may qualify for a tax break that could lead to a refund. Lower-income taxpayers may be eligible for the earned income tax credit.
Parents of children under 17 years of age may qualify for the partially refundable child tax credit.
You may also need to file taxes if you had income tax withheld from your paychecks or if you made estimated tax payments.
It’s important to look into whether you qualify for certain tax credits to see if filing your taxes would be beneficial.
The 2023 tax-filing season started on January 23, 2023, which is the date that the IRS began accepting income tax returns.
It’s essential to remember that the purpose of the 2023 tax-filing season is to file taxes for the 2022 tax year.
The tax-filing deadline for 2023 is April 18, but if you need more time to file, you can request an extension until October 16, 2023.
Keeping track of important tax deadlines and staying informed about the tax-filing process can help make tax season less stressful and more manageable.
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How do I file my taxes?
When it comes to filing taxes, you have three options: fill out IRS Form 1040 or Form 1040-SR by hand and mail it (although it’s not recommended), file taxes online using tax software, or hire a human tax preparer to do the work.
Many tax software providers offer online access to human tax professionals. Software such as TurboTax, H&R Block, TaxAct and TaxSlayer, can answer questions, review your return, and even file taxes online for you.
If you’ve used tax software before, you’ll likely know how to prepare and file taxes online. But maybe your financial life is more complex or you own a business.
In that case you may want to consider hiring a tax professional to prepare and file your taxes. They can provide guidance on forms and help you understand the process.
You can share your tax documents electronically with a tax preparer through a secure portal. They will typically email you a link to the portal, and you can upload PDFs or pictures of your tax documents.
It’s possible to file taxes for free. The IRS Free File program provides access to free online tax preparation software from various tax-prep companies, including major brands.
However, to qualify for Free File software, your adjusted gross income must have been $73,000 or less in 2022.
The IRS also offers all taxpayers, regardless of income, access to fillable tax forms that can be submitted electronically for free.
How do they determine my taxes?
In the United States, taxable income is divided into tax brackets and taxed at corresponding rates.
This progressive tax system means that those with higher taxable incomes pay higher federal income tax rates. Meanwhile those with lower taxable incomes pay lower rates.
The system works in a manner so that no matter what bracket you’re in, you won’t pay the corresponding tax rate on your entire income.
Which tax filing information do I need?
Whether you decide to do it yourself or hire a tax preparer, it’s important to gather all the necessary documents.
These documents serve as proof of income, expenses that are tax-deductible, and taxes you paid throughout the year.
To make sure you have all the documents you need, you can follow a tax prep checklist. Here are some essential documents to gather:
- Social Security numbers for yourself, your spouse, and dependents.
- W-2 forms that show how much you earned and the amount of taxes you paid. You may have multiple W-2 forms if you worked for more than one employer.
- 1099 forms that show income from other sources.
- Proof of retirement account contributions.
- Receipts for property taxes, mortgage interest, and charitable donations.
- Proof of state and local taxes you paid.
- Receipts for educational expenses.
- Proof of unreimbursed medical bills.
- Last year’s federal and state tax returns.
Having all these documents ready will make it easier to file your taxes accurately and on time. Additionally, you should keep these documents organized and stored in a secure location in case you need them for future tax seasons or audits.
How do I settle up with the IRS?
If you owe taxes, you can pay using various methods. This includes electronic payments, wire transfers, credit and debit cards, checks, or cash.
If you cannot pay the taxes owed all at once, an option may be an IRS payment plan. Through this you make monthly payments to settle what you owe. There are two kinds of IRS payment plans, short-term, and long-term.
To get your refund quickly, avoid filing your tax return on paper. The IRS takes six to eight weeks to process paper returns, but electronic returns are processed in about three weeks.
They can also send your refund directly to your bank account, so you don’t have to wait for a paper check. This reduces the waiting time for mail. Additionally, you can track the status of your IRS and state refunds online.
Recommendation: Learn what a dividend tax rate is!
Taxes will affect your investments too. They’re part of the game; the better you understand your taxes, the better you’ll manage your finances and make the right investment choices.
In the following, you can improve your knowledge on this topic by learning about dividend tax rate.
About the author / Danilo Pereira
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