We’ve all seen the commercials of people scratching their heads, trying to file their income tax return. We all know about sales tax and the taxes you pay at the gas pump, grocery stores, etc. But, specifically speaking of income tax, there is a requirement to file personal income tax returns once a year.
Certain people are exempt from income tax. For others, their financial information is simple and filing a tax return is no big deal. People that have simple financials file a single page 1040EZ form. However, those who have complex financials, such as homeowners, people with dependents, and business owners, often require the help of a bookkeeper or tax attorney in the process of filing their taxes.
In order to help you better understand, this guide will cover the basics of the process of filing your taxes. You can then check out federal websites, such as the IRS website, for further details and forms.
Do you need to File a Tax Return?
Any citizen or resident of the United States, who has reached a tax-paying age and meets the IRS requirements, must file an income tax return.
Filing status refers to a filer’s marital status. The option for ‘Head of Household’ is defined as someone who is not married, however, is responsible for supporting a household, a divorcee or a widower. Married couples can choose to file their tax returns jointly or separately.
Which Tax Form should you Use?
If you have simple assets and financials, you should use the simple 1040EZ form for filing your taxes. You can use it if you have a low taxable income (below $100,000) and if you are only utilizing the standard tax deduction, not claiming any others as dependents.
If you don’t meet the criteria for the 1040EZ, you’d need to use the 1040A form. If not that, then you will be required to file using the most complex 1040 form to file your income tax.
Should you File Electronically or use the Traditional Paper Form?
There are two methods of filing returns. You can mail a paper form that is signed or use the electronic method called E-File. There is an option for downloading and printing forms that you can fill out, which you can then sign and mail to the IRS. Otherwise, you’ll have to find an IRS E-File service provider, which may have a fee. You can also use a third party tax preparation software for E-Filing. If you E-File, you’ll get your refunds quicker if you’re eligible for a refund, compared to refunds received via mail.
When should you File your Taxes?
The filing is generally done around the 15th of April. If you are facing any kinds of problems, you can apply for an extension until the 15th of October.
There is also an automatic extension if you’re out of the US, along with other ways to extend your filing due date. Do keep in mind that the extension for filing is different compared to an extension to pay. There are a variety of payment options offered by the IRS.
Is there any Room for Error?
Everyone has different specifics regarding their taxes and they may be affected by a lot of things such as home ownership, investments, alimony, business, children and other dependents. It is easy to make mistakes when dealing with such complexities and the IRS allows you to correct such mistakes. However, you can save time and possibly money if you do it right the first time. It is recommended that you consult a tax attorney or an accountant/bookkeeper to help you with the tax filing process.
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