You must have seen people working on their tax calculations only to have a frustrated look on their face each year. As consumers, we are all familiar with sales tax and the tax you pay on gas at the pump. However, income taxes can be daunting because there is a requirement to file personal income tax returns.
Part of the confusion inevitably comes when you consider certain people are exempt from income tax, while others have financial information that is simple or even complex. Individuals with simple financials must file a single on-page 1040EZ form. However, those who have complex financials like homeowners, parents, or people with dependents and business owners often require the help of an accountant or a tax attorney to navigate the process of filing their taxes.
This guide will cover the basic process of filing your taxes, and then you can research federal websites, such as the Internal Revenue Service’s (IRS’s), for further details and forms.
Do you need to file?
A citizen or resident of the United States, who has reached a tax-paying age and meets the other IRS requirements, must file their income tax returns.
A 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 to file your taxes. You can use this form if you have a low taxable income (typically below $100,000), you are only utilizing the standard tax deduction, not claiming any others, and if you do not have any dependents.
If you do not meet the criteria for 1040EZ, you would need to use the form 1040A. If you do not meet the criteria for the 1040A, then you will be required to use a complex 1040 form to file your Income Tax.
Should you file electronically or stick to the traditional paper form?
There are two methods for filing returns. One is by mailing a paper form that is signed or by using the electronic method called E-File. There is an option for downloading and printing fillable forms, which you can then sign and mail to the IRS. Otherwise, you will have to find an IRS E-File service provider, which may have a fee. You can also use third-party tax preparation software for E-Filing. If you E-File and are eligible for a refund, you will often receive your refunds quicker than filings received via mail.
When should you file your taxes?
The filing is generally required to be post-marked by the 15th of April. If you face any kind of tax filing issues, you can apply for an extension until the 15th of October. Similarly, there is also an automatic extension if you are out of the US. Keep in mind that the extension for filing taxes is different from an extension to pay taxes that are owed. There are also a variety of payment options offered by the IRS if taxes are filed and due.
Is there any room for mistakes?
Everyone has different specifics regarding taxes, and they may be affected by a lot of factors, including homeownership, investments, alimony, business ownership, children, and other dependents. It is easy to make mistakes when dealing with such complexities, and the IRS allows you to correct mistakes. However, you can save time and possibly money if you file them correctly the first time. It is recommended that you consult a tax attorney or an accountant to help you with the tax filing process to avoid any confusion, delays, or possible legal action.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.