Tax season is upon us. It can be a daunting and tiresome experience, especially for the people who are filing taxes for the first time. So, if you are in a jam thinking about how you are going to file your taxes, we have a cheat sheet for you to follow up with. Read the following article and get the basics of filing your taxes.
1. Select Your Tax Filing Method
There are basically 3 ways to file your taxes. The first one is that you fill out an IRS Form 1040 and send it through mail. We don’t recommend it because paper processes take up to 6-8 weeks.
The second way is to file taxes online through a tax software. It is a fairly easy method that covers all the areas that are under inquiry during the audit. IRS also offers access to tax preparation software. You must have an adjusted gross income of $75,000 or less to avail this service.
The third one is to hire a professional tax expert or tax preparer. The professionals are well-aware of everything that goes in the system. They are familiar with all the requirements and technicalities involved in the process of the IRS audit. You might want to seek the guidance of a professional if you have a healthy earning side gig.
2. Have a Clear Understanding of How Taxation Works
Your payable tax amount is determined by dividing your taxable income in to tax brackets. Each bracket gets taxed at a corresponding tax rate. This system ensures fairness. So, a person with a high taxable income will pay more taxes and a person with a low taxable income will be subject to a small amount of tax as per the laws.
3. Know Your Tax ABC
You need to gather all the right documents and get them organized or you will be scrambling for everything at the last minute. It is good to be prepared and ready for everything. Here is a list of must-have documents that you will need during the process.
- Social Security Numbers (Yours and the dependents)
- W-2 Form (Form that states your annual earnings from last year and how much tax you have already paid)
- 1099 Forms (Records that a person or entity gave or paid you money)
- Contributions towards retirement
- Proof of state and local taxes you paid
- Educational expenses
- Unreimbursed medical bills
4. Settle Your Score With the IRS
If you have outstanding balance against IRS, now would be a great time to pay it all back. You can use cash, electronic payment methods, wire transfers, checks, and credit/debit cards to clear whatever you owe to the IRS.
If you can’t pay your taxes in one go, you can opt for an IRS payment plan. You can choose between a long-term plan or a short-term payment plan. Both come with their own pros and cons. Whatever you select, you will be making monthly payments after this.
As discussed in our blog, it is quite helpful if you hire the services of a professional tax expert to file the taxes for you. This will give you the freedom of mind so you can focus on better and more productive things in your life. MARIELA RUIZ, CPA, PLLC offers professional accounting, bookkeeping, and tax preparation services at affordable rates in Mission, TX. Check our website to learn more about our services or simply give us a call at (956) 997-0067 for further assistance.
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