Wondering How To File Taxes?
How can you file your taxes?
What’s important to know?
Keep reading as we have gathered exactly the information that you need!
Let me explain to you how to file your taxes so you know once and for all!
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Table of Contents
How To File Taxes Overview
Every year, we are all required to file our taxes with the tax authorities providing them information on our earnings so they can assess how much tax we are required to pay.
There’s an old expression that says death and taxes are two certainties of life!
In the United States, the Internal Revenu Service is the organization that is mandated to receive taxes and issue refunds to those who may be entitled to it.
It’s important that you file your taxes and pay the amounts that you may owe to avoid any legal troubles.
In this article, I will tell you how to file your taxes so you are better equipped in handling it.
Keep in mind that the tax filing requirements can vary from one jurisdiction to another, so this article is intended to give you an overall understanding.
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Why File Taxes
The first question that I’d like to cover is why file taxes in the first place.
The simple fact is that it’s the law.
If you have earned an income during the year, you are required to file your taxes to inform the IRS how much you made.
Once the IRS is made aware of your earnings, they will then assess how much tax you are obligated to pay.
Everyone is required to pay taxes so the government can receive funds to provide various government services to the people, provide benefits, and pay for their operations.
One of the most important sources of government funding is income taxes.
We all have to pay taxes but the amount of our tax liability will depend on our income level, filing status, age, and other variables.
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Tax Filing Methods
If you have earned some income in a given year, you are required to file your taxes.
In the United States, there are different methods that you can use to file your taxes: file your taxes using a tax software, using the IRS Free File, hire a tax preparer, or file your taxes by mail.
Let’s quickly look at each of these methods.
Online Tax Filing:
The most common method for filing your taxes is to file online.
You can file your taxes online by purchasing tax software allowing you to prepare your taxes.
There are different vendors that offer tax software solutions where you are guided through the preparation of your tax forms.
IRS Free File:
You can also use the IRS Free File program which is a free online tax preparation software.
To use the free IRS tax filing tool, you must have a total adjusted gross income of $73,000 or less.
Tax Preparer:
Another option is to hire a tax preparer to have him or her handle your taxes.
A tax preparer is a person who is able to help you prepare and file your income taxes with the IRS.
You may want to use this option if your tax situation is more complex, you don’t have the time to do your taxes, or you just don’t like handling tax-related matters.
Mail Filing:
The last option is to fill out the IRS tax forms and send your completed documents by mail to the IRS.
Today, this option is the least popular option as it takes time to complete the documents by hand, you’re more likely to make mistakes, the forms may get lost in the mail, and it will take the IRS longer to process.
If you have the option of filing your taxes electronically, it may be a better choice.
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How Tax Liability Is Determined
Tax liability is determined based on different factors such as your income, age, number of dependents, and tax filing status.
The way the government assesses how much taxes you must pay is to look at your “taxable income”.
The taxable income is income on which you are legally required to pay taxes.
In the United States, individual income is categorized in different tax categories known as tax brackets.
Depending on which income category (or tax bracket) you fall into, your tax rate will be different.
Typically, the higher your taxable income, the higher your tax bracket, and the more your will need to pay in taxes.
The more someone makes money, the more he or she will have to pay taxes.
This is called a progressive tax system where your tax liability progressively increases the more you earn money.
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Information Needed To File Your Taxes
To file your taxes, you will need to gather all information relating to your income, expenses, bills, and donations that are relevant for tax purposes.
If you are filing your own taxes, you will need to determine what income and expense information is important for your tax filing so you can report it to the IRS.
If you are handling your taxes through a tax preparer, you will be asked to provide the necessary information he or she will need to file your taxes.
Typically, a taxpayer will need to gather the following information:
- Social Security Number
- W-2 Form
- 1099 Form
- Education expenses
- Medical bills
- Property taxes
- Retirement account contributions
- Last year’s income tax return
- Charitable donations
A person with more investments and a more complex tax situation will probably need to gather more information.
Once you’ve gathered all your income and expense information, tax forms from your employer, and other related information, you’re ready to actually file and submit your tax return to the IRS.
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Tax Payment or Refund
Once you have filed your income tax return with the IRS, you will potentially have three possible outcomes: you owe taxes, you are entitled to a refund, you don’t owe any taxes nor will you get a refund.
In many cases, a taxpayer will end up having to pay a sum of money to the IRS to pay his or her full extent of tax liability.
For example, an employee that has paid $10,000 in taxes through payroll deductions may need to pay additional sums if the IRS considers that the person’s overall tax liability exceeds $10,000.
You can also end up with a tax refund.
A tax refund is when the total amount of tax liability you were assessed is below the amount of taxes that you may have paid or that you were entitled to a tax credit.
For example, if an employee had paid $10,000 withheld from his or her paycheck but owes the IRS $8,000, the IRS will refund the employee $2,000.
Finally, in rare situations, a person will neither have to pay anything to the IRS nor get a refund.
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Filing Your Taxes On Time
It’s important that you file your taxes every year before the deadline established by the IRS.
When you file your taxes sufficiently ahead of the deadline, the IRS may have the ability to process your application faster.
Those who expect to receive a refund from the IRS should file their taxes as soon as they can so they can quickly get their tax refund.
Filing your taxes electronically can also be a “safer” way to ensure that you have filed your taxes and that you have proof that your taxes were effectively filed.
If you file your taxes by mailing in your forms, you’ll need to make sure you keep a copy of your forms and get a receipt that your tax forms were submitted to the IRS.
Those who end up filing their taxes late will be exposed to fines and late interest penalties.
Make sure you file your taxes on time.
You can also track the status of your tax filing by looking up your tax filing status on the IRS website.
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Takeaways
So there you have it folks!
How do you file your taxes?
This is a question that many of you ask, especially if it’s the first time that you will be filing your taxes.
The process of filing taxes is fundamentally not complicated, it’s a matter of completing the IRS tax forms and submitting them to the IRS.
Then, if you owe taxes, you must pay the IRS or you will get a tax refund.
However, filing your taxes requires that you carefully gather your income and expenses documents, tax slips, and other documents relevant to calculate your income, tax deductions, and tax credits.
Once you have all the information collected and gathered, you can either use tax software to file your taxes, file your taxes on the IRS website if you are eligible, or work with a tax preparer.
Everyone’s tax situation is different and it’s important that you carefully assess what are your tax obligations and what deductions are credits you may be eligible to get.
You may want to work with a tax professional for advice on the filing of your income taxes.
Now that you know how to file your taxes, good luck with your research!
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