You should have a guide handy if you plan to do your own taxes. Federal income tax is a complex subject, and it’s best to use reputable sources to make sure your taxes are done correctly.
You could be subject to heavy fines and lose out on the maximum return.
You can avoid these situations by learning how to file your taxes efficiently and without hassle.
How to do your own taxes
You can prepare your tax return in three main ways:
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- Paper & ink You could use a paper and pen return form, and mail it to the IRS local collection address.
- Online form. Use the IRS online fillable forms.
- Online tax software Online tax software or mobile apps are available to help you file your taxes.
Your tax situation should determine the choice of method.
You may be able to use Form 1040 if your situation is simple, i.e. you have taken the basic deductions, and you haven’t made any major life changes.
You will not even need a tax software.
Manual Filing vs Tax Software
You’ll need tax filing software if your situation is complicated. For example, if you have to fill out the Form 1040 as well as other forms. This software will make it easier for you to manage your workload.
You can download the IRS forms, fill them out and then send them to the local collection address. These forms are available at IRS.gov. These forms are free.
You can pay your taxes by mailing a check directly to the IRS or via credit card, debit cards, or wire transfers made the same day using the IRS Online Payment System.
This method is more time-consuming, but can be great if your return is simple. Fill out your forms online using their free eFile system.
You may find that a tax software is necessary if you are dealing with a complex return or if you don’t have much time.
If you have rental property or run a small business, and you need to calculate capital gains taxes, using tax software can be a great option.
What you’ll need to do before filing your taxes
You need to follow a few steps before filing your own tax return. These include:
1. Find out your filing status
You must choose your filing status prior to preparing your tax return.
The IRS can assist you in determining your status by asking a few simple questions.You may be eligible for five different filing statuses.
- Married filing separate
- Married filing jointly
- Unmarried Head of Household
- Widow or widower eligible with dependent child
2. Make sure you have all your documentation in order
Get all the information you need to file your taxes before you begin preparing your return. This may include:
- Your W-2s
- Taxes on schooling
- Interest Statements
- Receipts for deductible expenses
- Property Taxes
- If applicable, a copy of your previous year’s tax return
- You may also need to use other forms, like the Form 1099, if you have certain types of income. For example, if you get taxable interests of at least $10.
All of your documents should be kept in a safe place and easily accessible. You may need them to prepare your taxes for the future or for another reason, such as applying for a mortgage.
3. How to Choose the Best Tax Software
You can choose from a variety of tax software. Review your options to determine the one that best suits your needs. You can find these software products online.
Some programs are specifically designed for the preparation of personal taxes, while others are perfect for business tax preparation. Others can handle both.
Tax preparation software includes TaxAct H&R Block and TaxSlayer.
You will be asked questions when you use tax software to make sure you pay the correct amount of tax.
Most of these products come with valuable educational materials and information that guide you through the entire tax filing process.
You can also contact the IRS directly if you need help. Calling the IRS to get help is another option.
Customer service agents at the IRS are usually very friendly and helpful.
The Best Tax Software to File Your Taxes
Let’s look at the three most popular options for Tax Filing Software available today.
You can use TurboTax for free to prepare your tax return online.
You may upgrade to the paid version if your return is complicated. This includes the deluxe, premier and self-employed versions.
You will need to pay an additional $40 for each state to file your self-employed tax returns if you are a freelancing.
TurboTax gives you access to tax experts who can review your returns. If necessary, you can also chat with an actual CPA “on demand”.
H&R Block offers a free package for online filing of basic tax returns. The paid packages are available from $29.95 up to $89.95 and are perfect for small businesses and self-employed people.
The free package does not charge you to file your state tax return. Depending on which tax preparation package you select, you might have to pay up to $39.99 per state return. H&R Block guarantees its users the maximum refund.
H&R Block offers an interest-free loan if your federal tax refund does not exceed $3,000.
The company offers a wide range of services, including face-to-face assistance. It has 12,000 offices in the U.S.
Who should do their own taxes?
In general, people who have a simple financial and tax situation should be able to do their own taxes.
You can also do your own tax returns if you have no dependents, investments or businesses.
If you earn at least $200 000 a year it can be difficult to prepare your taxes by yourself.
You should hire someone to prepare your taxes. You are more likely to be audited by the IRS if your household income is over $200,000.
If you’ve experienced a major life event within the last year, it may be worth hiring a professional to prepare your tax return.
A professional can also help you if your tax situation is complex and includes dependents, investments, businesses, assets, etc.
If you want to itemize deductions, working with a professional can be a great idea.
These factors can make your tax preparation more difficult.
Saving money by doing your own tax preparation is a great idea.
Use TurboTax or TaxAct to file your tax return online or manually.
It is better to hire a professional tax advisor if you are in a complex tax situation to avoid mistakes that could lead to IRS audits.