As you hear the word taxes, you want to run away. Dealing with your taxes can often be tiresome and frustrating and you woe the day you have to file your tax returns. Then there are also those who have no idea how to prepare their tax returns or are doing it for the first time. You get your first job and buy your own apartment and suddenly you are faced with a thing called tax returns. So what are you going to do?
Worry not, because we have decoded how to file your tax returns and what all is involved in doing so.
So, you may have received a tax form from the government to fill up. This document contains your tax liabilities and is specific according to the tax you will be paying, for instance income tax forms. These must then be filed with the government as tax returns. The process of preparing these tax returns is called tax preparation and you can even use online services and tax preparation software to fill these tax forms.
You must send these forms by April 15 to the Internal Revenue Service and for any extension you will have to give a written request. It is good to have already done all your deductions and savings beforehand so you will be ready to file by the stated time.
You need to identify which of the five categories specified by the Internal Revenue Service you fall into. The five categories are Single, Married filing jointly, head of household, qualifying widow with child and married filing separately. If you fall in the married filing jointly category, you and your spouse have agreed to file one tax return for both your incomes. On the other hand if you and your spouse have agreed to handle your taxes separately then you file separate returns and this comes under the married filing separately category.
If you are single and look after the financial needs of most of the household, which includes a dependent, you fall under the head of household category and will be taxed lower. You are eligible for the special qualifying widow with child category, if your spouse died in the previous two years and not the year you are filing the tax return and plus you have a child dependent on you.
The basic tax form that you must file is the 1040 form but you have to add more forms related to your income and any deductions. There are three kinds of tax forms:
1. 1040- This form is a basic income tax form for incomes greater than $50,000 and contains six schedules. These schedules list the itemized deductions, taxable interest, profit or loss from a business, capital gains and losses, additional income and losses and earned income tax credit.
2. 1040A- When your income is less than $50,000 and you do not itemized deductions, you can use form 1040A
3. 1040EZ- When your earned interest is less than $400, you are below 65 years of age, you are not blind, your taxable income is less than $50,000 and you have no dependents, you use form 1040EZ.
Next make a personal tax folder and make a checklist of all the documents and forms you require. If you are working, your employer will give you a W2 form at the beginning of the year. If you were employed as an independent contractor, you will need the 1099 form. Banks also provide the 1099 form where you can report all your interest and dividends earned, including interest on student loans, mortgage and brokerage trades. You must all show any documents related to deductions like medical expenses and contributions to charitable organizations.
So now you must fill out the forms correctly and attach all the relevant documents and forms. Make sure you sign the return and write the date on it. You also need to include a payment voucher for any payment you may have stated in the forms.
You should double check your social security number and both the husband and wife, in the married filing jointly category, must sign on the form. If you do happen to make a mistake, you can always file a 1040X and make changes to your tax return form. Make sure you send your forms to the IRS center in your state which should be listed in your instruction booklet.
If this is too confusing for you or if you want some help, you can use some tax preparation software like TaxSlayer, TaxACT, H&R Block at Home and TurboTax. These will guide you and allow you to file your tax returns electronically.
If all else fails and you still find yourself unable to fill the forms, you can always hire a professional to do the job for you. An attorney, an accountant or an agent will fill out the forms for you and ensure that your returns are filed correctly and help you report and record all your earnings and deductions.
E WATERS