Your initial tax filing procedure can be tedious at first, but can be extremely easy if you have accurate guidance well it is important to know the procedure to comply with the IRS regulations and enjoy maximizing your refunds while minimizing your liabilities at the same time.
When filing taxes, you need to collect your documents, select how you are going to file your taxes, and accurately report your income alongside your deductions.
Although the IRS has tools that are useful if you want to file taxes on your own, it is completely fine to seek help from a professional if you are a first-time filer.
With this guide, the entire filing process is streamlined and sorted. We guide you in figuring out whether you need to file and how to claim the deductions and submit your return as well. Now, tax season is a thing you can approach with confidence.
Step 1: Determine If You Need to File Taxes
The first step is figuring out whether you are required to submit a tax return or not. Generally speaking, if the amount of your income crosses the determined threshold, you need to file your taxes. Based on your filing status (single, married filing jointly, etc.), the IRS changes these thresholds a couple of times each year.
This method is also handy even if you are not obliged to file. If you believe you are entitled to a tax refund or tax credits, it could be worthwhile to complete the forms Even when you do not have a tax return to file, it has some usefulness.
For example, if some taxes were deducted from your paycheck and your tax return will indicate little to no tax obligation, there is an opportunity for a refund.
In addition, some refundable credits such as the Earned Income Tax Credit (EITC) or Child Tax Credit may put some money back into taxpayers’ pockets.
Step 2: Collect the Necessary Information
Here are some of the basic documents you should have ready for your tax filing:
W-2 Form: If you are an employed person, then this document should have been issued by your employer indicating your income and the taxes that were withheld.
1099 Forms: These forms will vary if you are self-employed or a freelancer, or anything else that would allow you to earn interest, dividends, or other types of income.
Social Security Number (SSN) or ITIN
Bank Account details: This is necessary if you wish to receive your refund via direct deposit.
Other Deductions and Credits Documents: You may be able to subtract medical expenses, student loan interest, mortgage interest, and educational expenses.
Form 1098-T: If you or your dependent paid tuition fees, this form can help you with the education credit.
Form 1098-E: If you paid interest on your student loan, you might be able to deduct it from your taxes.
Form 1095-A, B, C: These forms show which health insurance plans you had and may influence your tax return.
Step 3: Decide on a Filing Method
Filing your taxes can be done through one of these:
IRS Free File: If your income is low, there are free software tools offered on the IRS site.
Tax Software: Programs like TurboTax, H&R Block, and TaxAct make the work easier.
Hire a Tax Professional: If your tax situation is complicated, a CPA or enrolled agent can assist you.
Paper Filing: You can also print out your tax return when you’re done and mail it. However, this option takes longer to process.
There is less risk for errors when using professional services and most tax software instructions are given step by step. If you are your employer or have too many income sources, it is advisable to seek professional support to ensure all deductions and credits are claimed.
Step 4: Select the Correct Tax Form
The following forms are commonly used:
Form 1040: This is the basic tax return form that is filled by most individuals.
Form 1040-SR: For seniors aged sixty-five and above, it is a hybrid of Form 1040 with larger printing and more white space.
Schedules: Use Schedules to list additional income streams, deductions, and credits, which you may attach with Form 1040.
Form 1040-NR: For a non-resident alien individual earning in the United States, it serves as a mandatory form to be filed.
Form 1040-X: Used for amending previously filed tax returns.
Step 5: Claiming Deductions and Credits
Tax deductions decrease your taxable income, while tax credits reduce your tax billing dollar-per-dollar. The most frequently applied tax deductions and credits are:
Standard Deduction vs. Itemized Signals: Pick one that is to your advantage.
Earned Income Tax Credit: A refundable credit designed for people whose wages fall within a modest broad range of income.
Child Tax Credit: Given to guardians with dependant children.
Education Credits: American Opportunity credit and Lifetime Learning credit can assist with educational incurs.
Retirement Savings Contribution Credits: If you contributed toward the retirement plan, you could earn a Saver’s Credit.
Medical Expenses: If your medical expenses were to cross a limitation of your income, significantly, you can deduct them.
Step 6: Calculate Your Tax Liability or Refund
If you have reported your income, along with the deductions that apply to it, all figures should balance; you will determine if you are getting a refund or if you have to pay tax. With the tax software or professional service, the appropriate tax calculations are done by the system without any additional input.
In cases where tax is payable, it can be paid on the IRS site through direct bank transfer, credit card payment, or with IRS installment payments. For individuals expecting a tax refund, set up arrangements for a direct deposit so it can be processed without delay.
Step 7: Submit Your Tax Return
- E-file: The fastest and most secure method.
- Mail Your Return: If you prefer, you can print and send it to the IRS. Make sure to use certified mail for tracking.
E-filing is the preferred method for most taxpayers as it is processed faster and reduces errors. Many online tax software services also provide an option to file state taxes simultaneously.
Step 8: Monitor Your Refund
If a refund is expected, use the IRS “Where is my refund?” feature to aid in tracking progress. Status updates show that the refund gets processed within 21 days after an electronically submitted request is received; mail takes longer.
Provide correct bank details to prevent delays if a refund is by direct deposit.
Step 9: Make Copies of Your Tax Returns
Keep at least one copy of your filed return and all relevant documentation for three years in case discrepancies arise or audits are found. On the other hand, if you report business income or claim certain tax credits, retaining records for seven years is advisable.
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Most tasks in the complex process of filing tax returns such as choosing what form to use, calculating deductions, and electronically filing tax returns are easy with EasyFiling’s assistance.
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Conclusion
Although filing tax returns is often perceived as intricate, it is broken down further, and it can be easy to accomplish.
All one needs to do is gather the documents, decide on a filing method, and file the IRS tax returns if one wants. If a higher refund and compliance are sought, then a tax expert must be sought out.
It is of great significance to know how to file taxes. Proper organization and timely filing each year will enable you to benefit from tax allowances and avoid penalties all at once.
Nabin Adhikari
