Tax filing can be a daunting task especially for beginners. One has to be fully prepared and aware of the tax basics. The following are key steps to review:
What documents do you need?
The primary requirement is the W-2 or earning statements from all your employers. Your employers can mail these to you saving you the headache of hunting for them. According to the Federal law, these copies should be sent to you by January 31.
Also, there are other documents you may need to look out for in the mail. For instance, depending on one’s present portfolio, one may receive a 1099 for all the additional income not yet taxed. This could include interests on savings or other bank accounts as well as dividends. They could come alongside other important tax information in January, and it is up to you to be on the lookout. All these forms are essential during tax filing.
What does one fill out?
Obviously, all taxpayers have to fill the IRS’s 1040 Form. However there are different versions of this form for different taxpayers. Those with no dependents or itemized deductions should fill the 1040EZ while the 1040A is reserved for those with dependents but no itemized deductions.
If you need to itemize deductions, either you are a single person or a couple (eligible for deductions higher than $5,800 and $11,600 respectively) you should fill out the 1040 long form. Otherwise, there is a standard deduction for both categories depending on one’s filing status.
Before claiming any deductions, be sure you have the clear records. For instance, you cannot claim charitable donations unless there are receipts proving funds were given out. Beginners may not have much foresight, but by taking time to review the tax forms carefully during your first filing, you will learn all you need for next year.
How do you file?
When it comes to tax preparation and filing, there are several options to consider. A taxpayer can hire an attorney, an enrolled agent, a public accountant or a licensed tax preparer. One can also use free online software.
The best resource, however, depends on the complexity of your tax returns. First timers with fairly straightforward returns can utilize the online resources which offer free services to low-income taxpayers. Still, regardless of the resources one uses to prepare returns, it is advisable to file them electronically for faster refunds.