As tax season nears, you may ask what the alternatives available for filing a tax return are. You have three options to file your tax: filing your taxes, filing using online tax software, or filing by hiring a professional. You must have certain information readily available when filing taxes, no matter which method you select. This article will see how to file your taxes, which options are available, and which tax filing methods are best. But before you start to look for ways to file your taxes, you must know:
Do you even have to file taxes this year?
Your income, tax filing status, age, and other criteria will determine whether you must submit a tax return this year. It also depends on whether or not you can be claimed as a tax dependent by someone else.
Even if you aren’t required to file taxes, you should consider doing so anyway: If you qualify for certain tax credits or have already paid some federal income tax, the IRS might owe you a refund that you can only get by filing a return.
Therefore, give filing tax a serious thought if:
- Your paychecks had income tax withheld.
- You paid estimated taxes or had a refund applied to this year’s estimated tax from the previous year.
- Certain tax credits are available to you.
When is the 2022 tax season?
In the early months of the following year, “tax season” for the previous tax year begins. For example, the Internal Revenue Service (IRS) will begin receiving and processing returns for the 2021 tax year on January 24, 2022. Also, due to some public holidays in certain states/districts, the deadline for filing taxes is April 19, 2022.
Choose How to File Your Taxes
You can file your taxes in several ways. Hiring the service of a tax professional, using online tax software, or filling out the forms yourself are the three primary options for tax preparation. Take a closer look at these methods below:
1. Filing taxes online with tax software
You already know how to prepare and file taxes online if you’ve used tax software in the past. Many big tax software companies also provide access to human tax preparers.
For example, some companies provide software or support packages that include on-demand, on-screen, or online access to human tax specialists who can answer questions, evaluate your return, and even file your taxes.
Several tax-preparation companies, including big brands, offer free online tax preparation software under the IRS Free File program. You must have an adjusted gross income of $73,000 or less to be eligible.
2. Hire and work with a tax preparer
With a complicated federal tax code that is more than 74,000 pages long, it’s no surprise that more than half of all taxpayers in the United States need a professional to assist them.
If you choose this method, make sure the tax preparer has a Preparer Tax Identification Number (PTIN) from the IRS, and also ensure you ask about the fees upfront. Please note that the IRS requires your tax return to be filed electronically if your tax preparer submits 10 or more returns in a year.
If you do not wish to meet in person with the tax preparer, in that case, there is another way of filing taxes. You can share documents electronically with a tax preparer via a secure channel. Typically, the preparer will send you a link to the portal, where you will create a password and then submit photos or PDFs of your tax documents.
3. Filing taxes on your own
You can file taxes on your own by downloading and printing the forms from the IRS website, then mailing them with a check if you owe taxes.
Another option is filling out the forms online and submitting the return with a credit card payment. Using the Forms, Instructions, and Publications Search engine, you can find all the federal tax forms. In addition, state income tax forms are usually available on your state’s official website.
There is no cost or fee associated with submitting your taxes. Filing taxes on your own helps you understand and know your financial situation since it compels you to monitor and keep track of your transactions, earnings, and spending.
The majority of people who file taxes on their own have a simple tax status, an unaltered tax situation, or a genuine interest in the topic. If you have the necessary forms on hand, it can take only a few minutes.
If you file a paper return, it can take six to eight weeks to obtain your refund, however, you must submit it by mail in the below cases:
- You’re married and live in a community property state but filing a separate return.
- Claiming a dependent who has been claimed by somebody else.
- Submitting a tax form that cannot be electronically filed (like a multiple support agreement).
- Filing taxes after/before the e-file window.
Gather Tax Filing Information
Whether you hire a tax preparer or prefer filing taxes on your own, you’ll need to gather tax filing information.
The purpose is to collect proof of income, expenses that may be tax-deductible or qualify you for a tax credit, and documentation of taxes paid during the year.
A tax preparation checklist offers more details, but here’s a quick rundown of what you’ll need:
- Social Security numbers for yourself, your spouse, and any dependents, if applicable.
- W-2 form, showing how much you earned in the past year and how much taxes you have already paid. (If you worked multiple jobs, you may have received multiple W-2 forms).
- 1099 forms, record money given or paid by someone other than your employer. That is non-employment income such as dividend income, interest income, etc.
- Contributions to a retirement account
- Mortgage interest and property taxes
- Donations to charity
- Local and state taxes you paid
- Expenses related to education
- Medical bills that have not been reimbursed
- Federal and state tax returns from the previous year
Collect Income Data
Getting your tax forms together for you and your spouse is a great start, however, keep in mind that you may have income that isn’t listed on your W-2. Remember to include any income you received over the year, such as:
- Money earned through investments
- Rental properties
- Home businesses
- Winnings from the lottery or a casino
Itemized Deductions and Credits
The total amount of taxable income is reduced due to tax deductions. Hence, keeping track of everything you can deduct is necessary. The following are some common deductions:
- Child care costs
- Education costs
- Interest payments on a mortgage
- Donations to charity
Most deductions necessitate receipts and other documents, so double-check with your tax expert to ensure you have all you need.
Track of Taxes Paid
Most businesses deduct federal, state, and additional taxes from each employee’s pay. On your W-2 form, these deductions will be detailed. You’ll have to keep your tax records if you’re a contract employee or operate a business.
Significant Life Changes
Important life events might have an impact on your tax return. If you had a life event that the IRS recognized, you may be able to claim additional deductions, such as:
- Got married
- Had a baby
- Moved to a new state
The federal tax code is constantly changing. Make sure you discuss how these changes may affect you each year with your tax expert. Proposed tax legislation may have an impact on those in higher tax bands. Make sure you understand these bills significantly if your family’s annual income surpasses $250,000.
With over 15 years of experience, AOTAX is the experienced team you need. AOTAX has managed the finances of a number of Indian IT professionals. We have aided in reducing tax burdens and simplifying tax preparation year-round. So, if you’re going to trust a pro, sign up for free with AOTAX today!