In any tax season, if you’ve worked a good portion of the year, then it’s a good idea to get a start on your taxes early so that you can properly assess the situation. This is true no matter what tax bracket you fall under.
For many Americans, it is also possible to easily complete their own taxes each and every year. If you make a habit of doing it yourself every year, it also becomes easier to do with each subsequent year, as you are able to draw from past experiences and sometimes even previous data points that you’ve accumulated.
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Should I file my own taxes?
Outside of wondering can I do my own taxes? You might want to ask yourself, should I? The more straightforward your tax situation is, the more sense it makes to file them on your own taxes using tax software that is available online. One indicator that affects the complexity of your tax filing situation is the number of sources of income you have.
If you’re a freelancer that has completed a number of different projects, then this can add to that complexity for example. The same can be said for a business owner with a number of different revenue streams. Hunting down the information and documents required to report on these taxes can be quite time-consuming.
And one of the most weighted factors for deciding whether or not you would want to do your taxes is time. Ask yourself, do you have at least seven hours of time that you can allocate towards retrieving documents, filling out forms, and answering questions?
When can I start filing taxes?
The default date for which tax season begins varies from year to year, but will usually always take place sometime between January 15th and February 15th. This is because most people receive their final paychecks for the fiscal year at the end of the calendar year.
Because of this, the default system that the IRS runs on associates a fiscal year with the calendar year. However, the definition of a fiscal year can technically be different depending on the situation. For example, school systems run on a fiscal system based on the school year, and some people that are self-employed are actually able to choose their tax year simply by submitting their very first tax return observing the specific fiscal year.
What do I need to file my taxes?
There are a few items that every individual filing taxes on the tax calendar year will need. One of those pieces of information is your social security information and a secondary ID to prove that that social security number actually belongs to you.
You’ll also need some type of document to prove your income. These forms can be documents such as W-2s (if you have a regular job) or 1099s (if you are self-employed or do contract work). There are a plethora of other types of tax forms for various situations such as gambling winnings, broker transactions, cancellation of debt, and cryptocurrency gains or losses for example. Deductibles will then be subtracted from your income.
That’s right, tax deductibles work by reducing your taxable income. In order to be eligible for a specific tax-deductible, you’ll need to fill out the proper forms. Common forms that you may need to fill include 1098, 1098-C, 1098-EE, and 1098-T. These forms apply to major deductions like your Mortgage Interest Statement. These are different from your expenses.
In order to deduct expenses for either personal or business related needs, you will also need to have any and all receipts that are applicable. Common expenses that can easily be deducted include medical bills, charitable donations, and IRS contributions.
How to file your own taxes
Being prepared is the key to filing your own taxes. In addition to being prepared with the proper forms, there are some basic rules that you will need to follow. Fortunately, modern technology makes it easier for everyone to do their own tax filing.
Choose how to file
The first step to taking on your taxes on your own involves choosing which platform you are going to use to file your taxes. You’ll want to do so with an authorized IRS E-Filer, or directly with the IRS themselves using the IRS free file tool.
There are a few online tools available to those that are looking to file their taxes on their own. One of those is TurboTax, the well-known tax software that is offered by Intuit. Turbotax allows you to create a profile, which saves your information year over year, making it easier to
Gather tax filing information
Gathering your information for your taxes will involve tracing down the last year’s worth of activity, which can take some time if you haven’t kept the best organizational habits for your tax filing. This can sometimes take several hours or longer.
The documents that you should gather include the list previously mentioned above: social security information, proof of income statements, tax-deductible forms, and receipts.
Decide your filing status
There are 6 filing statuses that you need to choose from when filing your taxes.
- Single – Unmarried people that don’t qualify for another status
- Married filing jointly – The majority of married couples
- Married filed separately – High earning individuals that are married could benefit from less taxes
- Qualified Widow – Those that have lost a spouse and are supporting children
- Head of Household – There are special rules for this filing status that applies to those that are paying a majority of the bills and supporting others living in the same home. Be sure to follow them.
Learn about your deductions
Learning about your deductions can help you to save money on your tax bill. Common deductions include medical or dental expenses, payments on your mortgage interest, and the child tax credit – but there are many things that can be considered a tax deduction.
If you have a question about what deductions or credits may apply, it’s best to check directly with the IRS for the various programs for individuals.
Understand your tax bracket
The government applies a different tax rate for different levels of income. These levels of income are referred to as tax brackets and are based on the annual rate of income for each group of individuals. Tax brackets can vary from year to year so it’s important to check up on them each tax season.
Finding your tax bracket will allow you to forecast what rate you will have to pay for the tax calendar year as well as how much you will owe total in taxes. Of course, there are other factors (like deductibles) that affect the amount you pay, so it won’t always be exact.
File with the IRS
After you have completed all of the steps in preparation for filing, the only thing left to do is actually proceed with filing them. Most tax software programs have step-by-step instructions, as well as questionnaires, that help you to get the largest possible tax return possible.
An authorized E-filer will also be able to submit your claim directly to the IRS for you, as well as save your information for the next time you need to access the records.
What do I do after I file?
After you file, you will either owe taxes, or you will be eligible for a tax return. You will be able to accomplish either process whether you use the IRS’s tool or a third-party tool.
If you owe
If you end up owing money to the IRS for the tax calendar year, you usually have the option to either pay it upfront or set up payments directly to the IRS (or via a third party) that will be applied at a set interval.
Common methods of payment include bank wire, payments over the phone or online with a debit card, and even using digital wallets such as PayPal.
If you’re getting a refund
If you’ve filed electronically, then it’s possible to get a refund by direct deposit. Directly depositing the money into your bank account has a much faster turnaround time than waiting for the money to be sent to you via check when paper filing.
You’ll be able to get a refund using direct deposit whether you file directly with the IRS or if you use a third-party vendor like TurboTax.
Get a Head Start on Your Taxes
It’s always a good idea to file your taxes as early as possible so that you can assess the situation at hand. Usually, you’ll have a good idea of whether or not you will owe money or get a tax refund before you head into your taxes. That being said, the earlier you file, the sooner you’ll know exactly what those numbers add up to.
For that reason, it’s important to get a head start on preparing for filing your taxes each and every year. Doing so could help save you money.
Is it difficult to do your own taxes?
If you are properly prepared, it should be fairly straightforward to file your own taxes online or with an IRS authorized E-Filer or with the IRS itself.
Is it cheaper to do your own taxes?
Filing your own taxes starts off free when using a tax software like TurboTax or filing directly with the IRS. Different features may cost money, but you may not need any additional functionality.
How can I do my taxes by myself?
You can do your own taxes by using tax software like TurboTax or by filing directly with the IRS using their free software.