Many people who have never done their own taxes before are nervous when they need to file their tax returns. They are afraid of making even a tiny error and be severely punished by the mighty IRS. However, the IRS is not so monstrous as it might seem. It will simply point out your mistake to you and ask you to correct it. At the same time, the benefits of preparing your tax return on your own are great: You can make better financial decisions, save money on tax preparation, and feel more comfortable at negotiating fees with professional tax preparers when your taxes become too complex to deal with without external help. So, whether you are going to use the services of a tax expert or have a go yourself, follow this simple tax preparation procedure.
1. Determine your status as a taxpayer
Each citizen of the USA who is eligible by the IRS standards has to file a personal income tax return. One of the filing requirements, along with the age and gross income of the citizen, is their filing status: Whether a taxpayer is single or married and whether they qualify as head of household. The latter doesn’t necessarily have a spouse but may have some dependents like children. Note down this information about yourself plus think back to the events that took place in your life in the past year. Those can include buying a house (or selling it), having a baby, collecting social security benefits, and others. All that information is necessary in order to understand what IRS forms to select.
2. Choose your IRS forms
Now, pick a form. The simplest one is 1040EZ. It is filled by those whose taxable income is below $100,000, earned from wages, or received as unemployment money or interest. It also suggests no dependents, and can be submitted as an individual or together with a spouse. Among other forms are W-2Gs (receivers of money from gambling), SSA-1099 (receivers of social security benefits) and many more. Just pick a necessary form.
3. Get your documents together
Now, it’s time to get all the receipts that you have accumulated throughout the year in one place. Those can be property taxes, records of your investments, and others. Use those receipts to itemize your personal deductions unless you are going to opt for the standard deduction.
4. Decide how you are going to file
Two options exist for taxpayers related to sending their tax returns. One of them is to file electronically through an authorized IRS E-file provider, for example. The other option is to download the required forms, fill them, sign, and send by mail. If you are entitled to a refund, the E-file option is preferable as you will get your money faster.
5. Consider options for using your refund
If you know that you will get a refund, you have several options how to use it. You should inform the federal government about the desirable actions to be performed with your refund. One of them is to send it to a special account type like education savings account. Placing your refund to your checking account is also possible, as well as using it for paying your taxes next time.
6. Get expert help for tax preparation
You will need the help of a professional tax preparer sooner or later. To find a good one, talk to your friends, colleagues, or anyone you know who has already had experience with tax preparation. Get information about fees and whether the expert has a Preparer Tax Identification Number.
7. Ready, steady, go!
Now, that you have all the forms filled and all the documents gathered, file your taxes. You can either use the help of the tax preparer you have found or use a special software (free or paid) to venture on your own.
Tax preparation may seem daunting without external help. Even if you are going to use the services of a professional tax preparer, though, doing some work on your own is beneficial for your financial outlook and self-confidence.
