What You Should Know about Filing Your Taxes

What You Should Know about Filing Your Taxes

What You Should Know about Filing Your Taxes

(Last Updated On: February 19, 2018)

Filing Your Taxes

The deadline for paying and filing your taxes is fast approaching and you are running out of time.

It’s never too early to think about taxes. Sure, there are plenty of things that are much more pleasant to think about, like root canals or traffic jams. But getting a jump on your 2018 taxes is a great idea–the sooner you finish them, the sooner you can relax.

Going into tax season is much easier when you are prepared. Before filing your taxes, it’s essential to know basic tax terms, concepts and best practices.

Understanding these key elements can reduce your tax bill – or score you the largest tax refund – and ensure that you dodge any failure-to-file or late-payment penalties and fees.

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So What Should You Know Abiut Filing Your Tax?es

  1. Determine Your Filing Status? (Married, Single, Head of Household)

Marital standing at year end determines your filing status for the entire year. If you have a decree of divorce or separate maintenance, signed by a judge, you should file as single. Regardless of whether you have a signed decree you may be able to file as head of household. Filing as head of household may reduce your income tax obligation, but to qualify the following conditions must be met:

  • You paid more than ½ the cost of keeping up your home for the tax year,
  • Your home was the main home for your child for more than ½ the year, and
  • Your spouse hasn’t been a member of the household for 6 months.

If you can’t file as single or head of household, then you must either file as married filing joint or married filing separate.

Should my spouse and I file as married, filing separate or married, filing joint?

Filing joint may provide some tax benefits over filing separate. However, by filing separate the IRS can’t hold you responsible for any unpaid taxes caused by your spouse’s actions or omissions. The “innocent spouse” rule provides relief from this responsibility in some cases.

 

  1. Determine Who Will File Your Tax

Before filing your taxes, you need to determine who will file your taxes. Is it you? Will you use an online tax preparation system, such as TurboTax? How about visiting a professional tax preparer?

If your financial situation is simple, filing your taxes through a tax software system may be a good option. In fact, eligible taxpayers can file their taxes for free through many online tax programs. For the best method to file taxes for free, check out the software companies offering free returns through the Internal Revenue Service’s Free File system. Some tax software companies also offer their own free filing options for simple tax returns. For filers who don’t qualify, or who choose to pay for a more deluxe tax-return preparation package, expect to pay between $50 and $100 for software to file your federal and state forms. You’ll pay even more if you select add-ons, such as a review from a tax professional, or premium software packages.

    3. Get prepared for Your Tax forms and important papers

If you search the IRS website for tax forms, you’ll get over 900 results. Here are the ones you need to know. Walbert Castillo, Ramon Padilla, Karl Gelles, etc.

While you’re preparing your tax form, proceed by collecting your personal information, going through all your important documents and getting paperwork lined up.

You will need everything that details all the income you received in 2017. For most, the W-2 form from your employer will be the key document you need.

Next you will need to make decisions about which of the three major tax forms (1040, 1040 EZ or 1040A) to use and then round up all the other forms you might need to support your return.

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   4. Determine Whether To Take the standard deduction or itemize? 

Taking the standard deduction is easier and quicker but for some people itemizing will allow you to receive a bigger reduction in the amount of tax you owe.

The standard deduction is $6,300 for single filers and $12,600 if you are married and filing jointly. It will make sense to itemize if you are able to claim more than those amounts.

About 70% of taxpayers use the standard deduction, according to the IRS.

   5. Take Note of The Deadline

The deadline to file your tax return is usually April 15. Because the 15th falls on a Sunday this year, the deadline is pushed back a bit further. It would normally have been moved to Monday, April 16, but this date is a legal holiday called Emancipation Day in the District of Columbia. Therefore, the tax filing deadline will fall on April 17, 2018, giving you an extra two days to submit your return.

  6. Your refund might be delayed

Tax refunds usually go out within three weeks of the date that you submitted your tax return. The IRS does make an exception for tax returns that claim the Earned Income Tax Credit and the Additional Child Tax Credit. There is a relatively high rate of fraud associated with these credits, so the IRS may withhold the refunds of taxpayers who claim them. If you have claimed either of these credits, you might not see your return until March.

Tax Terms

  • Withholding: This term usually refers to what employers take out of employee paychecks to cover income taxes, state taxes and other obligations. You may also see parts of your pension, bonus or comissions withheld to help pay taxes.
  • Tax subsidies: A subsidy is financial assistance paid by the government to help reduce your tax burden.
  • Tax credit: Tax credits reduce your taxable income – and the amount you owe to the federal or state government.
  • Claiming a dependent: Claiming a dependent can help you reduce your taxable income. This person is typically a qualifying child, member of the household or relative whom you support financially.
  • W-4: You’ll fill out this IRS form to let your employer know how much money to withhold from your paycheck. Filling it accurately will help make sure that you don’t have a large tax bill due or refund at the end of the year.
  • W-2: This form reports to the IRS your annual wages and the amount of taxes taken from your paycheck.
  • Tax return: A tax return is the form you file that outlines your income, expenses, investments and other tax-related information.
  • Tax refund: This is the money returned when your tax liability is less than the amount you paid.

 

 

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