Although we’re all expected and required to know about filing taxes, many of us don’t know how to. This is probably because we come out of school uneducated in the matter. It is important to know the basics regardless.
Tax season can be daunting and filing your taxes can be an overwhelming and confusing task. But fear not! Kilcoyne Accountants are here to help. We have compiled a couple of guidelines to make the process much easier.
Understand what your status is. Are you married or single? Can you claim dependents in your household? This information largely determines your tax rate.
If you are the taxpayer, a dependent is a person that you support (IRS). This may be a child or an elderly relative. If you’re still in school, you will likely have to identify yourself as being claimed as a dependent on the tax payers behalf. This may be your parents or grandparents etc.
2. Required Documents and Forms
Staying organized is key to simplifying the tax process. Throughout the year, keep track of your pay stubs and any receipts for tax-deductible items. If you’re currently paying back student loans, you should tally up your payments. Using an accountant will help you determine what forms you’ll need and what information is most relevant to your return.
3. Take Advantage of Deductions and Tax Credits
It’s helpful to know the difference between deductions and tax credits.
- Deductions reduce your taxable income.
- Credits are a sum deducted from the total amount of taxes you owe.
Money spent on recognized charities, for example, can be counted as a deduction. Always save any deduction-related receipts throughout the year to ensure taking advantage of all tax credits and deductions. Visit the IRS website to discover other deductions and credits that may apply to you.
4. Decide How to File
If you’re a first-timer with a straightforward return, you can probably file on your own using a program like TurboTax or H&R Block at Home. As long as you use accredited software, it’ll be safe, simple and offer step-by-step guidelines. Plus, filing electronically will result in a faster refund. If your tax return is somewhat complicated, you may want to look into hiring outside help, such as an accountant. If you can afford an accountant, you’ll have the added benefits of discovering other deductions or credits you didn’t know about, as well as minimizing any chances of making mistakes.
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