If you’re filing taxes for the first time, or you prepare and file your federal income taxes every year, with a bit of planning your income tax return will be good to go!
Preparing your own tax return may seem like an overwhelming task, yet for the majority of Americans, filing your own income taxes is relatively simple. In fact, the complex tax code we hear so much about does not affect most taxpayers, it generally applies only to specific situations for personal returns.
According to the federal government, approximately 40 percent of individuals independently complete and submit their personal tax returns, rather than hiring a professional tax preparer. With a bit of patience and attention to detail, you can properly file your income taxes, stamp those returns ‘e-filed’, and have your tax refund in hand long before the April 15 tax filing deadline.
Pre-Filing Tax Preparation is Key
Gather the personal information you will need to begin your tax return, including social security numbers and birth dates for everyone who will be covered in your tax return, including you, your spouse, and all dependents.
By the end of January, you probably will have received the necessary tax documents from your employer, bank, and/or other financial institution(s) you do business with. Round up your receipts and review last year’s tax return as a guide for ensuring you have all the necessary information you need to begin your current year’s tax return.
Last year’s tax return will provide information about interest and dividends, including any 1099 forms you received, which are helpful for verifying that you received them again this year (unless the accounts were closed or your investments sold). Also, you will be able to review charitable contributions and deductions to determine whether you’ve made similar gifts this year.
Tax Preparation Terminology
Begin by understanding your federal tax rate, or federal tax bracket.
Deductions, credits, and exemptions all reduce the amount of tax you owe.
The lower your income, the less tax you owe. Most taxpayers are entitled to a standard deduction, a specified amount the Internal Revenue Service (IRS) allows you to subtract from your income before taxes are calculated.
For students, key tax reductions include those for student loan interest, college education, and credits that can help young people save for retirement.
How Do I File My Tax Return?
Electronic filing (e-filing) is the easiest, most accurate way to file your tax return and pay any tax bill due. You also can sign up for direct deposit for any tax refunds you’re owed.
Free Filing – If your adjusted gross income (AGI) is less than $69,000, you are eligible to file via Free File Software. Also, filers of any income level can file through Free File Fillable Forms found on the IRS website.
Turbo Tax Free Edition and Credit Karma Tax also offer versions of free tax software.
Other Free Tax Resources – Volunteer Income Tax Assistance (VITA) offers free tax prep services to those who make less than $56,000/year, people with disabilities, senior citizens, and those with limited English-speaking abilities.
For those who are 60 years of age or older, the Tax Counseling for the Elderly (TCE) program offers free services focused on addressing pensions and retirement issues related to seniors.
Commercial Tax Filing Software – There is a variety of tax filing software available for purchase, including Turbo Tax, H&R Block, and TaxAct Premium, among others.
Filing an Extension
You may request an extension through October 15 for filing your tax return. Even with a filing extension, you are still required to estimate and pay your tax liability by the April 15 deadline to avoid penalties and other fees.
Will I Get Audited for Preparing My Own Tax Return?
Preparing your own tax return does not make it more likely that you will be audited. Similarly, paying a tax professional to complete your income taxes does not increase the likelihood of an audit. All tax returns go through the same audit flagging process for further review.
Do I Need to File a Tax Return?
If your income for tax year 2019 is below $12,200 (single filers) or $24,400 (married filing jointly), you are not required to file a federal tax return.