As Benjamin Franklin once said, nothing in this world is certain but death and taxes. While that may hold some truth, there’s no reason that any one of us needs death BY taxes. Follow these easy steps to filing your federal income returns to ensure that both you and the government will be happy.
1. First, determine whether you’re required to file! If you have a steady job, in all likelihood you will. However, if your income is exceptionally low, you may be exempt. NOTE: Minors and children must file if they make a certain amount of income.
2. Gather all of your financial and tax records. This includes all W-2 and 1099 forms from employers. You should also have receipts if you plan on deducting any business expenses or charitable donations.
- Determine your filing status.
- Calculate how many exemptions you have. You can deduct yourself, your spouse (if married), and your children.
- Calculate your taxable income.
- Determine your income adjustments.
- Calculate your deductions.
- Determine your income tax. This amount is calculated by taking your taxable income and subtracting any adjustments, taxes, and deductions. Once you have that number, consult a tax table to find out your exact income tax amount.
- Calculate your credits.
- Identify and calculate any additional taxes. If you’re self-employed, you may have to pay additional taxes as you’re both the employer and employee. Add up your total payments. The total number is how much you have already paid.
- Determine whether you owe additional money to the IRS or are due for a refund.
- The IRS Web site has detailed instructions for each tax form. Since these can be tricky depending on your financial situation, be sure to use them, go slowly, and read everything.
- Even if you aren’t required to file, you may want to anyway. You may have had taxes withheld in a paycheck that you’re eligible to get back. You may also qualify for the earned income tax credit, which gives you additional money back.
- Do NOT ignore or blow off filing. This can result in huge penalties from the IRS. It is better to file and not be able to pay immediately than not file at all.
- You can get tax help in multiple ways. One such option is through the Low Income Taxpayer Clinic program that serves individuals who have a problem with the IRS and whose income is below a certain level. LITCs are independent from the IRS.