Tax season 2020 – here’s your beginners guide to filing taxes
If you are a US citizen then January means one very important thing: tax season!
While no one likes preparing and paying tax it is, as has been noted, one of the certainties of life if you are eligible for them.
Filing tax returns is a complex process, and it can be bother stressful and confusing. Mistakes can happen, especially if you are filing for the first time. You can easily miss crucial credits and deductions, or mess up your calculations which can be expensive.
To help you, here’s a beginners’ guide on how to file tax returns.
Who is eligible?
The United States requires all citizens to pay taxes, including those living and working outside the country and green card holders.
However, not everybody is eligible. So, it would be best if you first considered establishing whether you are eligible to file tax returns. Three factors determine if you need to file your taxes:
- If you are married, filing jointly and you have an income of more than $20, 700 you have to file tax returns.
- If you are not married and under the age of 65 earning more than $10,350 a year, you also have to file tax returns.
- People who earn less than the above annual amounts and are dependent on their parents’ taxes do not have to file their taxes.
If you are still not sure whether you are required to file your returns, the IRS has launched an online survey named “Do I need to file a return?” The questionnaire takes about 10 minutes and gives you a recommendation based on the information you feed it.
Although IRS has not announced the official dates, the tax season begins in late January. At this time, the IRS will start accepting and processing tax returns for 2019. T
The tax deadline is always around April 15, and any tax due begins to attract interest from this date onward.
Requesting tax extension
You can request a tax extension period if you are going through a difficult time or will not be able to file your returns by the deadline. If you fill a tax extension request, you can get an additional six months to complete your tax returns.
Although an extension gives you more time to file returns, any money owed to IRS must be returned by April 15. Failure to submit the tax owed results in penalties.
Requirements for filing tax returns
It is good to prepare tax return documents early. The following are key documents required to file your returns:
- 1099: if you have earned $600 from freelancing or another type of side work, your client will send you a 1099 form showing the amount of money earned.
- W-2: This is a form sent by your full or part-time employer showing the income earned in the previous year and the amount paid for Medicare, Social Security, and taxes.
- 1098: this is a form sent by your lender if you made interest payments on your student loan.
- 1095 A: The government sends this form if you have health insurance with healthcare.gov.
How to file tax returns
There are different ways to file your taxes. If you are afraid of making errors, you can hire the services of incredible tax professionals such as taxfyle tax preparation services.
You can also file your returns through Tax software like Credit Karma’s free filing tool or TurboTax. Many of the features are free, but there are key components in the software that are not free.
Photo by Stefan Vladimirov