Taxes 101: A Detailed Prep Crash Course
Life is quite unpredictable at times. And, it is even more when you are entitled to pay tax. So, if it is the tax filing time, the experience can be close to nerve-wracking. In the end, we all wish to get optimal results, be it by maximizing the return or minimizing the sum owed. Moreover, this also promotes the feeling of missing out on something, especially when you are new to filing for taxes or your conditions have changed or transformed. No matter the circumstances of your situation, we have a bunch of good news waiting for you. Here, we have put a handful of tips to assist you in the correct direction.
However, before that, note that we aren’t a substitute for trained tax professionals. Also, we strongly recommend you consult with a professional who can tackle such challenges with you. So, are you filing for the very first time? Welcome to the universe of taxes. With several resources and tips, you can do a lot and be more effective than you were initially.
Gather everything you require
This point comprises W-2s from your employers, 1099s, and tax forms that can report other forms of tax deductions, income, and corresponding receipts.
Do an income double-check
Have you forgotten about earnings from a side hustle? Or even interest from savings or investments? Even earnings or income in cash also need to be reported, helping your case for a significant refund if you utilize your supplies and equipment and then itemize your deductions.
Choose a suitable filing status.
Well, you should not leave money on the table. And, you might have heard about it already. Suppose you are unmarried and already have a dependent kid. In that case, you might think you need to file a single status. However, you would be better off filing as the head of household.
Double and triple-check for errors
Do not forget to review your income calculations, the accuracy of your address, the spelling of your name, date of birth, bank account information, and Social Security number. If you did not know, inadvertent mistakes might considerably raise unnecessary red flags or even hold up your return.
Just turned 18 and filing?
Do you know the first thing when you turn 18? Well, it is to acknowledge or know whether your parents are filing or claiming you as a dependent individual. Moreover, it is known as a biggie since you can’t file on your own. But before you get started with the new taxing life, talk to your parents to avoid any mishaps or misunderstandings. Speaking of which, if they have been paying for your college, they can claim you on their taxes to claim an education credit from the government.
However, if you have been paying more than half of the education expenses in a year, your parents won’t be able to claim you as their dependent on their set of taxes. Through such a method, you can file for your taxes on your own.
Have a minor child with income?
If you are already into this phase of life, congratulations already. The stage of child-rearing is as hard as it comes. But, it can make filing relatively stickier, for that matter. You do not wish to add your child’s income to yours, which is a significant tax faux pas. In such a situation, you need some simple diagnostic questions to help determine whether the earnings are earned or unearned like dividends, interest, capital gains, Social Security, or survivor annuities, and whether the sum exceeds or meets your filing threshold. You can look through the IRS Publication 501 to answer these questions.
Have you figured out the avenues where you could turn for tax-filing-related questions? Since COVID has affected several in-person tax filing assistance sites, there’s a lot of help still available within the ranks. And, some are just a click away.
- Begin with the IRS
- Filing for assistance and how to locate it
- Taxpayers in the Cornhusker State
- For Kansas filers
- For people serving the country
These are some of the bullets you might have to refer to to understand your tax filing situation. Moreover, if you have particular questions, do not look anywhere else but professionals dealing with them.
And, while we are heading towards the end, we hope we have provided you with enough information in the blog and alleviated some of the tax time anxiety you might have been holding against yourself. However, in the end, do not be afraid to use every resource available. And, whenever you are in doubt, get in touch with a tax advisor in your designated area for specific help and guidelines on your particular case. And, not to forget, we wish you a short and painless tax season.
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