Typically all employees and businesses within the US are required to pay federal income taxes every year to the Internal Revenue Service. To prove that you have paid your dues to the IRS, you’re going to have to file an annual tax return. This will allow the IRS to see how much money you have accumulated throughout the year, the total amount of income tax you were supposed to pay on it, and how much you actually paid. If you happened to overpay, which is most likely the case, you will receive a tax refund. On the other hand, if you underpaid, then you will end up owing a bit more.
Almost all people residing in the United States use a form called 1040, the most basic tax form. This tax document will guide you through determining how much you have earned in total for the year and then assists you in making income adjustments. These adjustments are expenditures that you made that the IRS permits you to leave out of your yearly earnings; these take the form of what is typically called a tax credit or tax deduction, although claiming these can come along with more forms.
The forms and procedures have shifted a little within the last few years, but believe it or not, this has actually streamlined the process in a couple of ways. In this piece, we will be diving into everything you will need to know about filing your taxes this year and the years to come.
When Should I File My Tax Return?
Every tax return that you file covers one individual tax year. Typically for most people, every tax year is an ordinary calendar year.
In almost all cases, you will begin filing your income tax return early in the subsequent year. You will need to file your 2021 tax return early next year in 2022. Every year the Internal Revenue Service selects a date for when they will begin accepting returns, usually within the final week of January.
The most recent deadline for tax season was May 17th; this day is commonly referred to as Tax Day. Keep in mind that this year the IRS had decided to push Tax Day back about a month due to coronavirus. This time of year is known as Tax Season.
The only way to get more time to file your tax return is to file for a tax extension. This extension will give you until the 15th of October to file your return. It is important to note that if you owe taxes and you receive an extension, you will still have to pay that by Tax Day, or you could be subject to a fee.
Who Is Required To File A Tax Return?
Almost all people who receive any income within the US are required to file a tax return. Determining factors on whether or not you will need to file are your total annual income, age, whether or not you are someone’s dependent, and your filing status.
You should file a return if your total annual income is more than $12,400 (this number is subject to change every year.) If someone has claimed you as a dependent, you will be required to file a return if your income for the year exceeds $1,050 or more. That limit is raised to $2,700 if you are 65 or older.
Gather Your Tax Forms
You are going to need detailed financial information to be able to correctly and completely file your tax return. Keep a lookout for these three documents, and make sure you have them before filing your return. If you are still waiting on one and have not received it by February, you should contact the person sending them.
W-2 Forms: Employers and business owners use W-2’s to report to the IRS how much money has already been withheld for taxes. Every company that has employees is required to mail W-2’s to their workers by February 1st.
1099 Forms: The 1099 is a form for reporting money earned or accumulated outside of what an employer would report on a W-2 form. There are many different versions of a 1099 based on the type of income in question. Nearly all 1099 forms should be in the mail system by February 1st.
Last Year’s Tax Return or, in other words, your adjusted gross income, commonly referred to as AGI. The IRS uses this information to confirm your identity.
Your bank’s routing number and account number to allow the IRS to deposit your refund.
Hire A Professional
In some cases, you may want to consider hiring an accountant and or certified tax preparer to help you file. This is especially true if you have an overly complex tax situation or if your income has changed exorbitantly. There are online services on the internet that can handle a large amount of people’s tax situations, but nothing can entirely replace that human touch.