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3 Ways To Filling Your Taxes (Number 3 Is Our Favourite)

While filing your taxes can be a scare, you still have to file it every 365 days. For many people, tax filing is an ordeal that can be avoided with all the right resources at your fingertips. Tax filing is just letting the Internal Revenue Service know how much you have made, then they decide the tax.

Yes, tax filing can be daunting, but it would not have been if you start preparing early. Yes, the last tax season is past, but nothing should stop you from starting for the next season right away. One of the significant tax filing headaches is the channel to be utilized.

Of course, you are well aware of the mediums through which you can file your taxes. However, there are still grey areas that give taxpayers headaches. That’s why we’ll better explain these mediums in a way that your subsequent tax filing will be a breeze.

Before we delve into it, here’s what you need to put in place; create three folders and name them as income, expenses, and investments.

1. Income

Salary, interests, dividends, earnings, 1099s, and W-2s

2. Expenses

Charitable donations, medical bills, mortgage statements, utility bills, childcare costs, and other expenses.

3. Investments

Purchases, sales, dividends, cost bases, K1-forms, losses, annual retirement plan contributions, and 1099s.

Why should you do this? This is to make retrieval of these documents easier. It does not matter how you intend to file your taxes; preparing the necessary documents will eliminate all nightmares. With this in place, we can start talking about filing your taxes.

1. How To File Your Taxes Through Form 1040

This is the traditional method of filing taxes that caters to individuals with multiple sources of income, let’s say, a freelancer or a contractor.

As an individual, you need a Form 1040 to file your tax in the United States. On the form, you’ll find the section for your income and the other for your deductions to determine what your likely tax will be.

While you may have to pay what you owe as taxes, you may also be eligible for tax returns. There are four variations of Form 1040; there’s the main Form 1040, then we have 1040-SR for senior taxpayers; 1040-NR, for non-citizens; and 1040-X, this is to correct any abnormality on your initial Form 1040.

Let’s say you are expecting a tax return; it may take between 6 to 8 weeks if filed via the traditional method.

2. How To File Your Taxes Electronically

According to the IRS, about 195 million returns and other forms were filed electronically in the 2019 financial year. Millions of taxpayers opt to file their taxes via the internet.

By visiting the IRS website, you’ll find different channels through which you can file your taxes electronically. This software can either be free or paid, depending on the extent of its services for taxpayers.

You can also take advantage of the Volunteer Income Tax Assistance (VITA) or the Tax Counselling for the Elderly (TCE) programs. These two are free services that can help you file your taxes if you fall into the categories of beneficiaries.

3. How to File Your Taxes Using Tax Professionals

There’s no shame in engaging tax professionals in helping you out with your taxes. What matters most is getting it right with your taxes, even if it requires a small fee. This is why most people rely on accountants and tax professionals in fixing their tax situations.

With their experience of the tax system, accountants are in the best scenario to help manage your tax and returns. However, you’ll make it easy for the accountant and even yourself by gathering all the necessary documents that will be required in doing their job.

The edge that tax professionals have over the two other options is the accuracy and the speed they offer. You should adopt this option if your financial situation can be categorized as complex.

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