It’s almost tax season, and you’re starting to get worried. Where are all your forms? Are the documents you need still where you left them? Did you forget to record or claim something? Is your employer forgetting to give you anything? Don’t panic – we have some better questions for you to ask yourself. Asking the right questions in the right order can help you learn how to file taxes with the least amount of hassle possible.
Each step of this guide answers a question about your tax situation. Once you find all the answers, you should be good to go for this tax season. So, take a breath! Worrying isn’t on the list.
Step 1: Where should I file my taxes?
To start, you need to decide what platform to use to file your taxes.
If you send your tax return via mail, check this page to ensure you are sending it to the correct service center. In some cases, you are required to use paper filing. You must send your tax return in by standard mail if you:
- Claim a dependent, but another taxpayer already claimed them.
- Need to file a tax form that can’t be filed online, like a multiple support agreement.
- File before or after e-filing begins/ends.
- Are married, filing separately, and living in a community property state (Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, or Wisconsin).
If you choose to pay someone to file your taxes, they will likely file online. There are numerous tax professionals both online and locally that you can employ. You can also get free help with your taxes in person.
No matter which method you choose, there are multiple ways to pay if you end up owing the IRS. You can use a credit or debit card, a direct bank transfer, a check, a money order, or even cash.
Estimated time: 1-2 hours
Step 2: What forms do I need to file my taxes?
Gather all the forms you need, which will depend on what you need to report.
Here are some of the forms you could need:
- W2: If you filled out a W4 when you got your job, then your employer is responsible for giving you a W2 form. It reports your wages for the fiscal year and you should receive it in your office or by mail sometime in January.
- 1099: If you were employed as a contractor you may be issued 1099 forms when you need to report miscellaneous income. This could mean you did some freelance work, you are self-employed, you won a prize, etc.
- 1099-B: A 1099-B form reports money from broker or barter exchanges. Each person involved in the exchange must file one.
- 1099-R: A 1099-R reports pension income or any distributions you took from a retirement savings account.
- 1095: Forms 1095-A, B or C are the Tax Forms used to report what Health Insurance you and your dependents received.
Search the IRS Tax Map by topic if you think you require any special forms for a type of income we haven’t mentioned.
Estimated time: 2 hours
Step 3: What is my adjusted gross income?
Calculate your adjusted gross income (AGI) by adding up all income and subtracting all deductions and related payments.
If you’re filing online, you don’t have to worry about calculating your AGI at all. The software you use will do it for you. If you’re one of those people who likes to do it by hand, read more about adjusted gross income in this article from Intuit.
Use this guide to calculate adjusted gross income yourself, or hire a professional to ensure your AGI is accurate.
Estimated time: 30 minutes
Step 4: How do I determine my tax bracket?
Your tax bracket is determined for you when you report your income, but it’s good to know where you stand.
Income taxes range from 10% through 37%. Your status and your income level affect which of the seven brackets the IRS places you in. For example, if you are filing as head of household instead of as single, you will be in a different tax bracket. If you want to know exactly which tax bracket you fall into, check out this list from the IRS.
Since your tax bracket is determined by your income, make sure you are reporting all your earnings correctly.
Estimated time: 15 minutes
Step 5: How do I find tax deductions?
Determine your deductions by either using the standard deduction or itemizing.
Standard tax deductions are pretty easy. As long as you know your status (single, married filing jointly, married filing separately, etc.) you can just scroll down a list and find out what your deduction is. There are a few limits, though. For example, if someone claims you as a dependent, your deduction gets reduced. If you are married but filing separately, your standard deduction could be denied if your spouse files itemized deductions. If you were the victim of a federally declared disaster, your standard deduction could increase. All nonresident aliens must itemize all deductions.
Itemized tax deductions are a little more difficult than standard because they are more labor-intensive. Instead of claiming one deduction, you go item by item – hence, the term “itemized deductions.” Some things you can itemize for are:
- State and local taxes (limited to $10,000)
- Home mortgage interest
- Real estate property taxes
- Private property taxes
- Casualty and theft losses
- Work-related expenses
- Medical expenses
- Charitable contributions
- State and local sales taxes
- Misc. deductions.
If you are doing your taxes yourself and your total itemized deductions would be larger than the standard deduction, choose to itemize instead.
Tax software will decide whether standard or itemized deductions will get you the best refund, so don’t worry about which one to pick.
Estimated time: 1 hour+
Step 6: What are my tax credits?
Tax credits mean you get to take even more money off your taxes, depending on your life and financial situation.
There are many things you can claim tax credits for. For parents, there’s an additional child tax credit (ACTC). Students can be eligible for student tax credits, and elderly and disabled people also receive a tax credit. Additionally, you can claim a tax credit for earned income (the earned income tax credit or EITC). See what else you may qualify for here.
If you’re not sure what tax credits you may qualify for, double check. Better to waste time checking than to lose money by not claiming a credit!
NOTE: If you claim the ACTC and EITC tax credit, it can cause a delay in receiving your tax refund if you file your taxes early. Under the new tax reform law, refunds that claim these credits can’t be issued until mid- to late-February.
Estimated time: 1 hour+
Step 7: What are my tax exemptions?
For 2019 filing, there are no personal tax exemptions.
This is good news and bad news. The good news is that you don’t have to deal with yet another facet of your taxes, and some of the tax changes for this season have offset the removal of personal tax exemptions. The bad news is that, well, you don’t get any personal tax exemptions.
Don’t sweat this one!
Estimated time: None
Step 8: How do I file taxes late?
To file taxes late, use IRS Form 4868.
This form is a request to extend your deadline. Penalties for failing to file are worse than the penalties for failing to pay. So, even if you can’t pay the full amount on time, file anyway. Penalties start accruing right away. If there is a reasonable cause for you filing late (and you can actually prove it), then you can avoid late filing fees altogether.
If you file for an extension and still don’t make the extension deadline in October, you will be charged a failure-to-pay fee. This is 5% of the unpaid taxes for every single month, compared to only half of 1% if you file anyway. To learn more, check out the IRS’s articles about penalties and collections procedures.
If you do end up with tax debt, Debt.com can connect you to a professional that can help.
Estimated time: 1 hour+
Bonus: How have taxes changed this year?
There have been a few major tax changes in the last couple of years that will affect this year’s returns. U.S. News reports that there are six major changes that the average taxpayer should watch out for:
- Child tax credits: Make sure you claim your dependents because child tax credits are higher this year.
- Estate planning: Inheritance tax exemption is higher this year.
- Business income: There are more ways to deduct expenses.
- Alimony payments: This is the final year that divorce payments can be taken out of your taxes.
- Charitable/medical deductions: Charitable deductions can help some people pass the standard deduction and become eligible for itemized deductions. The threshold for deducting medical expenses is lower, so if you have a lot of medical bills, this will help.
- Tax rates: Tax rates changed and, in most cases, they are lower.
What does the government shutdown mean for my taxes?
According to the most recent reports, the government shutdown should not affect your returns. If you are a victim of tax identity theft, though, you will have to wait until IdentityTheft.gov reactivates to report it.