There are two things that you can count on in life: death and taxes. But, while death only happens once, we must pay taxes every year. If we are lucky, when we file our income tax returns, we will get some of that money back instead of owing more. In order to get big refunds, people need to know all of the ins and outs of tax preparation, including any deductions they may be eligible for. Too many people wait until the last minute to file their tax returns. This just adds to the stress when everything needs to be done all at once. Get things done early, and learn how to file a tax return properly to learn how to pay less, and get big refunds instead. You can find many training programs that will help you to learn all about tax preparation. There are tax software demos that you can use as learning tools, as well as training for Sigma’s tax program and other good online classes.
Even though there are plenty of software packages available to help people file their returns, many people still choose to do it the old fashioned way, by hand. This can actually be advantageous, because they learn more about the process when they are doing it themselves and not letting a computer do all of the work. The only real drawback to doing your own taxes is that it can be complicated, and it takes time. Here are some tips that will help you to save time and still get everything done properly so you get a return instead of owing the government money:
Gather all documents – You are going to need all of your W2 forms from any employers you worked for in the current tax year. Independent contractors will need to use 1099-MISC forms. All documents from employers should be sent out by January 31.
Get the right tax forms – Once you have all of your employee documents, you need to find out which forms you will need to fill out for your tax return. If you are unsure about which forms you need, visit the irs.gov website for more information.
Indicate marital filing status – You need to state whether you are filing as a single person, a married person filing separately, or a married person filing jointly.
Name your dependents – You can get some exemptions for dependents if they meet the criteria. Each claimed dependent takes $3,900 off your taxable income.
Fill in personal information – Your personal info should be at the top of the 1040 form. This includes your name, address, and your social security number.
Calculate your income – Add up everything you earned in the tax year, including wages, tips, and any additional income.
Figure out if you have a refund or owe – If your total payments are higher than your total taxes, you get a refund! If your taxes are higher than your total payments, you will owe money.
Complete the adjusted gross income (AGI) – This is your taxable income after deductions, such as moving expenses or alimony payments.
Figure out taxes and credits – Add up all of the taxes, minus exemptions. Subtract the tax credits from this total.
Itemize additional taxes – In the “other taxes” section, list any other taxes you paid. The next section is for listing total payments, including money withheld on W-2’s.
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