Navigating the world of tax returns can be complex. From understanding how to do your own taxes to gathering the necessary documents for an income tax return in the USA, there are important considerations to remember. This guide will help you confidently tackle tax season.
How Do Tax Returns Work in the USA?
Schools rarely teach you how to file your own taxes in the USA, but don’t worry, we’ve got you covered. Let’s start with the basics.
What is a tax file?
It is simply another name for an income tax return. It is a document with important details like your income, expenses, deductions, and credits for the whole year.
What Does It Mean to Do Your Taxes?
Doing your taxes as an American involves compiling all such information and submitting the file to the IRS.
How Do I Know If I Need to File for Taxes?
The filing of your taxes is highly dependent on a few factors like income, age, and assets.
When Is the Right Time to File Your Taxes?
The tax deadline in the USA is usually April 15. However, if it lands on a weekend or a holiday, the authorities shift it to the next working day.
Now, when do you need to have your taxes done? In an ideal scenario, you should have them compiled by April 15th. If somehow life gets in the way, you can always request an extension.
You might also be curious about when most people file their taxes. Many people jump into tax season in late January or early February when they receive their W-2s and other necessary paperwork.
Lastly, when do you need to start doing taxes? Well, as soon as you start earning an income. It’s a yearly obligation, after all. So, buckle up and get ready to embrace tax season every year!
When Do You Start Paying Taxes on Income?
At What Income Do You Start Paying Taxes?
Let’s talk about how much you need to make to file taxes.
If you are married and will be filing jointly, your combined income will be factored in. If it crosses $25,100, given that both of you are under 65, or $29,400 if either of you is 65 or older, you need to file taxes.
Are you the head of household? If yes, then your threshold is $18,750 if you are under 65, and $21,000 if you are older.
The rules are a bit different if you’re married but will file taxes separately. It’s the same as for single individuals.
For self-employed individuals, the threshold is an annual income of above $400.
The IRS website is your best friend for understanding these numbers and confidently handling tax season.
How to Do Your Own Taxes for the First Time
Most people get the curious thought of “Should I do my own taxes?” at some point in their taxpayer journey. Here’s a step-by-step guide for doing your own taxes for the first time:
Step 1: Choose Your Tax Software
For your first time, consider using tax software. Many providers offer free versions for basic tax returns. These software guide you through the process, asking simple questions about your financial situation and filling in the correct forms based on your answers.
Step 2: Add Your Personal Information
In this step, it’s important to add your accurate and authentic information. This might include your home address, age, social security number, and even marital status. If you’re married, make sure to add your spouse’s information as well.
Step 3: Report Your Income
Next, you’ll input your income information from your W-2 or 1099 forms.
Step 4: Take Advantage of Deductions and Credits
The software will guide you through potential tax deductions and credits, helping you reduce your tax bill or potentially increase your refund.
Step 5: Review and File Your Taxes
Finally, review your form, check the information you’ve entered, and submit it. See? Pretty easy. Now, if someone says to you, “This year is my first time filing taxes,” you can break down the same process for them and ask them to take it one step at a time.
What Do You Need to File Taxes?
First things first, you must get the W-2 form from your employer. These handy forms show not only how much you earned but also how much tax was taken straight from your paycheck.
If you have any additional sources of income like self-employment, interest, or dividends, you’ll need 1099 forms. They record the income from these sources.
Next, bank statements can help you track your income and expenses. This is crucial when you’re figuring out your deductibles.
Got any deductible expenses? You’ll need receipts. This includes medical costs, donations to charity, and mortgage interest.
Finally, you’ll be filling out Form 1040. This is your U.S. Individual Income Tax Return, the main document where all your info goes.
Do You Have to File Taxes Every Year?
Did you know not everyone has to file taxes each year? The IRS has guidelines about who needs to. For instance, if you’ve made $12,550 or more from your job or at least $400 from sources other than work, like investments, you’ve got to file.
What about filing more than one tax return? Absolutely! If you’ve moved or switched up your filing status during the year, you’re good to file more than one tax return.
How to File an Old Tax Return: Can I File 3 Years of Taxes at Once?
Sometimes, people want to know how to file 3 or 4 years of taxes. If you too are wondering, “Can I do two years of taxes together?” here’s our expert take.
In the US, we’ve got this handy rule that lets us file a do-over on our taxes, also known as an amended tax return.
And there’s even a little something extra. You’re eligible to have a refund on your taxes even after two years of paying it. The only condition is you need to have 3 years from your beginning deadline on the tax return.
So what’s that mean for the 2023 tax year? Well, you usually have the chance to file a mulligan on your 2020, 2021, and 2022 tax years if you qualify for a refund or need to fix something on your past tax returns.
FAQs
When Do I Start Forking Over Taxes on What I Make?
You start paying income taxes as soon as the cash starts rolling in. The amount depends on factors like age, income, and marital status.
Do I Need to File a Tax Return?
Yes, according to US law, if you (US residents) earn a certain amount, you’re obliged to pay taxes.
What Paperwork Do I Need for Taxes?
You’ll need your SSN, bank statements, records of deductible costs, and W-2 and 1099 documents from your company or other payer.
How Do I Know If My Taxes Were Filed Correctly?
If you filed online, check your email for a confirmation message. If you mailed in your forms, you can reach out to your mail carrier to see if your package got there safely.
Can I File More Than One Tax Return?
Yes, you can definitely file more than one tax return. It becomes necessary in certain situations, such as having multiple income sources, changing employment type, or changes in your family structure.
Conclusion
With this beginner’s guide, you now have the knowledge and confidence to tackle your own taxes for the first time. Remember to gather all the necessary documents, use tax software to simplify the process, and review your forms before filing. If you have any additional questions, refer to the FAQs section or consult the resources available on the Mighty Technologies website. Happy filing!