Filing your federal income tax return can be a daunting task. However, you can approach tax season one step at a time, avoiding rookie mistakes and taking advantage of money-saving opportunities. AccoTech is the most trusted and best tax filing company for preparing your tax return. Our tax professionals provide comprehensive support and assistance by making the tax filing procedure as simple and straightforward as possible for you.
1 Keep an eye on your earnings.
If you earn more than a certain amount of money during the year, you must file a tax return. If you work, look at your pay stub for your "year to date" income—and if you have more than one job, add up your earnings from all of your employers. Remember to include income from other sources as well, such as rental property, sales, investments, or interest.
2 Keep the necessary paperwork for the entire year.
Keep track of tax-related paperwork throughout the year; it will make tax season easier. You should keep receipts for charitable donations, work-related expenses, medical bills, and other items from step 4. You should also keep any statements from student loans or investments, as well as any grants or fellowships. Having these on hand and organised can help you decide whether to itemise and make the process go more smoothly. You should also keep your paperwork after you have filed it. The IRS suggests keeping records for a minimum of three years.
3 Keep an eye out for your income documents.
In January or February, you should receive forms detailing how much money you've earned from your employers and other sources. If you work full-time, you will receive a Form W-2 that details your earnings as well as which taxes were withheld. If you work as a freelancer or on a contract, you may be issued a Form 1099-NEC that details your earnings. You may also receive documents indicating dividends or interest earned on investments (for example, Forms 1099-DIV or 1099-INT) or student loan interest paid (Form 1098-E). If you're a college student (or have a dependent who is), you'll get a Form 1098-T that shows how much you paid in tuition as well as any grants or fellowships you received to help you figure out deductions and credits for education expenses.
4 Discover which credits and deductions are available to you.
Having an idea of which credits and deductions you may be eligible for can help you gather the necessary documentation. Here are a few to think about:
Credit to the saver. You may be eligible for a tax credit if you contribute to a retirement plan even if you are not a full-time student and are not claimed as a dependent. The credit amount is determined by your filing status and adjusted gross income. If your filing status is single for the 2022 tax year, you may be eligible if your adjusted gross income is $34,000 or less. If you are married and filing jointly, your adjusted gross income must be $68,000 or less. These figures, however, are subject to change in subsequent tax years.
Student Loan Interest: Interest on student loans Depending on your modified adjusted gross income, you can deduct up to $2,500 in interest payments.
Deductions for charitable contributions. Do you want to support your alma mater or a favourite charity? If you itemise your taxes, you can generally deduct qualified charitable contributions.
Expenses for freelance work. If you work for yourself, you may be able to deduct work-related expenses such as industry subscriptions and office supplies.
Check the IRS website if you believe you may be eligible for additional credits or deductions.
5 Keep your deadlines in mind
If you receive your tax documents in January or February, you will have approximately two months to prepare your tax return by the usual due date of April 15. Plan the date you'll begin your return, and make sure it's early enough that you can schedule another session or two if you need to spend time locating additional documents or seeking assistance.
In general, experts advise filing tax returns as soon as possible rather than later. The sooner you file, the better your chances of avoiding tax-related identity theft, a growing crime. Furthermore, if you are due a refund, you will receive it sooner.
6 Determine how you will file your tax return.
There are several ways to prepare and file your tax return. Learn about each so you can make the best decision for yourself:
"Free File": If your adjusted gross income—this is a specific tax term that basically means your income minus certain tax deductions—is less than a certain limit, the IRS has free tax prep software that can help you figure out any deductions or credits you may be able to take.
Online IRS forms: If your adjusted gross income exceeds that limit, the IRS has electronic versions of the paper forms that will do the math for you, but they only provide basic guidance and will not assist you in determining which deductions or credits you may be able to claim.
Software for tax preparation: If you want a little more direction, you can pay a fee to use these online tools, which are available from a variety of providers. They will walk you through the process of preparing your tax return and will assist you in determining any deductions or credits you may be eligible for.
Tax preparer: If you realise you require one-on-one assistance from an expert, you can consult with a tax preparation firm or an accountant. Make sure you're working with someone you can rely on. You will be giving this person access to a lot of sensitive personal information, so choose wisely. The IRS maintains a directory of verified tax preparers, which may assist you in locating a verified tax preparer in your area. While this does not guarantee their reliability, it is a good place to start.
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