It’s tax season! Don’t let this time of year stress you out. Filing your taxes is something that can be very overwhelming; our tax system in the United States is pretty confusing. If you’ve never had to file your own taxes before and have no idea where to even start, I’ve got you covered! Today I’m going to walk you through the basics of the tax process and how to file your taxes!

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Basics of the Tax System

If you’ve never had to file your own taxes before, you might be totally lost on what the heck you really need to do. Let’s break down the basic process and give you the important dates.

Tax returns for individuals in the United States have to be filed by April 15th of the next year. So your return for 2019 must be filed by April 15th of 2020. You can file an extension that gives you more time to file, but you are still required to pay the tax you owe by April 15th. So you may as well get the return done!

The form you’ll use to file your individual taxes is called a 1040. There are several different versions of this form depending on your situation. The 1040 is the regular form, and the 1040EZ is a simplified version if you don’t have much in the way of income or deductions.

When you file your taxes, you are basically reporting all the income you received for the year to the government. You then subtract certain things from that income based on the current tax laws. These are deductions and credits. Deductions are subtracted from your income before you calculate the amount you owe. Things like job expenses, property tax, home mortgage interest, and charitable contributions are all deductions. Credits are subtracted from the amount of tax you owe. These are things like the earned income credit, child tax credit, and American Opportunity Credit. Click here to check out the IRS’s full list of credit and deductions.

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    Do you need to file?

    First, you need to figure out if you even need to file. If you have a full-time job and live on your own, chances are, you will.

    Here are the criteria you have to meet in order to NOT HAVE TO FILE for 2019:

    • Single
    • Below age 65
    • Earn less than $12,200 during the year
    • Don’t have any special circumstances (like owning a business and receiving self-employment income)

    Even if you don’t need to file under these rules, make sure you still run the numbers to see if you can file to get a refund back. You don’t want to let the government keep your money that isn’t owed to them!

    What documents do you need?

    The main documents that the majority of people will have are W-2s and 1098s for student loan interest. If you have a mortgage you will also have a 1098 for that as well. If you have health insurance through your employer, you will receive a 1095 that shows what months you were covered under the plan.

    Here’s a list of the most common forms you might see:

    Income:

    • W-2 from your employer
    • 1099-MISC from side hustle or business income
    • 1099-INT from banks for interest received
    • 1098-DIV for dividends

    Deductions:

    • 1098-E for student loan interest
    • 1098-T for tuition expenses
    • 1098 for mortgage interest paid

    The majority of tax forms are required to be sent out by the end of January. If this is your first year filing your own taxes, I would recommend waiting until mid-February to file. This gives all those forms time to hit your mailbox and keeps you from having a headache situation to deal with if something doesn’t get reported. Also, keep in mind that some companies don’t actually mail out forms – especially if you’ve opted to go paperless with statements. Make sure you log in to all your accounts to grab these forms.

    As your forms come in this year, keep a list of everything. You need to keep all these forms anyways – the IRS can always come back and audit you – but having a summary list will save you time. Keep this list of docs somewhere safe so next year you’ll know when everything has arrived. Just make sure you think about any changes during the year that would result in additional forms.

    Should You Go To An Accountant?

    As a CPA, I generally recommend people have their taxes done by an accountant. However, if you only have a W-2 and some student loan interest to report, you could probably do them yourself just fine. There are many programs online where you can file your taxes for free, and most of them walk you through questions that will make sure you include the basic information required. If you have a more complicated return, like multiple 1099s or if you receive a K-1, you have multiple jobs, or if you own a business, I would definitely recommend finding a good accountant to help you out.

    If you do decide to take your taxes to an accountant, there’s not much else you need to do! Make sure to round up all your documents, schedule an appointment, fill out the organizer document they’ll send you, and be ready to answer questions about your finances throughout the year. Most accountants will want to have a face to face meeting with a new client, but you may also be able to just drop off your information and be ready to answer any questions they might contact you with as your return is worked on.

    Read: 5 Easy Tips to Prepare for Tax Season

    Another benefit of going to an accountant is they will be able to help you optimize your withholding. What the heck does that mean? Basically, you really want to come as close to breaking even in your taxes as possible – meaning you don’t owe OR get a refund. An accountant can help you with that. If you’re getting a huge refund every year, you’re basically just giving Uncle Sam an interest-free loan with your money! The IRS is giving back money you overpaid, not free money they found for you. If you reduce your refund, you’ll get to use that money throughout the year instead.

    Options For Filing Online

    There are quite a few free online programs available for filing your taxes. Turbotax, HR Block, and Credit Karma are the ones I see talked about most often. These programs are all perfectly fine to use if you don’t have much going on.

    Click here to use the HR Block online software I filed with this year – it’s super easy and FREE!

    These programs usually walk you through a bunch of questions that are designed to fill out all the required information on the 1040 form. This method makes it a lot easier to understand what you need and give correct information. Make sure you have all your documents handy when going through things because you’ll need to provide a lot of information from them.

    Once you’ve gone through all the questions and finished your state and federal returns, its usually as easy as clicking a button to file. Some of these programs even give you the option to get text updates on your return processing, which I think is a pretty nice benefit. Once you’ve filed your returns, print or save a copy somewhere, and keep it somewhere safe together with all your documents for the year. If you’re ever audited, you’ll be glad you kept it!

    Refund or Taxes Owed?

    Depending on how your tax situation went during the year, you will probably either owe money or get a refund. If you are getting a refund, you can choose whether you want the money sent via check or direct deposit usually. If you opt for a direct deposit you will get the money quicker.

    Something else I like to mention when it comes to refunds is the earlier you file the better. There has been a major increase in identity theft with tax returns in recent years. Get your return filed before someone else has the chance to file using your information! It can be a big pain to get this corrected and you really don’t want to be dealing with the IRS any more than you have to. And when you get to the section of whatever online program you’re using to file your return this year that asks you for “optional” driver’s license information – put that information in! This is a measure used to help fight identity theft, and it can only help you out.

    Be Ready for Next Year

    Set yourself up this year so next year’s tax season is a breeze! Like I mentioned before, keeping a list of documents to expect can help you make sure you don’t miss anything. Make a note somewhere (that you’ll see it!) to sit down halfway through the year to evaluate your tax situation. If anything major has happened during the year – buying a house, starting a business, having a baby, etc. – then you will have to determine how this will affect your taxes. If you have major changes or don’t really know if something will affect your tax situation, meeting with an accountant will be your best bet.

    By sitting down and evaluating this halfway through the year, you’ll avoid any surprises come tax time. Knowing how the tax system works and what you really need to get your taxes done right can go a long way in taking the stress out fo this time of year!

    Need more help organizing your finances?

    How to File Your Taxes