Tax season is the biggest headache of the year. It’s one more thing employees have to do to get the money they deserve and something employers have to remember to budget for.
Whether you’re betting on a big return or making sure you have enough to pay what you owe, it’s easy for employees and employers alike to make the process more complicated than it has to be. In reality, though, you can learn how to file taxes for yourself without stressing out.
Knowing how to do your taxes makes financial planning much easier and lowers the general sense of anxiety associated with taxes. To take on filing taxes yourself, you have to do the following three things.
Understand Your Filing Status
Before you get into all the ins and outs of filing your taxes, you have to understand your filing status. Are you filing single or with your spouse? Do you have a dependent you can claim, or are you still considered someone else’s dependent?
These play into how you file, just as the kind of work you do determines your filing status, too. Employees have different forms to fill out in comparison to business owners. Not to mention, there are all kinds of intricacies between different tax groups, based on how much money you earn each year.
Note: if you do business overseas or live outside of the U.S., you may have additional things to consider when filing your tax return.
Get All Your Forms Together
Once you’ve identified your filing status, you have to get all the proper forms together. Employees will need a W-2 from each of the businesses they work for. Freelancers, business owners, and partners will need to get 1099s together for their clients/employees.
Then, you have to choose which form to actually fill out, depending on the information mentioned above. Keep in mind you may have multiple forms to handle. If you work a part-time job but you also freelance, for example, you will have a W-2 to claim as well as taxes you owe to the government.
File on Time to Avoid Penalties
No matter what your status is or how many forms you need to fill out, make sure to get everything done on time. The last thing you want to do is think you’ve completed your taxes only to find out you have to pay a fee for filing late.
This is pretty easy to avoid if you’re an employee. If you run your own business, though, keep in mind there are quarterly payments to keep up with in addition to your annual taxes. Actually, these payments offset the total number you need to pay at the end of the fiscal year – but they’re “additional” because it’s one more thing to keep track of.
Master the Process of Filing Taxes Yourself
Filing taxes yourself without a professional is easy for some people, while it’s a little more intimidating for others. Still, however you feel going into this situation, you’re sure to feel much better once you understand how taxes work.
This is a sense of empowerment like no other. Knowing what to expect comes tax season opens the door to all kinds of financial opportunities, if only you have the guts to knock.
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