How To Do Your Own Taxes

1. Free Versions of Online Tax Software

Many of the big tax preparation companies will bring in customers with the offer of “free” filing, says Curtis. But beware of the upsell.

We at Forbes Advisor reviewed four of the top online tax software platforms, and our top free pick for simple tax returns is Cash App Taxes where you can file both your federal and state taxes for free. The service includes several forms, including self-employment, as part of their free package.

Unlike Cash App Taxes, some online tax software providers offer limited form options. “Often, if the return requires any additional forms like a Schedule A or C, that costs extra. In many cases the federal return might be free, but a state return will have an additional cost.”

When you’re choosing a free product, read the fine print. Most of these products come with limitations that may exclude your specific situation, including your income and the forms you need to file. Also, consider the complexity of your taxes: If you think you’ll need professional help while filing, some tax software companies offer CPA assistance—but you’ll likely have to pay for it.

Read more: The Best Tax Software of 2022

Video

Choose a DIY Tax Method 

If you’re the calculator-and-pencil type, you can print forms from the IRS website or pick up a package at your local library. There are three standard tax return packages:

 

  • The 1040EZ is for people with under $100,000 in total income and no deductions. The typical user is young, in school or does not own a house. 

  • You move to the more complex 1040A form if you must add an IRA, stock investments or want to claim certain tax credits. 

  • The 1040 is appropriate if your income exceeds $100,000, if you have one or more businesses, or if you choose to itemize deductions rather than take the standard deduction.

File Your Return 

If you’re going old school with your return, you’ll have to trek down to the post office and mail your package to the appropriate address for your state. Note that different addresses are used based on whether you include a payment with your return or you’re entitled to a refund. 

Tax prep software connects with the IRS e-file system, making it the most convenient way to submit your return. You’ll have to set or obtain a PIN to electronically sign your return. If you owe money, you can pay one of several ways: 

 

  • Authorize an electronic money transfer

  • Pay using a credit or debit card 

  • Mail a check or money order along with Form 1040-V, the payment voucher

 

Get help from a live tax pro

File your taxes with Basic Online Assist and you’ll have access to an actual tax professional on-demand and wherever you need.

  • Screen sharing with your tax pro
  • On-demand chat and video
  • Support on any device
  • Unlimited help from a tax expert, enrolled agent, or CPA

Should I do my own taxes?

Now that you know the steps you may still be contemplating “Should I do my own taxes?” To be honest, the process of taking care of your own taxes is not for everyone. Let’s take a closer look to see if it is a good option for you.

When is it a good idea to my do my own taxes?

Preparing your taxes can be time-consuming and somewhat tedious, but it is completely possible to tackle this annual task on your own. You might be able to save some money, but you’ll also feel more in control of your finances.

If you choose to do your own taxes, then you’ll need to pay close attention to details along the way. It will likely take several hours to work through your forms, so make sure to set aside the right amount of time.

When should you consult a professional?

If you don’t have hours to set aside for this task, then you should seek out a professional. Another good reason to consider a professional is if you have a complicated tax situation.

If you have a complex situation with multiple W-2s, 1099s, and your own side hustle, then you might want to consult a professional. They can help you clarify your filing and make sure that you don’t miss out on any savings.

Step 3: Pick a Filing Status

Your filing status helps you figure out what you’ll need to do to file, what your standard deduction is, your eligibility for certain credits, and how much you’ll owe in taxes.

There are times when picking your filing status is pretty straightforward—like if you’re single—and other times when you might qualify for more than one filing status and it’s not so clear.

How do you figure out which filing status to pick? There are five different statuses to choose from:

  • Single. If you’re divorced, legally separated, or not married, you’ll file as a single taxpayer.Simple enough, right?And if you were widowed before the tax year, you’ll probably file as single.
  • Married Filing Jointly. You’re married and both of you agree to file a joint return. In most cases, married couples usually save more by filing jointly.
  • Married Filing Separately. If you’re married and for some reason don’t agree to file jointly—maybe you want to be responsible for your taxes only or filing separately results in a lower tax bill—you can use this filing status.
  • Head of Household. This one’s a little tricky. To qualify you must have paid for more than half of the household expenses for the year, be unmarried, and must have a qualifying child or dependent. So, if you’re a single parent or taking care of an ailing family member, you might qualify to file as head of household.
  • Qualifying Widow(er). If your spouse dies and you don’t remarry in the same tax year, you can file jointly with your deceased spouse. For the two years following the year of death, you can use the qualifying widow(er) filing status if you’re still unmarried and live with a qualifying dependent.2

In most cases, folks will either file as single taxpayers or married filing jointly. But there are some rare instances where you might consider filing separately or another filing status if it applies—so always do the math.

How to file your own taxes

Once you’ve collected your paperwork and determined your filing status, you are ready to do your own taxes. There are three different ways for you to do this. Each of these options offers a slightly different way to prepare, but the basics are all the same. Choose the option that best suits your lifestyle.

1. File manually

You can download the forms you’ll need to fill out from the IRS website. It is completely free to download these forms. If you choose to print them, you can complete them by hand and mail them in.

In most cases, this manual method for doing your taxes is only a good option if you have a fairly simple tax situation. Although you can work through a more complex financial picture with these paper forms, it might become tedious after a few forms.

2. File your taxes with the IRS online fillable forms

The IRS offers free file fillable forms on their e-File site. With the fillable forms, you’ll have line-by-line instructions to help you complete the form. If this is your first time filing your own taxes, then the instructions can be helpful to follow.

3. Using an online tax software program

As a final option, you can use online tax software programs to file your own taxes. Although you may need to pay to use an online software program, it might be worth it if you have a complex tax situation.

Most tax software programs walk you through the filing process with prompts along the way. It can be helpful to see these prompts. You might see something that helps you notice easily forgettable details of your tax year.

A few good options include:

Credit Karma Tax

In addition to their free credit monitoring, Credit Karma offers free tax filing via a simple and easy-to-use interface.

TurboTax

You can use TurboTax to file your basic return for free. However, you may need to upgrade to a paid version if you have a complicated situation.

H&R Block

H&R Block is another well-known tax software program that can help you file basic returns for free. However, their paid options are very affordable if you need more help.

Simply choose the software that you are most comfortable working with. Doing your own taxes will be much easier if you pick a method that feels easy to you.

Method 1: File By Mail

Though you may shudder at the thought of calculating your taxes by hand, there are a number of benefits of doing things the old-fashioned way:

  • You learn more about where your money is going. Tax software programs are designed if you want your taxes to be finished as soon as possible and with as little intrusion as humanly possible. Tax preparation software programs don’t do a great job of explaining the tax process, where your money is going after you pay it or the laws surrounding tax preparation. If you’re an inquisitive person, doing your taxes by hand gives you an inside look at how you’re taxed and where your tax money goes.
  • You’ll fight against tax complexity. The United States has 1 of the longest and most arduous tax processes in the world. Some critics blame tax software companies for their lobbying efforts against a simpler tax code, that were it not for software manufacturers’ interference, the public would have adopted a less complicated tax process ages ago. A growing body of consumers choose to do their taxes by hand to discourage complex tax laws and encourage government representatives to simplify the tax code.
  • You save money on software. Filing your taxes by hand is basically free, saves the cost of postage, ink for your printer and mailing supplies.

If you’ll be filing your taxes by hand this year, your 1st stop should be to IRS.gov, where you can download the necessary forms to begin your return. If you’re like most Americans, you’ll need to fill out the Form 1040, which is suitable for most who are employed either full-time or part-time. To view a step-by-step guide to filling out Form 1040, check out the video tutorial below:

Step 5: Get Organized for Next Year

If you end up with a big tax refund or a large tax bill, you probably want to go ahead and adjust your withholdings so that you’re not taking too much or too little out of your paycheck for taxes. 

And one more thing: Once your taxes are signed, sealed and delivered to the IRS, you might be tempted to celebrate by starting a bonfire and burning all those receipts and tax forms in a blaze of glory … don’t do that.

Instead, promptly file any tax documents and important receipts when you receive them so you don’t have to search the house for them next spring. Buy a few manila folders, an accordion file or a filing systemthat will hold your tax documents and save those documents for at least three years. You might need them if the IRS comes knocking.

Get Ready to File Your Taxes

If you’re planning to file your taxes by hand, make sure that you leave yourself plenty of time to do extensive research on your liability, your tax bracket and the credits and deductibles for which you’ll that you qualify.

If you have a more complicated situation, you’re managing brokerage taxes or you’ve recently undergone a major life change (like having a baby, getting married or switching from an employee to an independent contractor), you’ll run the risk of losing out on money, paying more than you owe or filing the wrong form.

Check out the IRS’s tax topics compilation, which offers answers to some of the most common tax inquiries. Take advantage of the resources at your fingertips as you get ready to file your own taxes.

Related content: How Much is Federal Income Tax?

Tags

Leave a Comment

Adblock
detector