Filing taxes can be intimidating, but it doesn’t have to be. Being a first-time filer, a person probably got many questions about the process. What if I made money from odd jobs? What if I want to itemize my expenses? What do I need to know about my taxes? The best way to handle taxes is to seek out the help of a professional, but sometimes that’s not possible. The following are some tips on how someone can file taxes;
A person will need basic information about income and deductions to file any tax return. To do this, someone has to compile all important documents related to the earnings and expenses. For example, if a person has earned a small income from freelance/contract work, make sure to have copies of these records, including checks and deposit slips for all deposits made in the current year. It would be best to gather payment receipts for anything related to taxable events for which there was a transaction receipt.
Get the right software
Then, get the right program for the tax situation. Someone can find free or low-cost software online. A person can also use tax preparation software or rent a program from a library or other source that offers this service. The IRS website has information on these options.
Double-check every entry before submitting the tax return
If a person makes a mistake, one could be hit with a fine or penalty for filing late or not paying enough money, depending on the nature of the error. Missing income might seem like an innocent mistake, but it can have major consequences when filing the next year.
The second most common mistake is overestimating deductions and credits. One might think that claiming any deductions is good because it means the person gets more money back from the government. However, this isn’t always true and could cause problems with the IRS later on.
Remember the gig economy income
The IRS considers a job if someone is doing something that benefits someone else and they are the ones paying the person. When using a platform like Airbnb or Lyft to find work, those platforms aren’t considered for the employer. That means the company isn’t withholding taxes from one’s earnings — it’s up to an individual to pay taxes as a worker. If doing enough work on any of these sites, consider getting a professional tax preparer.
Filing electronically allows for the fastest refunds, usually within three weeks. However, if a person chooses to file on paper, they should expect to wait at least six to eight weeks for the return and additional paperwork from the IRS.