23 Oct Everything You Should Know About Tax Returns
When it comes to tax returns, most people do their best to complete them correctly without really understanding how they work. Plus, some significant changes came into effect in 2018, many of which you’ve probably never heard. It was a big change, so we can’t blame you!
Considering all of that, we decided to give you a guide on doing your tax returns. By the time you read this article, you’ll have a better understanding of taxes and how to file your return.
Important Information You Need to Know
As you are probably aware, tax returns are used to calculate liability, refunds, and tax payments.
What many are not aware of is that tax returns can be very beneficial for you. By filing them once a year (usually on April 15) you can determine the exact amount you owe so that you won’t overpay the IRS. However, you’ll also see if you’ve overpaid throughout the year, and you’ll be able to get the money back.
The IRS is not obligated to inform you if you’ve paid more than were required – you always need to determine this on your own. They can then verify through the tax return process, and you’ll eventually get a tax return.
Also, it’s important to note that it’s highly advisable to keep tax returns for at least three years. A lot can happen in the future with the IRS, so it’s better to have them, just in case.
Everything You Need to Do to File
Doing your tax returns is pretty straightforward. The IRS provides you with most of the information you need to know.
You need to provide a lot of personal information, but you also need to provide information on income, deductions, and tax credits.
For income, you need to provide all your sources of income for the previous year. This will determine the amount you need to pay in taxes.
For deductions, you must calculate correctly, as these decrease your tax liability. Plus, only by subtracting all the deductions will you be able to determine your exact tax rate on your adjusted gross income.
As for tax credits, these are the amounts that offset tax liabilities and the taxes you owe. They are different from state to state, and they reduce the actual amount you owe.
In the end, when you file, you need to choose how you’ll do it:
- Manually, by filling out Form 1040 and mailing it directly to the IRS.
- By using tax software programs or websites that explain the process in more detail.
- By getting help from a professional accountant or tax
The second and third options have a cost associated with them, but either one of these ways will help you quickly determine how much you owe or how much you will receive. Also, you may end up paying less than you would if you were to do it on your own.
Outside of all of this, there’s not much else you need to know. However, if there is something you haven’t seen here, feel free to contact Golden Tax Relief directly or take a look at our blog where we often write about taxes and how to deal with the IRS.