How to File a Tax Return? A Quick Guide
If you are currently employed by an organization, you know that you do not receive the paycheck in full. Some of it goes behind taxes. While most of us cringe at the thought of taxes, we also understand that it is necessary to run our country. And the system starts seeming fair when the IRS refunds the excess tax you paid after you have filed for a tax return.
In this post, we detail everything you need to know about filing for a tax return. Let us assume that you are employed by another employer, the corporation withheld some amount every month to pay your taxes, and come next tax season, you will have to file a tax return to either pay an outstanding sum to the IRS or get a refund.
The all-important Form W-4
You probably remember filling out a form called the W-4 when you started your employment. This is where you made all kinds of decisions regarding how you want to distribute your salary partially, disclosed personal information like marital status, and more. The details you put down in W-4 ultimately decides how much tax you paid over the entire year and whether you have overpaid or underpaid.
Now, most of us forget about the Form W-4 during the course of our employment. But the IRS recommends updating this Form from time to time to include your life events that affect taxes. 2020 onwards, the IRS has simplified the W-4 where it has become much easier to complete the process. The updated information will help while filing for a return.
How to file your tax return?
With the W-4 sorted, you can now move ahead and file for a tax return with the IRS. Depending on your comfort level and time available, the following three options are open for you.
First, contact a tax professional or an accountant. It is their day job to help people figure out their taxes, deductions, and file for a refund. However, this is the costliest step of all. If you have multiple income sources with various investments and donations made to different charities, filing for a tax return can get complicated. Hire a tax accountant then and file for the tax return.
Second, complete Form 1040 yourself and mail it to the IRS. This is the DIY technique and costs the least. Your W-4 will tell you the amount of tax you have already paid through your employer. Form 1040 will help you to eliminate non-taxable incomes and come to a taxable figure that the IRS will tax depending on an inflation-adjusted bracket. Fill out Form 1040, include the outstanding amount if you owe the IRS tax, and mail it to the authorities. You are done.
Lastly, there is another way to file for your tax return. Here, a tax software helps you to finish Form 1040 and automatically sends the details to the IRS. For a small fee, you can use software like TurboTax or H&R Block to answer a series of questions that ultimately helps to fill 1040 electronically. Currently, the IRS offers free e-filling and tax preparations for those citizens earning below $72,000 annually.
You have successfully filed a tax return. Next, if you are eligible for a tax refund, the IRS will either directly senda check to your mailbox or deposit it directly in your bank. The amount is generally substantial for many as the exemptions provided under the tax laws are, after all, people-friendly.
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