Tax season is here and if you worked and received a paycheck during the 2017 tax year, you most likely have to file a federal and state tax return for that year. Do you know what that means?
What is a tax return anyway?
A tax return is simply an official form the Internal Revenue Service, also known as the IRS, require you to fill out listing all the income you earn in a given year to calculate your tax liability (taxes you owe) and if you need to pay a difference or if the IRS needs to refund you.
While you work during the year, most employers are required to withhold federal payroll and income taxes from your paycheck. After completing your tax return, if the amount of taxes taken from you is more than what you owe, then you are entitled to a refund (money will be given back to you from the IRS).
If you did not pay enough taxes throughout that year, then you will owe money to the IRS (you will have to pay the IRS that amount). If you cannot pay the entire amount owed, you usually can setup a payment arrangement with them. You will need to call them. You can find the IRS contact information on their site on www.IRS.gov
If you are due a refund, you can choose to have it sent to you via check (not best method, takes forever) or directly deposited into your checking or savings account (you get your money much faster that way).
When are tax returns due?
You always pay taxes for the most recent year that ended. So, we are now in the year of 2018. You would complete a federal and a state return, if applicable, for 2017. Tax returns are always due to the IRS by April 15…so in this example, April 15, 2018.
Work in 2017 ? —- Complete 2017 tax return in 2018
If you worked all or part of the 2017 year then between January 1, 2018 to April 15, 2018, your tax return must be completed and submitted to the IRS.
There are three common federal tax return forms that can be used to file your taxes, 1040EZ, 1040a & 1040. Your personal circumstances will determine which form is most appropriate for you to fill out. No need to feel anxious about which form to use. There are professionals and tools available to help you with that.
How are tax returns completed?
There are two ways tax returns are usually completed. One, you can hire a tax preparation service such as HR & Block, Jackson Hewitt or a personal tax accountant to complete your taxes for you. This is the more expensive way, often paying hundreds of dollars, to file your taxes however it is beneficial if you are not familiar with tax related stuff or do not want to do it yourself. You often will go to a location where you can sit down and get one-on-one assistance.
Another way, is to do it yourself by using an online tax preparation service. You can also buy the tax software as a CD but it is more convenient to do it online. I typically pay about $60-$70 to file both the federal and state tax return I have been doing my own taxes for many years using the online tax preparation company, TaxAct.
As you are doing your tax return online, you are asked questions at every step to help you fill in the appropriate fields on the tax form. You also can see how much taxes you owe or will be refunded as you go along. Another popular online tax preparation software is Turbo Tax.
It cost nothing to complete the form online using these services, you only pay when you are ready to submit the tax return to the IRS. Depending on your situation, both companies offer a range of plans, from free to premium. You can learn more about them by visiting their website at Taxact.com and Turbotax.com
There are also free tax preparation services often listed on the IRS website. Currently, individuals who who earned an income below $66,000 can file their federal taxes free of charge. Visit the IRS website to learn more, www.irs.gov
Have a question about taxes and your paycheck or want to learn more about the tax return process? Become a patron of Just Do It Afraid and get your questions answered.
Bye for now…