Some Tips On Doing Your Own Taxes

Doing Your Own Taxes may appear daunting, in a lot of cases however it is really not that difficult. In order to be successful with it though, you will need an accurate record of your expenses and incomes, and will also need to become familiar with the available tax codes. If you have questions for a tax professional on this topic just ask your question ateHow.com.

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Instructions

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You should generally stay organize and keep a record of your incomes and expenses throughout the entire year. You will need a dedicated binder or file system to keep your tax related files/documents together.

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You should know the type of deductions you can make from your total income. You will need to itemize your deductions or take a standard deduction. Using some calculations or a tax software can help you to determine which is better for you. If your medical costs are low, and you are not paying a lot of mortgage interests or taxes on real estate, it may be better for you to take a standard deduction with your filings.

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You will also need to become familiar with the tax forms. A lot of households will generally file the Form 1040. You can provide the details of your incomes online or may fill them in on the W-2s tax forms. If you had earned over $400 in self-employed incomes through freelancing etc, you will need to fill the Schedule C and SE forms and will need to deduct any business related expense against your self-employed income.

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You should make use of some tax file and software online for accuracy and simplicity. You can make use of free software like TaxAct, TurboTax etc. Some banks (USAA etc) may provide some eFile services for free too.

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You may key in your deductions, income, personal information and tax credits into a tax software/application or you can fill them in on some paper tax forms. You will need to include your W2 forms with your paper forms, or you can fill in your information when you are filing or generally doing your own taxes.

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You can file your tax returns and then provide your bank details for direct withdrawal/deposit or could mail in your check. When you file your tax on the web, you should get an email acknowledgement, returns that you mailed will generally not get an acknowledgement however. If you get a refund or your payment is withdrawn from your specified bank account, you will then know that you have done what you should do right.

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Tips And Warnings

For taxes that are complicated and other issues you should contact an accountant.

You should also avoid getting any red flags with your tax filings (some tax software can alert you on this), in order to reduce the likelihood of your refund being audited by the IRS.

What Not To Do On Your Taxes According to Experts

Being careful is import when completing your taxes and this year should make you a little bit nervous if you are preparing your taxes yourself. Even professionals are making a lot of mistakes according to the Government Accountability Office.

In a study done in 2014, 10% of preparers did not calculate a normal tax return correctly. The final error rates for tax preparation according to the study was 50% for self-prepared returns and 60% for professionally prepared returns. Of course, the professionals more than likely handle the tough returns. Still, those are alarming numbers.

Some errors are obvious mistakes while others are harder to deduct, keep these difficult areas in mind this tax season: foreign investments, charitable giving, real estate taxes, gambling winnings, and state refunds.

If you have foreign investment accounts or savings accounts, make sure to report them to the IRS. If the IRS is able to discover the account later, you can face a penalty up to $10,000.gaooffice

When making contributions to charity, keep a record so you can prove that you gave to a qualified charity. And when purchasing an item for a charity event, you can only deduct the portion above the value you are receiving.

Real Estate taxes can be a trick if you just purchased the home as some are paid on the closing statement. And an office in the home is a great deduction, but make sure not to claim more space than the office occupies.

If you have gambling winnings during the year, offset those winnings with loses you experienced and documented. You can’t take a lose of gambling, but limiting the amount of your winnings that is taxable is really nice.

Finally state refunds. State refunds on tax return filings are taxable the next year as income on the federal return. Yet federal tax refunds are not taxable, you get to keep the full amount of those funds.