How to do your own taxes? These 15 Tips Will Help You Get Your Taxes Done Right
Millions of taxpayers are eager to get a refund, or at least to reduce their owes, as tax season approaches. It doesn’t matter if you are a taxpayer or not. file your taxes early You don’t want to procrastinate, but knowing the basics will help you make more money.
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Here are 15 tax tips you need to know before filing your taxes:
1. Find out if you are required to file
If you need help determining whether you’re required to file a federal income tax return this year, use the IRS’ online Interactive Tax Assistant. The IRS tool will help you by asking a few questions about your filing status, income, and whether or not you have federal income tax withheld.
2. Get your Social Security Numbers
Your Social Security number is a nine-digit information that you keep track of throughout your life. It will be required to prepare any tax return.
“Make sure you have the Social Security numbers for yourself, spouse and all dependents,” said Kay Bell, tax journalist for the blog Don’t Mess With Taxes. She added that to claim some credits — such as the child and dependent care credit — you’ll need to provide a Social Security number or other ID numbers.
3. Check Your Filing Status
Your filing status will be determined based on your marital status as of the end of the tax-year. It applies to the entire tax year. There are five possible options.
If you are legitimately in more than one category you should choose the one you belong to pay the least amount of taxes.
4. Reexamine Your Past Returns
Take your previous year’s federal and state tax returns. Because some entries are the same, this information will be helpful in starting your tax returns. Some entries will prompt for you to gather missing information.
You might also need to make adjustments if you have had significant life events such as getting married, divorced, having children, or changing your job.
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5. Collect Your Documents
For income information, you’ll need the forms you received from employers and banks, which might include some of the following:
Formula W-2 (wages)
1099-B (investment sales)
1099-MISC (independent contractor work, royalties)
1099-R (retirement distributions)
K-1 (MLP or partnership, or S-Corp portion of income)
SSA-1099 (Social Security Benefits)
1099-G (unemployment benefit and state tax refunds).
W-2G (gambling winnings)
1099-C (forgiven debt)
The following forms may be required if you have made any adjustments to your income:
You might also need forms if you want to itemize your deductions and receive tax credits.
1098 (mortgage interest)
1099-LTC (long-term care benefits)
1099-SA (HSA/MSA distribution)
1095-A (insurance market statement)
1095-B (health coverage)
1095-C (employer-provided coverage for insurance)
You’ll also need any personal receipts for expenses such as charitable contributions, unreimbursed employer business expenses, medical expenses, and moving expenses.
6. Find out which deduction to take
If you’re not sure if you should itemize your deductions, there’s a relatively simple way to determine the best choice for your situation. “If you have enough itemized deductions to exceed the standard deduction, itemize. If you don’t, take the standard deduction,” said accountant Eric J. Nisall, founder of AccountLancer, which offers accounting help for freelancers. “If you’re not sure, put everything in and let your tax program of choice tell you what to do.”
If you don’t itemize, you’re in the majority. Only 30% of taxpayers itemize deductions.
7. Find out the deadline to file
Because April 15 falls on a weekend, the date for federal tax filings is April 18.
8. File Your Federal Tax Return for Free
Free tax filing is available to taxpayers who meet certain requirements — the IRS offers Free File where you can file your federal taxes without paying any fees. The amount of your adjusted income will determine the version that you can use.
If it’s below $73,000, you can use the available free filing software.
9. Take off your medical expenses
If you itemize deductions you may be able to deduct medical expenses related to diagnosis, cure, mitigation and treatment. These are payments for services rendered by doctors, surgeons or dentists. You can also deduct the cost of equipment, supplies, or diagnostic devices. Additionally, you may be able to subtract:
These expenses can only be deducted if you meet a certain threshold. Qualified medical expenses exceeding 7.5% of your adjusted net income can be deducted on Schedule A (Form 1044)
10. Allow Travel Deductions for Medical Treatment
If you drove in 2022 to get to a hospital, doctor’s office or dentist’s office for the purpose of medical treatment, the cost of getting to and from the facility or office is based on the variable costs.
11. Take your mortgage interest deduction
If you itemize deductions, interest on mortgage payments might be deductible. Interest on a second mortgage, home equity line of credit or another mortgage may also be eligible for deduction. If you have paid more than $600 in mortgage interest, you should get Form 1098 from your lender.
12. Charitable donations should be properly deducted
Nisall said that you need to itemize your charitable contributions if you wish to claim a deduction. “Any single cash donation over $250 or non-cash donation in excess of $500 should have a receipt in your records — and it would be ideal to have a receipt for any donation,” he added.
Not all donations are eligible for deduction. For example, you can’t deduct the entire amount of your donation if you received a benefit like a fancy dinner at a fundraiser. The fair market value for the meal must be subtracted from the donation amount.
13. Get your tax documents for health insurance
A Form 1095, Form 1095 B or Form 1095 C may be sent to you for medical coverage you have or was offered. Another important document that you should keep track of is the Form 1095-A, Form 1095-B or Form 1095-C for tax filing purposes.
“You and each member of your family must have qualifying health insurance coverage for each month of the year, or qualify for an exemption from the coverage requirement — or make an individual shared responsibility payment when you file,” said Bell. “Filers who get coverage from the marketplace will need the Affordable Care Act 1095 forms to make sure they file properly. If you have coverage through your workplace, you’ll simply check a box on the return.”
14. Find out if your eligibility for EITC
The earned income tax credit may be available to you if you worked in 2022, but have a low- or moderate income. You don’t need to itemize your deductions to receive this tax break because a tax credit reduces the amount of tax you have to pay. You might even get a refund. You may be eligible to receive a refund. EITC Assistant To help you determine whether you are eligible.
15. Report your Unemployment Income
If you weren’t employed in 2022, you might think that you don’t owe any income taxes. You must declare any unemployment compensation you receive and pay any taxes due. So, don’t ignore that 1099-G you got. “The Internal Revenue Service got a copy, too,” said Bell.
More Information from GOBankingRates
Taylor Bell Contributed to the reporting of this article.
This article was originally published on GOBankingRates.com: Doing Your Own Taxes? Make Sure You Follow These 15 Tips