Tax Day is on its way, and with it comes a mix of stress and excitement for many taxpayers. Are you going to reel in a nice refund or will you have to fork up a large chunk of change for the Internal Revenue Service (IRS)?
Regardless of the outcome of your return, there are several ways to file your federal income taxes. In this post, we’ll discuss some of the common ways you can handle them this year.
File Your Taxes Yourself
It’s not uncommon for people to file their tax returns on their own without a tax professional. For the most part, as long as you have a relatively straightforward financial situation (i.e. you have one job and few or no dependents) and you are comfortable with the process, filing solo is a viable option.
According to the IRS, the most important steps to filing a federal tax return yourself are:
- Determine if you’re required to file a return: some low-income earners and children are exempt from filing
- Figure out your tax filing status: single, married filing jointly, married filing separately, widowed, etc.
- Calculate your personal exemptions and dependents: some people are entitled to tax exemptions that reduce their taxable income
- Report your total income for the year: this can be determined by reviewing your W-2s, which can become more complicated if you work several jobs in one year, or you are self-employed or a freelancer
- Claim eligible tax credits and deductions: claiming credits and deductions can reduce your taxable income and increase your chances of receiving a tax refund
- Send your completed forms to the appropriate office: typically, your forms are sent to the Department of the Treasury or the Internal Revenue Service office, but this can change depending on which federal tax return form you’re filing and if you’re attaching a payment or not
All tax forms should be available on the IRS website. You can also order IRS tax forms and relevant publications for delivery by mail.
If you find the prospect of filing taxes on your own overwhelming or you are anxious about making any mistakes on your return (which can cause delays in receiving a refund), you can always use a professional service like an accountant or other registered agent.
Hire a Tax Professional
If you’re uncomfortable filling out your tax forms on your own or filing online, there’s no shame in using a professional to prepare your return for you.
Hiring an accountant is still a popular way for taxpayers to manage their returns. An accountant offers peace of mind because of their experience in filing returns year after year. As long as you bring all of your paperwork (Social Security card, income-related documents, expense-related documents, etc.), and have an accountant you trust, you can be confident that your return will be managed efficiently and correctly in time for Tax Day. If you’re unsure of the reputation of an accountant, it’s a good idea to check reviews to see how others have fared with a particular accountant’s services.
Freelancers, small business owners, and other people with more complex financial situations tend to leave their returns up to professionals because the more income streams you have and the more paperwork you rack up increases the chances you might make a mistake. If you’re someone who has a variety of income streams, creating a Personal Financial Statement can be a simple way of organizing your finances to make it easier for you and your accountant to sort through your paperwork and streamline the process. The last thing you want is a delay in a return or the IRS hounding you for a late payment.
If you’re concerned about the cost of hiring a Certified Public Accountant (CPA), which can range anywhere from $150 and higher, an easy way to cut down on the cost is by remaining organized. Some CPAs charge by the hour, so having your paperwork organized and being on top of things (i.e. filing on time without needing a filing extension or avoiding rushed paperwork), can help to trim down the total bill.
File Your Federal Income Tax Return Online
Many taxpayers choose to file their taxes online with the assistance of filing software to save time and paper. In many cases, you’ll fill out your taxes on your own using the forms provided, and then file them using an IRS-authorized E-File provider like efile.com.
The IRS website has a list of e-file options for individuals with suggestions on how to find online forms or online tax return preparation sites that help you complete your returns online.
Some services and tax software providers charge a fee for use, but there are some free services (with and without eligibility requirements).
With efile.com anyone can prepare your federal and state tax returns free of charge by filling out a step-by-step questionnaire.
There are also the Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs, which are free services that are meant to assist people who make less than $54,000/year, have disabilities, and/or have limited English-speaking abilities.
It should be noted that programs like VITA and TCE are not online services. They are located in communities, but the volunteers can assist with filing online returns.
Use a More Economical Tax Filing Service
If the cost of a CPA is still too high and you don’t want to manage your own tax return, there are other services that can assist you with your tax needs without breaking the bank.
These services include:
Each of these services offers a cheaper alternative for filing taxes and include either assistance for filing online or professionals in-house who can file for you. The price for services range from free to around $100 depending on what you require. Whether it’s a complete filing (filling out your forms and sending them in) or you’re simply looking for a second opinion or review of the work you’ve done on your own return, these services have something for everyone.
Surviving Tax Day
There are many options for taxpayers to use to manage their tax affairs this year. Review your financial situation and reflect on the best option for you based on the complexity of your return, the time you have to file your return, and which service suits your budget best.
Regardless of what you choose, make sure you don’t leave your return to the last minute. Preparation and organization will be some of your greatest allies in tackling this tax season.
How do you prefer to file your taxes?