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Are you wondering how to file taxes effectively? If so, you’re probably wondering how to best approach this process. As the saying goes: “The longest journey begins with a single step.” So, let’s take the first step with this essential guide to how to file taxes for the 2023 tax year.
First step: Collect filing information from the previous year
Whether you’ll be filing your own taxes or using tax preparation services, your first step before preparing and filing your tax return is to make life easier and gather all the relevant filing information from the past year. This may include:
- W2 form
- 1099 or multiple 1099s and documentation of expenses. The main thing you should know as a side note to business taxes is that you will receive a 1099 from all those who paid you $600 or more during the year.
- For self-employed people (those who run a business and do not receive a 1099), you will need documentation about your income and expenses.
When can you start filing taxes this year?
It’s already tax season. You could have already started if you were applying online. You can start preparing the taxes required by the IRS by filling out all the relevant information. If you move or your filing status changes, this is a first step to saving time getting this information in and out of the way.
Do you expect a refund? The faster you file, the faster your refund will arrive.
Decide how to file your federal income tax return
Filing federal taxes with the IRS can be simple or complicated. You may be able to file for free online. What type of tax return do you have?
This is the first step in the decision-making process. For example, if you only have a W2, you must be able to prepare and file taxes yourself.
Even if you have more than one job and multiple W2s, your federal and state taxes have already been deducted. Local taxes may also have been deducted, or you may have to file them separately. You’ll use the standard deduction in 2024, which is $14,600 if your filing status is single. You can file taxes with the IRS Free File. Or you can use basic tax preparation software to prepare your federal income tax return electronically.
If you’re self-employed and wondering how to file self-employment taxes, filing your taxes gets a little more complicated. You can still file your taxes yourself, but you’ll appreciate the guidance of any professional preparers or the best tax software as you prepare your federal return.
Here are some tips from ClearValue Tax on how to maximize your tax refund safely and easily:
The best options for filing tax returns
single? Programming? Tax report? Free file? Below is more detailed information about the best options for filing tax returns:
Tax software
Tax preparation software can help you simplify filing your federal tax return. As a bonus, all the information you need can be used for the feds to file your tax returns at the state and local levels.
As you use tax return software to prepare your tax return, you will be asked to add information that may lead to tax breaks. You may find tax deductions you didn’t know existed (see below).
Hire a tax preparer
Hiring a tax professional is a great option, especially if you are just starting out doing your own taxes (a new business venture). A tax professional provides guided tax preparation and may have suggestions for steps you can take in the coming years to help you save money.
IRS forms online
All of the forms you will need to file your federal tax return are available through the IRS; You’ll need separate forms to file state and local taxes. You can download and print the forms – use them as worksheets before using the free IRS file, and use them as fillable IRS forms.
Free file
You can file a federal tax return without filing with the IRS. Well, the Free File Option portion of the IRS is free — of course, you may still need to pay what you owe on your tax return! You can pay what you owe with a credit card, link it to your bank account, or set up a payment plan (if you can’t pay everything you owe right away.) You can get your money back by linking your bank account.
Below is a table listing the best options for filing your tax returns, as well as their pros and cons.
| option | a description | Positives | cons |
|---|---|---|---|
| single | File taxes on your own without help. | – Complete control over your deposit process. | -You may miss out on potential tax breaks or deductions. |
| Tax software | Use tax preparation software to file federal taxes, with potential options for state and local taxes. | – Simplified process with claims for tax credits. | – Some programs may have costs associated with them. |
| Tax report | Hire a tax professional to prepare targeted taxes and potential money-saving suggestions in the future. | – Expert guidance and assistance. | -Can be more expensive compared to other options. |
| IRS forms online | Access all necessary federal tax forms directly from the IRS to fill out manually or as worksheets. | – Free option for those who prefer manual filling. | – It requires more effort and calculations compared to software. |
| Free file | Use the IRS Free File option to file federal taxes; You may need to pay taxes owed or set up payment plans. | – Free option to file federal taxes. | -Additional costs if you owe taxes or choose refund options that include linked accounts. |
Each option has its advantages and disadvantages, so choosing the best approach depends on your comfort level with filing tax returns, the complexity of your tax situation, and budget considerations. Consider the features and benefits of each option to find the one that best suits your needs and ensures a smooth and accurate tax filing experience.
Determine which tax bracket you fall into
There are 7 tax brackets that determine your tax rate. The tax rate ranges from 10% to 37%.
Your taxable income is calculated using your total earned and investment income and then adjusting that number based on deductions. Read more about the discounts below.
Get your tax documents together
Trust us – get all your tax documents together before you get started. You probably already have everything you need, for example, QuickBooks or similar software. Or you may have all of your documents in a less formal location, such as a grand stairwell. Either way, let’s get started:
Tax deductions
The total amount of your tax deductions will determine whether you itemize your income tax return or use the standard deduction. the The standard deduction varies depending on filing statusYou’ll have to add up your deductions to see how you qualify.
Let’s take a look at the following potential tax deductions you may qualify for:
- State and local income taxes: The money you paid for your state and local income tax burden can be deducted from your federal income tax return.
- Real estate and personal property taxes: The money you paid for these taxes can also be deducted while you file your federal taxes.
- Mortgage interest: Depending on your mortgage rate, the amount of interest you pay could be significant.
- Gifts to charity: Charitable donations can also be deducted. You’ll need receipts, as well as documents proving that the recipient of your gift is a charitable organization.
- Medical and dental expenses: This includes the cost of the premiums you paid. If you have Healthcare.gov insurance (and get a discounted policy), this does not include the total premium amount for the policy, but rather the portion of the premium you pay. Other medical and dental expenses may be covered, but only if the cost exceeds 7.5% of your adjusted gross income.
- Student loan interest: The amount of interest you paid on your student loan may also be deducted, even if you are no longer a full-time student.
How to pay your taxes
Now that you know how to file taxes online, you can also make sure you pay your taxes on time. The best way to do this is to pay when you file – you will be hit with interest charges on late amounts in your account.
Bank account
When filing your tax return, you can pay from a checking or savings account.
Card
You can pay using your personal or business credit card.
Payment plan
Taxpayers can set up scheduled payments. You can set up the process for free online, using the IRS’s free filing site.
Tax filing extensions for the 2024 tax filing season
If you need more time, you can apply for an extension for free. You must file by the tax due date. Only a minimum amount of information is needed to apply for an extension. You’ll make estimates and use IRS Form 4868, which is free to download and use.
How to file an amended tax return
Taxpayers can make mistakes when filing taxes. You may have left a discount, for example. Or if you’re self-employed, you may have a late 1099 and want to add that to your return.
You will need to file an amended tax return using IRS Form 1040X.
How to file taxes again
If you find yourself in a situation where you owe back taxes, it is essential to take the appropriate steps to address the problem. If you don’t, you could be looking at a lot of interest accruing or even penalties.
The best course of action is to work directly with the IRS to settle the outstanding tax debt. To start the process, you’ll need to set up an account with irs.govwhich allows you to access the tools and resources needed to manage delinquent taxes.
Creating an account with the IRS is a straightforward process, usually done online through their official website. Once you create your account, you can explore the payment options available to determine the best plan for your financial situation. The IRS offers a variety of payment plans, allowing you to spread out payments over a period that fits your budget.
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