IRS Tax Return Preparation & Filing At Cash Tracks Financial Colorado Springs

IRS Tax Return: How to File Your Taxes and Get the Most Refund

Preparing to File Your Tax Return

Before filing your tax return, it is essential to make sure that you have all the documents and information you need in order to maximize the potential of receiving a refund or reducing your owed amount. This includes having all W-2s, 1099s, and various other forms reporting income, deductions, credits, and any specific information like Social Security numbers for family members. It is important to ensure that the information provided in each form includes your name, address, and Social Security number. In addition to having all documents on hand, deciding whether to file electronically or use a paper return is an important part of preparing for tax time.

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The debate about whether electronic filing is better than using paper returns has been ongoing for many years now. There are several key benefits of electronic filing, such as it being generally more accurate than a paper return due to fewer chances of calculation errors and providing faster refunds than paper returns. However, some argue against electronic filing because of potential privacy and security issues that may arise from submitting one’s information through the internet. People who have experienced hacking can be less likely to trust the IRS systems in place for electronic filing. Additionally, people who lack access to computers—for example, individuals living in rural areas—may be unable to electronically file their taxes easily.

Regardless of which method is chosen when preparing to file your tax return, it is vital that all necessary documentation be collected and double checked before actually sending your information over. Once this process has been completed and your return is prepared correctly, it is time to proceed onto determining your filing status before fully submitting your information.

●        According to the Internal Revenue Service, the deadline to file a 2020 federal income tax return is April 15, 2021.

●        Nearly 1 in 4 taxpayers wait until the last two weeks before the filing deadline to submit their returns.

●        In 2020, 41 million Americans filed their taxes electronically, a 1.2 million increase compared to 2019.

Knowing Your Filing Status

Knowing your filing status is a crucial step when preparing to file your taxes. Each taxpayer will have one of five different statuses, and it’s important that you select the right one in order to ensure that you get the most refund possible. The five filing statuses are single, married filing jointly, married filing separately, head of household and qualifying widow(er).

If you’re single, divorced or legally separated as per your state requirements, you are considered to be single. If you’re married and both spouses agree to file a joint return, then you would file as married filing jointly. On the other hand, if only one spouse files on behalf of both spouses, then this is known as married filing separately. When taxpayers are either divorced, widowed or legally separated from their spouse but have cared for any children under the age of 13 for over half of the tax year then they qualify for the head of household filing status. Lastly, if you were widowed and had maintained a single household for more than two years since your spouse’s passing then you can file as a qualifying widow(er) with dependent child.

It can often be difficult to determine which filing status is best to choose from when it comes down to getting the most refund possible. Generally speaking, married individuals fall into the “married filing jointly” or “married filing separately” categories; however those who have a higher income may benefit more by filing separate returns due to certain deductions being unavailable in joint filings. On the other hand, those who have more deductions and credits may fare better if they file jointly instead as certain credits may be doubled up when both partners combine their taxes into one return. Therefore it's best to thoroughly evaluate all options before deciding on what works best exactly for your individual needs.

Now that we have gone through the various statuses available and how they affect tax refund amounts, let's move on and discuss what additional information is needed when collecting tax information in order to properly prepare for and complete IRS tax returns in order to receive the largest amount in refunds possible.

Collecting Tax Information

Gathering your tax information can be a vital first step in filing your taxes and getting the most refund. To get the most refund, you’ll want to make sure you keep copies of all your important documents, such as W-2s, 1099s, 1098s and other tax forms in a safe place. Additionally, if you plan on itemizing deductions or claiming credits, make sure you have all documentation for proof of your qualified expenses or donations.

For businesses and those who are self-employed, it is important to keep track of income, expenses and any other investments throughout the year. This is so that any potential deductions may be accurately determined when filing taxes. Some of these deductible items can include business travel costs, office supplies and home-office related costs.

The IRS does try to keep the process as streamlined and simple as possible by giving taxpayers the option of using low-cost options like free e-filing software and online banking services. This makes collecting important documents like account statements more accessible than ever before. It also allows taxpayers to file their returns electronically with more accuracy and less hassle than ever before.

Whether you are filing with paper copies or electronically, it's important to take some time to review all your information before submission in order to ensure accuracy and avoid fraud or identity theft opportunities.

Filing taxes doesn’t have to be daunting when armed with the right information! With the right preparation and collection of documents, filing taxes can actually become an enjoyable experience that leaves you feeling rewarded with a potentially large refund at the end. Now that you have collected all the necessary information for filing your return, let's move onto Listing Your Income - the next step in achieving optimal refunds from taxes!

Listing Your Income

Listing Your Income: When it comes time to filing taxes, the most important factor is properly listing all of your income. It's important to remember that anything you earned in the past year counts toward your taxable income, even if it wasn't reported on a W-2 or 1099 form. This includes capital gains, rental income, interest, dividends, bartering exchanges and so forth. Furthermore, don't forget self-employment income and free-lance payments.

If you receive Social Security benefits or unemployment income even though payroll taxes aren't automatically taken out, it may still be subject to taxation depending on eligibility requirements. In the event your total gross income surpasses $400 for the year, the IRS requires that you pay self-employment tax. Keep detailed records such as bank statements, invoices and payment information safely stored away for at least three years—the IRS can inquire about these records at any time.

Also consider if other sources of income such as gambling winnings were not reported. Failure to do so could result in an IRS audit and fines from failing to report correctly. To ensure accuracy on taxes filed within each year, report any gambling winnings as Other Income to avoid errors when filing taxes.

Whether you're reporting wages paid by an employer, dividends earned or capital gains reported on Form 1099-DIV or Form 1099-B, the most important thing is to accurately list all sources of income so that documentation is available if it's needed by the IRS. Completing accurate tax returns helps taxpayers protect their financial interests while maintaining compliance with federal guidelines.

Now that we have discussed listing your income in detail let’s move onto discussing deductions, credits and refundability in the next section.

Deductions, Credits and Refundability

Deductions and credits are two ways to reduce the amount of money you owe on your taxes. Both deductions and credits will help lower your overall tax liability, but each has different rules and regulations. Deductions reduce the amount of taxable income, while credits directly reduce the amount of taxes you owe.

One major difference between deductions and credits is that deductions can only be used to reduce your taxable income, whereas credits can reduce both tax liabilities-- substantially reducing your tax burden. Additionally, deductions are available for both federal and state taxes, but credits vary by state. Different types of deductions exist for income earners including itemized deductions, medical expense deductions, charitable donations, and mortgage interest payments. Qualifying taxpayers can take advantage of the Child Tax Credit up to $2,000 per dependent child (under 17) and if it is not used in full during the tax year it can potentially be refunded.

The Earned Income Tax Credit (EITC) helps low-income working individuals and families as well as dependents who do not qualify for the Child Tax Credit, by offering them a credit with the potential to be refundable. However certain criteria must be met in order to qualify such as income restriction, filing status, age restrictions, citizenship status and number of children in home.

Depending on individual circumstances many taxpayers could benefit from taking advantage of both deductions and credits when filing their taxes in order to get the most backrefund – but every case is different so thorough research into what deductions or credits would best serve each taxpayer’s needs should always be done beforehand.

By using deductions and credits wisely when preparing to file taxes individuals have an opportunity to save money and potentially receive more back from their returns– moving onto the next section we will explore using those options strategically in order to maximize potential refunds.

Using Deductions and Credits

When filing your tax return, you may be able to use certain deductions and credits to reduce the amount of taxes owed and increase the potential refund. Qualifying deductions and credits can help lower taxable income to provide a larger refund or reduced tax liability.

Deductions are expenses that can reduce the amount of your income subject to federal tax. One common deduction is for home mortgage interest, which allows homeowners to deduct a portion of their mortgage payments from their taxable income. Charitable contributions, state and local taxes, medical expenses, and unreimbursed employee business expenses are some other deductions that could help reduce taxable income.

The Tax Cuts and Jobs Act (TCJA) eliminated a number of itemized deductions but increased the standard deduction to an all-time high of $12,400 for single filers and $24,800 for joint filers in 2020. The higher standard deduction could mean that those whose itemized deductions do not exceed the standard deduction amount will get more benefit claiming the standard deduction than itemizing on their tax return.

Taxpayers can also take advantage of credits when filing their return. Credits are more beneficial than deductions because they directly reduce your total tax liability dollar-for-dollar. Examples of available credits include the Earned Income Credit, Child Tax Credit and American Opportunity Credit.

When considering whether to take itemized deductions or claim the standard deduction or use a credit, it is important to understand how different decisions may affect your overall tax benefit. There is no one best choice as it depends on each taxpayer’s individual financial situation. Consulting a tax professional or using online tax preparation software can help you make the best decision for your unique situation so you can maximize your refund.

Now that you know about using deductions and credits when filing your taxes, let's turn our attention to filing your return itself in the next section.

Filing Your Tax Return

Filing your tax return can be a daunting task, depending on how complex your financial situation is. It's important to understand all the different methods available for filing taxes before you begin in order to make sure that you're taking full advantage of all of your deductions, and ultimately, receiving the highest refund possible. There are two primary ways to file your tax return: paper filing and electronic filing.

Paper filing involves filling out a traditional paper return and then mailing it into the Internal Revenue Service (IRS). This option is helpful for individuals who are more comfortable with paperwork or those filing very simple returns. Additionally, paper filing will help ensure accurate calculation of tax liability since all calculations can be completed manually; it's an especially attractive option for taxpayers who may be less confident about their ability to accurately input data into online tax-filing programs. On the downside, tax filers must wait significantly longer for their refunds — on average, around eight weeks — compared to those who file electronically.

Electronic filing is growing more popular every year as it offers taxpayers a quicker and easier way to submit returns and receive refunds. By using a software package or other third-party vendor, taxpayers can digitally file their returns directly with the IRS by inputting information electronically and making any necessary calculations automatically without manual intervention. Taxpayers usually get their refunds in just under three weeks when they e-file their taxes instead of waiting nearly double that amount of time with paper filing. The downside to this option is that if you make a mistake when completing your return online then correcting it can be comparatively more difficult than it would be with paper filing.

No matter which method you decide is best for you, understanding how to file your taxes properly is an essential part of getting the most refund possible from the government at tax season. Now that we've gone over the basics of paper and electronic filing, let's turn our focus to the next step: how to file with IRS forms.

How to File with IRS Forms

Filing taxes with IRS forms is the traditional way to submit a return and is valid for most taxpayers. When choosing this method, the IRS recommends gathering information such as 1099-MISC forms, W-2 forms, bank statements and other financial documents related to income and deductions. Taxpayers must also decide which filing status they will use when submitting their return. To file online, they can access IRS form 1040 through the IRS website.

While some taxpayers feel comfortable filing taxes on their own using hardcopy IRS forms, others prefer to get assistance from a tax expert who can provide guidance about deductions or credits that may apply to their situation. Hiring a tax professional can be expensive and time consuming but is especially recommended for taxpayers whose situations are more complicated than average, such as those who operate a business or receive investment income. Meanwhile, computer-savvy taxpayers can take advantage of different tax software programs available on the internet, which offer step-by-step instructions to complete and file taxes without having to read long IRS instructions.

No matter what method one chooses for filing taxes, it is important to plan ahead so that all necessary documents are organized and received in time for submission. Finally, make sure to double check all entries and ensure that digital signatures are correctly added if applicable. After taking all necessary steps in preparing the return document, taxpayers should wait for confirmation of its receipt by the IRS.

Understanding tax refunds comes after filing returns — whether done online or with hard copy IRS forms — by following these steps one can better prepare themselves in advance and take full advantage of deduction opportunities offered by the IRS.

Understanding Your Tax Refund

Understand Your Tax Refund

One of the most satisfying things about getting your taxes filed is the potential for a refund. It's important to understand what a tax refund is, and how it works.

A tax refund is a return of money from the Internal Revenue Service (IRS). The IRS withholds taxes from paychecks throughout the year, and if more taxes were withheld than necessary, the extra amount is returned in the form of a refund. In order to calculate your return, there are various deductions available to reduce your taxable income and increase chances of getting a refund.

Understanding which deductions apply to you can have a huge impact on how much of a refund you’ll get when filing taxes. Common techniques to reduce taxes include taking advantage of retirement savings benefits and credits such as the Earned Income Tax Credit. This can save taxpayers thousands of dollars each year.

However, some taxpayers opt not to take any deductions at all. Doing so can be advantageous for those who don't anticipate earning large refunds due to their income level or lack of deductible expenses. Taking no deductions may help eliminate potential problems with audit or re-assessment down the road.

No matter which route you take, understanding which deductions you qualify for, credits you’ll be eligible for, and other tax factors will give you the best chance for success when filing your taxes.

Now that we've gone over what tax refunds are and how they work, let's go into our next section about tax return help and resources available to help better understand them.

Tax Return Help and Resources

Completing a tax return can be a daunting task and many individuals find it beneficial to seek help. Fortunately, the Internal Revenue Service (IRS) offers a range of resources to individuals who need help filing their returns. From online resources to professional advice, there are a variety of options available to get help when it comes to filing tax returns.

Online Resources

The IRS website includes a range of helpful resources, including informational videos and articles, interactive conversations with virtual assistants, and instruction booklets that can assist filers in completing their returns. Additionally, the IRS Taxpayer Advocate Service provides free tax consultation for anyone seeking help with Federal taxes. In addition to the information provided on the IRS website, there are several other websites run by trusted third-party sources designed to guide individuals through the process of filing their taxes.

Professional Advice

If you prefer more personalized assistance with your tax return, there are several ways to access individualized advice from professionals familiar with filing taxes. Individuals can seek out qualified accountants who specialize in preparing tax returns or visit dedicated tax preparation services such as H&R Block or AARP Foundation Tax-Aide Program which offer the opportunity to work with a trained expert in filing taxes. There may also be local resources offered by community organizations such as libraries or churches.

Benefit of Professional Services Versus DIY Approach

One debate when considering which route of getting help for filing taxes is best is between do-it-yourself approaches versus hiring an accountant or other professional service provider. Supporters of doing it yourself often cite cost savings as one of the primary motivating factors for taking this approach. However, depending upon your financial situation, seeking out professional help could be beneficial in leveraging deductions that could help maximize your refund amount or minimize any penalties assessed by the IRS. Professional services can also provide insight into legal issues associated with filing taxes so taxpayers have greater understanding of potential liabilities should they choose not to hire someone else's expertise.

All in all getting help with filing taxes can be beneficial but the right strategy depends upon individual needs and preferences. By utilizing online resources or signing up for additional guidance from professionals taxpayers can feel confident that they’ve taken steps to complete their returns accurately and receive their maximum refund allowable by law.

Answers to Commonly Asked Questions

What is the deadline for filing my IRS tax return?

The deadline for filing your IRS tax return is April 15th each year. If that date falls on a weekend or holiday, the deadline is extended to the next business day. It is important to file your taxes on time to avoid penalties and fines from the IRS. Moreover, if you are expecting a refund, it’s best to file as soon as possible to get your money back quickly.

What are the penalties for late filing of an IRS tax return?

The IRS penalties for late filing of a tax return can be substantial. If a taxpayer is more than 60 days late in filing their return, they may be assessed a failure-to-file penalty equal to 5% of the taxes owed for each month (or partial month) up to a maximum of 25%. Additionally, a taxpayer who owes taxes but does not pay them by the due date will be charge an additional 0.5% monthly penalty plus interest on any unpaid balances. Ultimately, the total amount due could end up being significantly larger than the original tax bill if the returns are filed and payments are not made on time.

What documents do I need to submit with my IRS tax return?

When filing your IRS tax return, it's important to make sure you have all the necessary documents. Depending on your circumstances, this may include any of the following:

• A copy of your federal tax return from the previous year

• Payment vouchers or settlement records if you paid estimated taxes during the year

• W-2 forms from each employer you worked for during the year

• 1099s and other income statements such as Social Security benefits and stock transactions

• Documentation showing itemized deductions such as medical and dental expenses, home mortgage interest, state and local taxes, and charitable contributions

• Bank account information, such as a voided check or a deposit slip

• Any other documents needed to claim credits and deductions

By having all these pieces of documentation in order before filing, you can ensure that your tax return is prepared accurately and that you receive the maximum refund or reduce penalties due to late filing.

Cash Tracks Financial Colorado Springs

525 N Cascade Ave #200

Colorado Springs, CO 80903

(719) 359-8789