As tax season approaches, you may find yourself wondering what your options are for filing a tax return. There are a couple of items we must address first. When is the tax season? What information do you need to gather before you can file your taxes?
- Tax season typically runs from early in the new year to April 15 of the year following the tax year in question.
- No matter which method of tax filing you choose, you will need to have certain information on hand when you file.
- The tax documents most need include their W-2 forms and 1099s forms.
- The three main options for getting it done include paying a tax professional, using tax software, and the do-it-yourself method.
When is the 2020 Tax Season?
Tax season for the prior tax year is the early months of the following year. In 2021, the Internal Revenue Service (IRS) started accepting returns for 2020 taxes on Feb. 12. The deadline for filing 2020 taxes is Thursday, April 15, 2021.
If you live in Texas, your deadline for filing your 2020 taxes and paying any tax due has been moved to June 15, 2021, due to the snowstorm-related federal disaster declaration. If you don’t live in Texas but were affected by the storm, you may still be eligible for the delayed deadline.
Information and Forms You Need to File Taxes
No matter what method you choose to file your taxes, there are certain items you will need to have on hand. You need to identify yourself and your dependents. You also need to document your filing status, taxable income, the amount of tax you’ve already paid, and any deductions and credits you may be eligible for. Here’s what you’ll need to have handy:
- Names, dates of birth, and social security numbers for yourself, your spouse, and dependents, if any.
- Form W-2, which you receive from your employer. This reports your income and taxes paid.
- Form 1099-NEC (non-employee compensation), which you would receive if you earned more than $600 working for a non-employer person or entity. You’d get this if you worked a contract job or had a side gig.
- Form 1099-MISC, which you would receive if you earned more than $600 in other income, including rents, prizes, fishing boat proceeds, or crop insurance payments.
- Form 1099-INT, which you would receive from a bank or other financial institution if you earned more than $10 in interest during the tax year.
- A record of your retirement account contributions.
If you plan to itemize deductions rather than take the standard deduction, these are the records most commonly needed:
- Property taxes and mortgage interest paid.
- Charitable donations.
- State and local taxes you paid. This is on the W-2 form.
- Educational expenses.
- Unreimbursed medical bills.
- Last year’s federal and state tax returns.
How to File Taxes?
There are several ways to prepare your taxes. The three main options for tax preparation are a tax professional, tax software, and manually filling out the forms yourself.
Manually Filling Out Forms
You can prepare your federal taxes on your own by downloading and printing the forms on the IRS website and sending the return in, along with a check if you owe a payment.
Another option is to fill out the forms online and submit the return electronically with a credit card payment. All the federal tax forms can be found at IRS.gov.
State income tax forms are usually found on the state’s official website.
There is no charge or fee for filing your own taxes. Doing so is a good way to learn more about your financial situation as it forces you to track your transactions, earnings, and spending.
Most people who file their own taxes have a simple tax situation, an unchanged tax situation, or a personal interest in the subject. It can literally take minutes if you have the right forms on hand.
For anyone with a complicated financial situation or a lack of confidence about finances, a tax professional is a better option. Capable tax professionals can help minimize the amount you owe and maximize the deductions you claim. Using a tax professional can pay for itself.
Tax Software Vs a CPA: Which Is Right For You?
Tax Preparation Software
An intermediary option between filing your own taxes and hiring a professional is to use tax preparation software for your federal and state returns. You input your own information, but the software is designed to help you through the process step by step. Professional help may be available online or by phone or both. If you use it for more than one year, the best of these programs automatically fill in your previous year’s information.