Make Filing US Taxes Easier

Do Your Taxes: Your Most Common Questions Answered can be a daunting task, especially if you want to claim lots of deductions or have income from multiple sources. However, as long as your financial documents are well organized, the process shouldn't be too difficult. If you're planning to do your taxes yourself, using tax preparation software can greatly simplify the process. For more complex tax situations, filing taxes will be easiest if you hire a professional.

Steps

Organizing Your Records

1. Get a copy of your tax returns from the previous year. If you filed taxes last year, your tax return can give you a good idea of what you'll need to complete this year's tax return. Look it over carefully and make a note of any situations that have changed.
   • For example, if you started driving for a ride-share service in the last year, you'll have income from that work as well as related deductions.
2. List all of your sources of income. Write down all your sources of income over the past year. For each of these, you'll need at least one document to file your taxes. Common documentation includes:
   • W-2s: for any work done as an employee (you earned hourly wages or salary and your employer withheld taxes)
   • 1099s: for any work done as an independent contractor (your employer did not withhold taxes), interest you were paid, or dividends you received from investments
   • Receipts: for income from small business sales, rentals, royalties, real estate, or trusts
   • Benefit statements: for any benefits you received, including Social Security or unemployment benefits
3. Collect documentation of education expenses. If you're currently pursuing higher education or have already graduated and are making student loan payments, there are credits and deductions that can help you save. If you're eligible for any of these deductions or credits, you'll need the following documentation:
   • American Opportunity Credit: tuition statements, receipts for books or equipment required for school
   • Lifetime Learning Credit: tuition statements, receipts for books or supplies needed for coursework
   • Tuition and fees deduction: tuition and fee statements, receipts for books or supplies required by your school
   • Student loan interest: Form 1098-E (automatically sent by the lender that services your student loans)
4. Gather receipts and invoices for any business deductions. If you own a small business or have any income from work as an independent contractor (such as ride-share or freelance income), you can potentially deduct expenses you incurred that were related directly to that work. Common business deductions include expenses for:
   • Office supplies and equipment
   • Inventory or supplies to create products for sale
   • Vehicle mileage, gas, and maintenance
   • Business licensing fees, continuing education, or certification fees
   • Home office expenses
   • Expenses related to customer service or client retentionTemplate:Greenbox:'''Warning:''' If you don't have a receipt for an expense, don't claim it on your taxes, no matter how certain you are about it. If your return is audited, you'll only be allowed to claim deductions that you can prove with written documentation.

Filing Your Return Yourself

1. Find out if you can file for free. If you fill out paper tax forms by hand, you won't have to pay anything other than the cost of a postage stamp to file your taxes. However, that's not the easiest way to file your taxes if your tax situation is more complex. Fortunately, you may qualify to file for free using an online tax preparation service if you meet income and residency requirements.
   • Generally, free file software options are available if you made less than $69,000 (as of 2020). However, some software brands set the maximum income much lower. For example, TurboTax's free file option is only available to taxpayers whose adjusted gross income is $36,000 or less.
   • Many free file programs also are limited to taxpayers who live in certain states.
   • To find free file programs you might be eligible to use, try the IRS's online lookup tool, available at https://apps.irs.gov/app/freeFile/jsp/wizard.jsp.Template:Greenbox:'''Warning:''' The free file program applies to federal returns only. You may still have to pay to file your state tax return using the same service.
2. Fill out forms yourself if your tax situation is simple. If your only income is reported on a single W-2 and you aren't claiming a lot of credits or deductions, completing the paper forms by hand yourself might be your easiest option.
   • If you use the IRS's free fillable forms service, you'll be able to file your taxes electronically when you're finished. To create an account and start using the free fillable forms, go to https://www.irs.gov/e-file-providers/before-starting-free-file-fillable-forms.
3. Choose an online tax preparation service if your return is more complex. Tax software companies compete to offer the most intuitive and user-friendly tax filing experience. If you're looking to make the process easier, use online software that does all the calculations and tax code analysis for you.
   • Typically, these services ask you plain-language questions and fill out the tax forms based on your answers. They also provide guidance throughout the process if there's a question you don't understand.
   • If you already use accounting software, see if that company has tax preparation software as well. Often you can input data from your accounting app directly into the tax preparation app, which can save you a lot of time.
4. Take the standard deduction rather than itemizing. If the total of your potential itemized deductions, such as mortgage interest and charitable donations, is greater than the standard deduction, you'll save money on your taxes. However, itemizing your deductions requires a lot more time and documentation. If you want to make it easier to file your taxes, just take the standard deduction.
   • The Tax Cut and Jobs Act of 2017 nearly doubled the standard deduction and eliminated many itemized deductions. As a result, if you're like most taxpayers, you'll find that the standard deduction is much higher for you than the total of any itemized deductions you could take.
   • Even if your itemized deductions would ultimately be a little bit more than the standard deduction, simply taking the standard deduction would save you a lot of time and hassle.
   • Taking the standard deduction also makes it less likely that your return will be audited. Itemized deductions are more closely scrutinized.
5. Verify your identity to file electronically. Filing your tax returns electronically is far easier than mailing them. Even if you fill out the forms yourself, you can still file electronically through the IRS website. If you filed taxes for the previous year, use the adjusted gross income (AGI) you reported in that year to verify your identity. You can find your AGI on line 37 of your Form 1040.
   • Additionally, if you file electronically, you'll typically get your refund more quickly than you would if you sent in a paper return.

Hiring a Tax Professional

1. Hire a tax professional if you have a complex tax situation. Without a doubt, it's cheaper to do your taxes yourself than it is to hire a professional — but it might not necessarily be easier. If you only have income from a single W-2 and nothing about your personal or financial status has really changed since last year, you can probably easily do your taxes on your own. However, you should consider hiring a tax professional if:
   • You've never done your taxes before
   • You've had a major life change in the past year, such as getting married, having a baby, or getting divorced
   • You have self-employment income or own your own business
   • You've recently retired
   • You have significant investment income
   • You bought or sold real estate in the past year
2. Search the IRS directory for tax professionals near you. The IRS directory is the easiest way to find qualified tax professionals locally. If you're going to use a professional, you'll have very little work to do yourself. However, you can still make things easier on yourself by finding someone whose office is close to your home or work.
   • Go to https://irs.treasury.gov/rpo/rpo.jsf to search the directory. Check the attorney, CPA, and enrolled agent credentials to ensure that your results are among the most qualified tax professionals in your area.
3. Meet with 2 to 3 different professionals in your area. Meeting with 2 or 3 tax professionals gives you the opportunity to compare fees and assess their relative expertise to find the best tax professional for you. Ask them specifically about their fees and what's included in the different packages they offer.
   • Ask if they're going to file your return electronically. The IRS requires tax professionals who do more than 10 returns for clients to file electronically, so if they say that they don't, that's a sign that they aren't very experienced.
   • Find out how available they'll be during tax season and beyond. You might have questions that you want to ask them, so you need to make sure they'll welcome a call, email, or visit after your return has been filed.Template:Greenbox:'''Tip:''' Don't discount the value of finding a tax professional who makes you feel comfortable and welcome. Finances can often be a sensitive or emotional subject, so it's important that you hire someone you like and respect.
4. Check a tax professional's credentials before hiring them. All tax preparers who charge a fee to prepare tax returns must have a Preparer Tax Identification Number (PTIN). However, these numbers are fairly easy to get and don't require specific credentials or licensing. Ask tax professionals you talk to for their credentials, then search online to find out their standing.
   • If you search for a tax professional by name, you can also find reviews of their services from former clients. Those reviews and other reports or articles online can help you determine if a professional is reputable and trustworthy.
5. Provide your records and receipts to your tax professional. Once you've chosen a tax professional, they'll need all the records you organized, including receipts for any deductions you want to take. Typically, they'll provide you with a checklist of documents they need based on your tax situation.
   • If your tax professional has asked for any documents that you don't have, let them know as soon as possible so they can help you get what you need.
   • Try to arrange your documents neatly and in some kind of order to make your tax professional's job a little easier. For example, if you have receipts for business expenses, put them in an accordion file by type of expense rather than just handing your tax pro a shoebox.
6. Review your completed return before you sign it. When your tax pro finishes your return, schedule an appointment to go over it with them. If there's anything in your return that you don't understand, ask for an explanation.
   • Check all the amounts entered against your own records to make sure everything's accurate. Don't worry about offending your tax pro. A reputable professional will welcome the double-check and appreciate your diligence.

Tips

• You don't have to submit documentation of the information you provide on your tax return. However, you should keep all documentation for at least 3 years. If the IRS audits your return, you'll need documentation to support everything on your return.

Warnings

• Tax laws change every year. If you're filling out paper forms yourself, check the IRS website before you start to review any changes that might affect your taxes for the current tax year. The IRS includes a summary of recent changes on the first 2 pages of Publication 17, available at https://www.irs.gov/forms-pubs/about-publication-17, which is updated every year.

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