How to Do Your Taxes | How Much Do You Have to Make to File Taxes?
Knowing how to do your taxes is an essential skill. Unfortunately, tax filing isn’t something they tend to teach in school, so if you’re wondering how to do taxes, you’ll want to read this helpful guide. We’ll show you how to do your taxes, who needs to file taxes, and what to do if you miss a tax deadline!
Why should I file my taxes?
Paying your taxes benefits countless government programs, including Medicare, Social Security, public education, infrastructure improvements, and more. Plus, filing your taxes often results in a tax refund — a lump sum the IRS pays back to you every year.
How does doing your taxes work?
Tax returns for the previous year are generally due on April 15, also known as Tax Day. However, the IRS extends that deadline if April 15 falls on a holiday or weekend.
While Tax Day is the filing deadline, you can start filing your taxes in January. The earlier you file, the sooner you may receive your tax refund!
When you work for an employer, your income and employment taxes are automatically withheld from each paycheck. This includes both full-time and part-time employees. So, traditional employees won’t need to do anything more besides filing their taxes by Tax Day.
Self-employed taxpayers, however, may need to pay estimated taxes throughout the year. Failing to pay enough estimated tax payments could result in a penalty, even if you’re owed a refund when you file your taxes.
Ways to file taxes
Regardless of your employment status, filing your taxes by Tax Day is the same for everyone. There are a few different ways you can file, including:
File taxes online
Learning how to do taxes online is the best way to familiarize yourself with the process. E-filing software walks you through every step from start to finish. Despite complex tax codes and requirements, e-filing is convenient, quick, and designed with the layperson in mind.
Filing taxes online allows you to maintain and access your electronic records. Processing times are much faster than filing by hand, so you’ll get your tax return in record time.
Hire a tax preparer
If filing online taxes seems daunting, consider hiring a tax preparer. Having a tax professional do your taxes can help you avoid costly errors. For example, suppose you make a mistake when filing your tax return, and the IRS conducts an audit. In that case, you could be hit with extra interest and penalties. A tax professional will know how to avoid these mistakes, saving you money in the long run.
Tax preparers may also find extra deductions or tax credits you may otherwise miss.
File taxes by hand
Filing taxes manually is the most challenging option, but it’s free to do so. Start with a printed copy of the appropriate tax form and instructions. In addition to the correct tax-filing form, you’ll need your W-2 or 1099, a calculator, and any information related to your itemized deductions or tax credits.
Complete the tax return following the IRS’ instructions and double-check your calculations, as making even a tiny mistake can delay processing. When you’re finished, mail the completed form to the address provided in the instructions. You’ll also need to include a check, cashier’s check, or money order made payable to the U.S. Treasury if you owe taxes.
How can I do my taxes?
Now that you know your tax-filing options, let’s break down the process further:
Choose how you want to do your taxes
Decide how you want to do your taxes. Filing online or through a tax pro will cost extra money in addition to any taxes you might owe — so make sure to budget accordingly.
Figure out what information you’ll need
You’ll need to have a few things on hand before filing taxes.
First, make sure you know your tax identification or social security number. If you’re married and filing jointly, you’ll also need your spouse’s social security or tax ID number, date of birth, and full name.
Other important information to have when doing your taxes includes your:
- Bank routing and account number • Identity Protection PIN (if the IRS has issued you one)
- Driver’s license (required in some states)
- Dependent information
Gather all necessary documents and information
Have the required documents on hand before you start. Your tax-filing checklist typically includes:
- Employer-provided W-2
- Self-employed 1099
- Paid interest statements for your student loans or mortgage
- Unemployment payments
- Savings, investments, or dividend statements
- Charitable donation statements
- Medical bills
- Any stimulus payment information
- Your taxes benefits
Not every item above may apply. For instance, you may not pay student loans. In that case, you wouldn’t have a statement showing how much interest you paid during the previous year. Depending on your circumstances, you may have been sent other forms you’ll need to refer to when filing.
You should receive most tax documents automatically. However, check with your employer, student loan carrier, or investment company if you haven’t received the appropriate form in the mail by January 31st. You may need to download these electronically.
Fill out your tax forms
Complete your federal and state tax-filing forms as instructed. Detailed instructions are included in each document.
File your taxes
You should file your taxes according to the tax-filing method you chose.
Once you’ve completed your tax forms using an e-filing platform, you can submit them automatically. Any professional tax preparer you hire will usually file them electronically on your behalf, but some may mail the return.
If you’ve completed your tax return manually, mail it to the address provided on the form. Tax returns must be postmarked by the deadline.
How to find out if you are required to file taxes
How much do you have to make to file taxes? Well, it depends.
The IRS determines if you need to file taxes based on several factors, including your:
- Filing status
- Employment status
- Dependency status
For example, you’ll need to file taxes if you’re a single adult who earns more than $12,400. If you earn less than that threshold, you don’t necessarily have to do taxes. Still, you might want to consider it to take advantage of any tax breaks you qualify for.
That income threshold is much less if you’re a gig worker. As of 2021, the IRS requires you to file a tax return if your self-employment earnings exceed $400 during a tax year.
You can always check the IRS’ latest publication if you’re unsure whether you earn enough to file taxes.
Can I get an extension if I miss the deadline to do my taxes?
Depending on your situation, you may be able to get a tax-filing extension.
Individual filers can request an extension through the IRS Free File Program. Filling out this form gives you an extension to file through October 15. However, even if granted an extension, you’re still responsible for paying the due amount.
The IRS also has options if you pay estimated income tax and need an extension on your upcoming payment. If you’d rather not miss a payment, consider getting a cash advance or installment loan to avoid penalties.
Now you know how to do your taxes!
Answering questions like, “how much do you have to make to file taxes” and “what’s the importance of filing taxes” will no longer trip you up.
Tax time might be hectic, but at least you can be prepared! Know your filing status, gather the necessary documents, and file on time to ensure the process goes smoothly.