Whether it’s your first tax return or your 50th, filing your taxes can feel like a daunting task, but a little knowledge can go a long way. This guide to understanding the ins and outs of your tax return can help ease the process — and maybe even save you some money.
The Basics of Doing Your Own Taxes
Taxes are computed based on your income and deductions. Your total tax for the year will vary depending on:
- Filing status. Determines the rate at which your income is taxed. The five filing statuses are: single, married filing jointly, married filing separately, head of household and qualifying widow(er) with dependent child.
- Income. The most common sources of income include wages, interest, dividends, alimony, business and rental income, gains or losses from the sale of property, and retirement income from IRAs, pensions and annuities.
- Deductions. A deduction reduces the amount of a taxpayer's income that's subject to tax, generally reducing the amount of tax the individual may have to pay.
- Credits. Credits can reduce the amount of tax due and may give you a refund even if you don't owe any tax.
FAQs: Doing Your Own Taxes
Here’s what you need to know, collect and do in order to file your own tax return.
What Forms Do I Need to File My Taxes?
Before you get started, make sure you have the forms and receipts that show the money you earned and the tax-deductible expenses you paid. These include:
- A W-2 form from each employer
- Other earning and interest statements (1099 and 1099-INT forms)
- Receipts for charitable donations, mortgage interest, state and local taxes, medical and business expenses, and other tax-deductible expenses if you are itemizing your return
How Do I Find My Filing Status?
Your filing status will usually be determined by whether you are married or unmarried. Typically your marital status on the last day of the tax year determines your status for the whole year. If your spouse passed away during the year, you are still considered married for that year.
How Should I File My Taxes?
Decide how you want to file your taxes. The IRS recommends using tax preparation software to e-file for the easiest and most accurate returns. If you file by mail, it can take up to 6 months for the IRS to process your return.
Should I Itemize My Deductions?
You’ll want to determine whether you are taking the standard deduction or itemizing your return. The standard deduction is a flat amount based on your filing status. Itemizing your deduction allows for potentially greater returns if you have record of expenses like local income or sales taxes, property taxes, mortgage interest, medical expenses or gifts to charities that, when added to the IRS deduction formula, push you beyond the standard deduction amount.
Find the Support You Need
Everyone’s situation is unique, and you may have specific questions that you need help with. Contact a Farm Bureau financial advisor to help you develop a plan to meet your financial goals.