Navigating the Tax Maze
As this may be your first time filing taxes, the process may be complicated. With the proper guidance, it would be a walk in the park. If you have tried to file, had issues or are just about to file, go through this guide. We have broken down everything in a step-by-step process to assist you in filing your first tax easily. Let's begin!
Step 1: Determine Whether You Need to File
First, you need to consider whether you must file taxes for the year. This depends on your income, tax filing status, age and other factors, such as being dependent on someone else. Several scenarios will determine if you can or cannot file; to help with this, the IRS has a tool. All you have to do is answer a few questions to know your status.
Step 2: Begin the Process
Once you know your status, presumably you are to file, the next thing to do is start the filing process. This process will require you to gather the essential documents. To know more about the documents, you can consult a tax professional or research to obtain answers to questions you may have. This would make the actual filling process less strenuous.
Step 3: Determine What You Need to File
To file your taxes, you are going to make use of tax forms. These forms can be categorized into income tax forms or deductions. Just as it sounds, income tax forms are used to report any form of income, and they include W-2s and 1099s. Deductions, on the other hand, refer to things that can lower your tax bill and add to your refund. The IRS allows you to subtract this from your income instead of your deductible expenses.
Step 4: Mind Your Deadlines
Starting from January, the IRS usually accepts and processes tax returns for the previous year. The tax filing deadline is generally in April, which gives you two to three months to prepare your tax return. However, the IRS provides room for an extension till October, but you have to request the extension by tax day. Plan your tax return start date early to allow for additional sessions if you need to locate more documents.
How to File Taxes
There are several options for preparing and filing your tax return. The popular ones include filing an IRS Form 1040 by hand and using the postal service, online with the aid of a tax software or company or hiring a professional tax preparer.
Out of these three, we recommend using software options and companies. They have professionals who will help you every step - from preparing your tax return to figuring out deductions you are eligible for. Here, we review the top 5 companies to consult if you are filing your taxes for the first time.
TaxAct
TaxAct suits those seeking an efficient, streamlined interface for tax return filing.
Fees: TaxAct offers four package tiers based on the type of tax forms you need. Federal filings range from $0 - $64.95, while state ranges from $39.95 - $44.95.
Pros
- Efficient and streamlined interface.
- Expert help is available with every package.
- Multiple refund options.
- Filing covers student and child tax credits.
Cons
- State returns aren't free.
- Customer support is somewhat limited.
TurboTax
TurboTax is the best option for those with complex tax situations, as it offers expert assistance.
Fees: Offering four different ways to file your taxes, it costs $0 - $169 for federal taxes. (State taxes are an additional $49 each with paid products.)
Pros
- Offers step-by-step guidance.
- Robust audit support with all returns.
- Outstanding user experience.
- Ability to upgrade for instant access.
Cons
- Among the most expensive options.
- Not everyone can file for free.
FreeTaxUSA
FreeTaxUSA is one of the few options that can save you money on federal tax filing.
Fees: FreeTaxUSA offers free federal tax filing for all self-filing options. However, there is a $14.99 fee to file state taxes.
Pros
- Free federal e-filing, inexpensive state filing.
- Affordable professional tax support.
- Covers a wide range of tax situations.
- The platform is generally user-friendly.
Cons
- No import or photo capture for W-2 or 1099s.
- No live chat without an upgrade.
H&R Block
H&R Block is a great option for personal filing or delegating the task to a professional.
Fees: H&R Block offers four main ways to prepare and file taxes. The cost of filing ranges from $0 to $85, while you have to pay an additional $37 per state.
Pros
- Multiple add-on options.
- User-friendly interface.
- Uploading of W-2 or 1099 forms into the software.
- Wide range of services available.
Cons
- No live expert support with free files.
- One of the pricier tax software products.
TaxSlayer
TaxSlayer is an affordable choice for independent filers and offers great value for the self-employed.
Fees: TaxSlayer is less expensive than competing tax prep services. For federal tax filing, the service charges $0 - $52.95. In states with income taxes, TaxSlayer charges an additional $39.95.
Pros
- The free version permits student loan interest.
- One of the least expensive options.
- Budget-friendly for self-employed filers.
- Users can receive fast tax refunds.
Cons
- Expert assistance is only available with higher-cost packages.
- No option for a tax expert to review your return.
Tax Time 101
For first-time filers, seeking an experienced person's help or using a tax professional's services to avoid errors that could lead to a tax crime is recommended. You are probably happy to know that online tax filing can be carried out online with the help of the services we have reviewed in this guide. These services make filling easy, providing services that match your budget and make you comfortable.