It’s said that the longest journey starts with a single step.
How to file taxes? Whether you’re going to file your own taxes, 0r use tax preparation services, your first step before you prepare and file a tax return is to make life easier and gather all the pertinent filing information from the past year. That may include:
- A W2 form
- A 1099, or multiple 1099s, and documentation of expenses. A basic thing to know as a side business taxes guide is that you’ll get a 1099 from all who paid you $600 or more during the year.
- For self-employed people (who run a business and don’t receive 1099s), you’ll need documents about your revenue and expenses.
When Can You Start Filing Taxes for 2022?
It’s already tax season. You could have already started if you file online. You can start your tax preparation required by the IRS by filling in all the pertinent information. If you’ve moved, or your filing status has changed, it’s a time-saving first step to get that info entered and out of the way.
The official tax return filing start date, set by the IRS, is January 20 for federal tax returns. The due date for taxpayers set by the IRS is April 15.
Do you anticipate a refund? The quicker you file, the sooner that refund will arrive.
Decide How to File Your Federal Income Tax Return
Filing IRS federal taxes can be simple or complicated. You may be able to file for free online. Which type is your tax return?
That’s the first step in the decision process. If you will only have a w2, for example, you should be able to prepare and file taxes on your own. Even if you have more than one job, and multiple W2s, federal and state taxes were already deducted. Local taxes may also have been deducted, or you may have to file them separately. You’ll use the standard deduction for 2022, which is $12,950 if your filing status is single. You can file taxes using IRS free file. Or you can use basic tax preparation software to electronically prepare your federal income tax return.
If you are self-employed, and wondering how to file self-employment taxes, tax filing gets a bit more complicated. You can still file taxes on your own, but you’ll appreciate the guidance of either a professional preparer or the best tax software as you prepare your federal return.
Solo? Software? Tax preparer? Free file? Here is more detailed information about the best options for filing tax returns:
Tax Software
Tax preparation software can help you simplify filing your federal tax return. As a bonus, all the information you need for the feds can be used to file your state and local tax returns.
As you use tax return software to do your own tax return, you’ll be prompted to add information that may garner tax breaks. You may find tax deductions that you didn’t know you had (see below).
Take a look at TurboTax/Intuit, H & R Block, TaxAct and TaxSlayer as tax filing software for the self-employed.
Hire a Tax Preparer
Hiring a tax professional is a great option, especially if you’re just getting started with your own taxes (a new business venture). A tax professional offers guided tax preparation and may have suggestions for steps you can take in the coming years to help you save money.
IRS Forms Online
All the forms you’ll need for federal tax filing are available via the IRS, (you’ll need separate forms to file state and local taxes). You can download and print the forms – using them as worksheets before you use IRS free file, using them as IRS fillable forms.
Free File
You can file an IRS-free file federal tax return. Well, the IRS free file option part is free – of course, you may still need to pay what you owe on your tax return! You can pay what you owe using a credit card, linking to your bank account or setting up a payment plan (if you can’t immediately pay all you owe.) You can receive a refund by linking to your bank account.
The IRS option includes free file fillable forms you can populate online. Many still print the IRS free file forms and use them as worksheets before hitting that Send button. For more information about filing a free federal tax return, check out Free File: Do your Federal Taxes for Free | Internal Revenue Service, (irs.gov).
Determine What Tax Bracket You Come Into
There are 7 tax brackets, which determine your tax rate. The tax rate ranges from 10% to 37%.
The tax rate for income tax brackets is affected by two main conditions: your income and your filing status. For example, your tax rate may be based on your income, but that is adjusted based on your filing status – single, married, etc.
Your taxable income is calculated using the total of your earned and investment income, and then adjusting that figure based on deductions. Read more about deductions, below.
Get Your Tax Documents Together
Trust us – get all your tax documents together before you start. You may very well already have everything you need, for example, your QuickBooks or similar software. Or you may have all your documents in a less official location, such as the Big Drawer. Either way, let’s get started:
Tax Deductions
The total amount of your tax deductions will determine whether you itemize on your income tax return, or just use the standard deduction. The standard deduction varies by filing status, but for single filers, the standard deduction 2022 is $12,950. You’ll have to total up your deductions to see which way you qualify.
Do you have significant tax deductions that may help you qualify for tax breaks and get a refund? Do you have receipts to prove them? You may be eligible for a tax break and earn a refund. Let’s take a look to see if you’re eligible:
State and Local Income Taxes
The money you’ve paid on your state and local income tax burden can be deducted from your federal income tax return.
Real Estate and Personal Property Taxes
The money you’ve paid for these taxes can also be deducted as you file your federal taxes.
Home Mortgage Interest
Depending on your mortgage rate, the amount of interest you pay may be significant.
Gifts to Charity
Charitable donations can also be deducted. You’ll need receipts, plus documentation that proves the entity that receives your gift is a charitable organization.
Medical and Dental Expenses
This includes the cost of premiums you’ve paid. If you’re on the Healthcare.gov insurance (and receive a discounted policy), this doesn’t include the total premium amount for the policy, but it does include the portion of the premium that you pay. Other medical and dental expenses may be covered, but only if the cost exceeds 7.5% of your Adjusted Gross Income.
Student Loan Interest
The amount of interest you’ve paid on a student loan may also be deducted, even if you’re no longer a full-time student.
How to Pay Your Taxes
Now that you know how to file taxes online, you can also ensure that your taxes are paid on time. The best way to do that is to pay as you file – you’ll be hit with interest charges for past-due amounts on your account.
If you don’t owe and are getting a refund, you can set up a direct deposit to a bank account when you e-file or ask to be sent a paper check to get your money.
Bank Account
When you file a tax return, you can pay from a checking or savings account.
Card
You can pay with a personal or business credit card.
Payment Plan
Taxpayers can set up scheduled payments. You can set up the process for free online, using the IRS free file website.
Tax Filing Extensions for the 2022 Tax Year
If you need more time, it’s free to file for an extension. You must file by the date taxes are due. Only minimal information is needed to file for an extension. You’ll make estimates and use IRS form 4868, which is free to download and use.
How to File Amended Tax Return
Taxpayers can make mistakes when they file taxes. You may have left out a deduction, for example. Or if you’re self-employed, you may get a 1099 late, and want to add that to your return.
You’ll need to file an Amended Tax Return using IRS form 1040X.
How to File Back Taxes
If you owe back taxes your best move is to do so via the IRS. You’ll need to set up an account and payment plan there.
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This article, "How to File Taxes for the 2022 Tax Year" was first published on Small Business Trends