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How to file an income tax return:
One of the first things that your should do to file your income tax returns is to get all the relevant IRS forms pertaining to your specific situation. These forms are easily available from the IRS website and can be downloaded and printed. Once you have the forms, make sure you have an online income tax calculator, and a good tax preparation software. Armed with this, you are all ready to follow the steps mentioned below:
Step 1: This involves trying to figure out whether you have to file an income tax return. If your income is very low, you do not have to file a return. Children you meet certain income levels and have income, have to file tax returns.
Step 2: You have to figure out your filing status. In certain circumstances, you can choose your filing status.
Step 3: Figure out how many personal and dependent exemptions you qualify for. Personal exemptions are primarily for you and your spouse. As long as a person meets the prerequisite for dependent, he or she also qualifies.
Step 4: This is an important step. Here you calculate your income. There are certain income types that are taxable and certain non-taxable. You have to take everything into account.
Step 5: Subtract all the deductibles from your income so that you can lower your taxes. You can choose between standard deduction or itemized deductions. Also this is the step to take into account any adjustments.
Step 6: Now you determine your taxable income. This is done by taking your taxable income and subtracting adjustments, deductions, exemptions. The IRS tax table will give you information as to how much tax you have to pay on your taxable income.
Step 7: Determine your tax credits, additional taxes (in case you are liable), and find out how much taxes you have been paying until now. This includes the taxes withheld by the employer, estimated taxes paid and earned income credit. Figure out whether you have been overpaying or underpaying taxes.
Step 8: If you have overpaid taxes, find out the refund amount. If you have been underpaying taxes, you might have to pay a penalty so figure that out.
Step 9: Fill out the correct tax forms and submit the same to the IRS.
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