Some things that you can do without:

Filing taxes can feel overwhelming, but don’t worry if you can’t locate every single document. Here are a few items you might think you need, but can often do without:

Receipts for Every Expense:

• You don’t need to keep every single receipt unless you’re claiming specific itemized deductions. The standard deduction often simplifies the process and removes the need for extensive documentation. If you can’t find every receipt, that’s perfectly okay.

Perfect Records of Small Donations:

• Large charitable donations should be documented, but small cash donations don’t always require receipts. A simple record in your personal finance app can suffice for modest amounts. Missing a few small donation receipts won’t derail your filing.

Daily Commuting Expenses:

• Generally, daily commuting expenses aren’t tax-deductible, so there’s no need to keep detailed records of your daily travel to and from work. If you can’t find these records, it’s no big deal.

Personal Bills:

• Regular personal bills, such as utilities and groceries, are not deductible. Focus on business-related expenses and major deductible items instead. It’s okay if you don’t have these personal bills on hand.

Every Single Bank Statement:

• You don’t need to submit every bank statement with your tax return. Focus on statements related to interest income, dividends, or any tax-deductible expenses. If you can’t locate every statement, don’t stress—it won’t hinder your tax filing.

Step-by-Step Guide to Filing Taxes

Step 1: Choose Your Filing Status

Your filing status affects your tax rate and eligibility for certain credits and deductions. Common options include:

• Single: If you are not married
• Married Filing Jointly: If you and your spouse are filing together
• Head of Household: If you are unmarried with dependents
• Qualifying Widow(er) with Dependent Child: If your spouse died during the past two years and you have a dependent child

You can find more information about filing statuses on the IRS website here.

Step 2: Determine Your Taxable Income

Determining your taxable income involves a few key steps: adding up all your income sources and subtracting adjustments, deductions, and exemptions. This will give you the amount of income on which you will be taxed. Let’s break it down with examples:

Add Up All Income Sources

Start by summing up all your income for the year. This can include:

• Wages: Your salary from your job
• Interest: Earnings from savings accounts or investments
• Dividends: Profits from stocks
• Rental Income: Money earned from renting out property
• Business Income: Profits from your own business

For example, if you earned $50,000 from your job, $500 from interest, and $1,000 from dividends, your total income would be: $50,000 + $500 + $1,000 = $51,500

Subtract Adjustments

Adjustments to income can reduce your total income before applying deductions. Some common adjustments include:

• Contributions to a Traditional IRA
• Student Loan Interest Paid
• Educator Expenses

For example, if you contributed $2,000 to a traditional IRA, you would subtract that from your total income: $51,500 – $2,000 = $49,500

Subtract Deductions

Next, apply either the standard deduction or itemized deductions, whichever is larger. Common itemized deductions include:

• Mortgage Interest
• Charitable Contributions
• Medical Expenses

If the standard deduction is $12,550 and it is higher than your itemized deductions, you would subtract this: $49,500 – $12,550 = $36,950

Subtract Exemptions

Finally, you may be eligible for exemptions that further reduce your taxable income. Note that the personal exemption was eliminated in recent tax reforms, but other credits and exemptions may apply depending on your circumstances.

Calculate Your Taxable Income

The result after all these subtractions is your taxable income. Using our example: $36,950

Helpful Resources for this step

For more detailed information on adjustments, deductions, and exemptions, you can visit the IRS website’s Taxable Income page.

Step 3: Claim Deductions and Credits

Maximize your tax savings by claiming all the deductions and credits you qualify for. Deductions reduce your taxable income, while credits directly reduce your tax bill. Here’s how to make the most of them:

Common Deductions

Deductions lower the amount of income that is subject to tax. Here are some common ones:

• Mortgage Interest Deduction: If you own a home, you can deduct the interest paid on your mortgage.
• Student Loan Interest Deduction: Deduct the interest you’ve paid on student loans, up to a certain amount.
• Medical Expenses Deduction: If your medical expenses exceed a certain percentage of your income, you can deduct them.

For example, if you paid $3,000 in student loan interest, you can deduct that amount from your taxable income: $36,950 – $3,000 = $33,950

Common Credits

Credits reduce the amount of tax you owe dollar-for-dollar. Here are some popular credits:

• Earned Income Tax Credit (EITC): This credit is for low-to-moderate-income workers. It can significantly reduce your tax bill and even provide a refund.
• Child Tax Credit: If you have children, this credit can reduce your tax bill by up to $2,000 per qualifying child.

For instance, if you owe $1,500 in taxes and qualify for a $2,000 Child Tax Credit, your tax bill would be reduced to zero, and you may even get a refund of the remaining $500.

Steps to Claim Deductions and Credits

1. Gather Documentation: Collect all necessary receipts, forms, and statements.
2. Calculate Eligibility: Use IRS guidelines or tax software to determine eligibility for each deduction and credit.
3. Fill Out Forms: Complete the appropriate tax forms to claim your deductions and credits.

Helpful Resources for this step

For more detailed information on deductions and credits, visit the IRS website’s Credits & Deductions page.

Step 4: How to File Your Tax Return

Submitting your tax return to the IRS is the final step in the tax filing process. You can choose to file electronically using tax software or mail in your paper return. Here’s a simple guide to get you through this step:

Electronic Filing

Advantages:

• Speed: Electronic filing is fast, and you can often expect a quicker refund.
• Accuracy: Tax software can help reduce errors by checking your return for you.
• Convenience: You can file from the comfort of your home.

How to File Electronically:

1. Choose a Tax Software: Select a reliable tax software like TurboTax, H&R Block, or IRS Free File.
2. Input Your Information: Enter your income, deductions, and credits as prompted by the software.
3. Review and Submit: Double-check your entries for accuracy and submit your return electronically.

Paper Filing

Advantages:

• No Software Needed: Perfect if you prefer a traditional approach.
• Control: You have complete control over your paperwork.

How to File by Mail:

1. Get the Forms: Download the necessary forms from the IRS website.
2. Fill Out the Forms: Enter your income, deductions, and credits manually.
3. Review for Accuracy: Carefully review your entries to avoid errors.
4. Mail Your Return: Send your completed forms to the appropriate IRS address.

Double-Check Your Information

Regardless of your filing method, it’s crucial to double-check all information for accuracy. Mistakes can lead to delays or penalties.

Helpful Resources

For more information on filing your tax return, visit the IRS’s File Your Tax Return page.

Step 5: Pay Any Taxes Owed or Get Your Refund

Successfully completing your tax return means it’s time to address any taxes owed or look forward to receiving your refund. Here’s how to handle both scenarios:

Paying Taxes Owed

If you owe taxes, it’s important to make a payment to the IRS by the tax deadline, which is usually April 15th. Here are the steps to follow:

1. Calculate Your Payment: Review your tax return to determine the total amount owed.
2. Choose a Payment Method: The IRS offers several payment options:
   • Online Payment: Use the IRS Direct Pay system or a credit/debit card.
   • Electronic Funds Withdrawal: If you e-file, you can have the payment automatically withdrawn from your bank account.
   • Check or Money Order: Mail a check or money order payable to the “United States Treasury” along with Form 1040-V.
3. Submit Your Payment: Ensure your payment is submitted or postmarked by the deadline to avoid penalties and interest.

Receiving Your Refund

If you are due a refund, the IRS will process it and send the money to your bank account or mail you a check. Here are the steps:

1. Check Your Refund Status: Use the IRS “Where’s My Refund?” tool to track the status of your refund.
2. Choose Your Refund Method: Decide whether you want your refund deposited directly into your bank account or mailed as a check.
   • Direct Deposit: This is the fastest and safest method. Make sure to provide your correct bank account information.
   • Paper Check: If you prefer, the IRS can mail a check to your address.
3. Receive Your Refund: Once processed, your refund will be deposited into your account or mailed to you.

Helpful Resources

For more information on making payments and tracking refunds, visit the IRS’s Payments and Refunds pages.

Helpful Tips

• Stay Organized: Keep all your tax-related documents in one place to make the filing process easier.
• Use Tax Software: Many tax software programs offer step-by-step guidance and can help you maximize your refund.
• Seek Professional Help: If your taxes are complex, consider hiring a tax professional to ensure accuracy and compliance.

By following these steps and tips, you can simplify the tax filing process and make sure you get the most out of your tax return.