With only one week left until Tax Day (April 15th), now is a great time to be a little panicked about filing your taxes. Don’t worry though—even if you waited until the last minute you can file your taxes stress free! (Did you file your taxes last year? Read our earlier article to learn what’s changed!)
We’re keeping this article short and to the point so you can focus on getting those taxes done!
Step 1: Gather Your Documents
Since January, you should have received several documents outlining your income through out the year. Common documents include:
W-2: A form provided to employees by their employer that includes salary and tax information
Form 1095: These information forms show that you had health insurance coverage in the prior tax year. They include:
1095-A: Health Insurance Marketplace Statement
1095-B: Health Coverage
1095-C: Employer-Provided Health Insurance Offer and Coverage
Form 1098: This form is provided if you paid >$600 on mortgage interest throughout the previous tax year. This may help you receive a tax deduction or credit. There are also two special types of Form 1098.
1098-E: If you have student loans and paid off a portion of the interest, you will receive a 1098-E from each of your loan servicers. This will help you receive a tax deduction credit.
1098-T: For people who were enrolled in classes from an accredited institution, a 1098-T shows how much you paid and how much you received in grants. This can help you determine eligibility for tax credits and deductions.
Form 1099: These forms are provided to outline income that was not received as a W-2 Employee. They include:
1099-DIV: A form providing information on dividends and distributions you received
1099-G: Certain government payments
1099-INT: Keeps track of interest income earned on investments
1099-OID: Provided if you received more than the stated redemption price on maturing bonds
1099-Q: Payments from qualified education programs such as a 529 Savings Plan
1099-MISC: Miscellaneous income, often received as an independent contractor, self-employment, or from prizes/awards
In addition to these tax documents, you should also gather the following:
Personal information for everyone included on your tax return: You will need Social Security Numbers (if you or they don’t have one you will need a TIN)
Your tax filing from last year (if you filed)
If you own a business that operates as a pass-through entity (a sole proprietor, partnership, some Limited Liability Companies or S-Corps) have a summary of expenses and income available, mileage records, and quarterly estimated tax payments (if applicable)
If you have an IRA that you contributed to, you will need a Form 5498
Receipts for unreimbursed medical expenses: These could include exams, surgeries, preventative care, prescriptions, glasses, braces, and more!
Records of charitable donations
Property tax receipts
Step 2: Start the Filing Process
Now that you have all your documents together, you can start the process of filing! Most of our readers won’t need a Certified Public Accountant (CPA) but if you are extremely uncomfortable filing your own taxes it may be worth looking at for your own peace of mind. (Note: by this point in the year many CPA’s may be fully booked. Plan accordingly).
Before you pay for expensive tax software, was your income below $66,000 last year? If so, you should visit the IRS Free File Software Page which has full versions of popular tax software that is free for qualified filers. Some of these software products even include state filings! Note that they typically have more features than the free version available directly from the company websites.
If you made >$66,000 last year but are comfortable filing your own taxes, you can go to the IRS Free Fillable Forms (which have become simplified compared to past tax years) and file your tax return online.
Finally, if you made >$66,000 and are willing to pay, there are any great tax software options available for purchase online.
Step 3: File Your Federal Taxes or Request an Extension
Congratulations! You’re either finished or mostly done but just waiting on a form or two. If the latter, you can request a Filing Extension from the IRS. You should know that an extension is NOT meant to put off paying your taxes— if you underpaid you can still be hit by penalties. You should have a good estimate of what (if anything) you owe and make sure that is paid first. An extension provides you extra time to send in your full tax filing, so it is potentially safer to be cautious and overpay and then receive a return later.
You can either file a Form 4868 to receive an extension or you can use Direct Pay, the Electronic Federal Tax Payment System, or a credit or debit card to have a confirmation number and later amend or submit your full return.
Step 4: File State and Local Taxes (If Applicable)
Not all our readers will need this step (Hi Texas!), but if you are located in a state that has income taxes you will need to file at the state level and possible your local municipal level. Make sure you do so, or you may be hit with late fees. If you own a business or are self-employed you may also have taxes due, even if you are in non-income tax states. Also remember: If you moved during 2018 you may have to file in multiple states!
Step 5: Relax
You’ve made it through another tax season! Celebrate by putting a copy of your tax return in a safe place (maybe two or three places?) and spend some time with family and friends.
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