Taxes. One way or another, everybody pays them. And at the beginning of every calendar year, most of us have to figure out how to file our tax return.
Filing your taxes can be time-consuming, confusing, and stressful. We’re here to help. Money Under 30 can help you navigate some of the most commonly asked tax questions (and point you in the right direction for answers we don’t have).
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Who has to file a tax return?
If you earned a certain amount of income in the United States, you’ll likely need to (or want to) file a federal income tax return on or before April 15 or April 18 (it’s usually the 15th but sometimes lands on the 18th due to holidays). Although certain people earning less than a certain amount in a year are exempt from filing a return, you may want to do so anyway because you may be due a refund or credit.
When will I receive my tax refund?
The IRS begins receiving returns in late January.
You can prepare your return with tax software before that date and the software will automatically send your return to the IRS when they open. The IRS issues refunds within 21 days of accepting your return, but it may be even quicker if you choose to get your tax refund by direct deposit. If you opt for a paper check, expect it to take a bit longer.
The IRS has a helpful “Where’s my refund?” page that can help you estimate when you’ll receive your refund (this only works AFTER you’ve filed your return).
Read more: When will you get your tax refund? Here’s a schedule
Ok, how do I file my tax return?
Technology makes it easier than ever to file your taxes. The best tax software programs let you start your return for free and use friendly on-screen interviews to guide you through the process. These software programs are ideal for all but the most complicated tax returns. Many will let you file your federal income tax return for free and charge a nominal fee ($20 – $40) for your state return. Fees may go up if your return includes advanced items like business or investment earnings.
How do I get started?
Before you can file your tax return, you’ll need to collect all of the documents you’ll need. Our simple tax document checklist can help you get these documents organized.
For most people, this is just the W-2 provided by your employer in January showing how much you earned over the year. You may also get 1099 forms from banks (showing any interest you earned on savings) or from companies who paid you more than $600 as a contractor. Other forms include statements showing the interest you paid on student loans and/or your mortgage. Finally, you’ll want to organize any receipts for tax-deductible expenses like charitable donations.
Will I get a refund? How much tax will I pay?
Although it’s impossible to accurately estimate your final tax liability until you complete your return, you can determine your marginal tax rate (or tax bracket) using this chart. Keep in mind this chart is based on your taxable income after certain allowances and deductions.
How do I maximize my tax credits and deductions?
Every taxpayer wants to reduce his or her tax liability in every legal way possible. Here are some articles that can help you take your maximum allowed deductions and file your tax return properly.
- Need a tax break? Here’s a list
- Itemized deductions: A beginner’s guide
- Understanding the differences between tax credits, deductions, and adjustments
- Why you should pay attention to property taxes when you buy a home
- Buying your first home? Make sure you’re financially prepared with these steps
- Received a property tax bill? Here’s how to handle it
For freelancers and business owners:
- 10 Deductions You Didn’t Know You Could Take As A Business Owner
- How much should you budget for self-employed taxes as a freelancer?
- Got freelance income? 10 money-saving tax tips
- A SEP IRA can help side hustlers save even more for retirement
How can I avoid an audit?
Taxation in the United States is largely an honor-based system, albeit one with stiff penalties for non-compliance. These resources can help you ensure your taxes are in order and minimize your chances of attracting the unwanted attention of IRS investigators.
Handling common tax problems
- How to avoid simple tax return mistakes
- Behind on your taxes? Here are 6 ways to arrange a payment plan with the IRS
- I received an IRS CP 2000 Letter; what do I do?
Other helpful links
- 2022 income tax brackets (marginal tax rates)
- Roth IRA income and contribution limits
- Should you hire a tax professional?