Filing family taxes can be a complex endeavor; one sloppy mistake can make you miss out on a large refund, make the IRS think that you owe them more money, or attract an audit. Furthermore, if you have children you wouldn’t want to miss out on the expanded credit of up to $3000 per qualifying child, free community college and prekindergarten, subsidized child care, and a national paid leave that President Joe Biden proposed recently due to tax filing mistakes. If you have been having difficulties filing your taxes, here is all you need to know:
Explore free programs
If you make $72,000 a year or below, you are entitled to file your taxes for free. The IRS can also let you request for an extension, i.e., if you are sure that you won’t get it done before the deadline. If you make more than $72,000, you can still find some free, easy-to-use programs to use, one of them being the IRS free electronic forms.
Besides that, there are other free online platforms you can look for. Just make sure that they are credible and legitimate. You don’t want your financial information to get into the wrong hands.
Stay organized
Before you start the filing process, you must get all your documents in order. Therefore, group your documents into three categories, which include:
1) Your income – This includes your salary, earnings, interest, dividends, distribution, W-2s, and 1099s. W-2 form details earnings for a full-time employee. They also show taxes that your employer took. Form 1099 details the earnings of freelancers and people working on a contract.
2) Expenses – This includes utility bills, childcare costs, medical bills, mortgage statements, rents, charitable donations, and non-reimbursable employment-related expenses.
3) Investments – This includes your annual retirement plan contributions, cost bases, gains, losses, statements, and K-1 forms.
Such an organization can make it easier to file your returns. You can quickly retrieve any document when you need it. Afterward, gather all your personal information. Ensure that you have social security numbers, employer information, and any other relevant information that may be required during the filing process. Stay on top of every tax-related paperwork all year to make your life easier during the tax season.
Take note of the credits and deductions you can take
Having an idea of the deductions and credits you’re eligible for might help you look for the proper documentation to support your course. The following are some items to consider:
Freelance expenses – If you are a freelancer or a self-employed worker, you can claim deductions for office supplies and industry subscriptions.
Charitable donations – The IRS can deduct some of your charitable donations if you itemize them on your tax returns.
Student loan interest – Did you know that you can claim a deduction of up to $2500 in interest payments? However, this will depend on your modified adjusted gross income. So, don’t fail to mention it. You can determine your deductions easily by using a simple tax calculator. There are many simple student loan interest deduction calculators available today.
Saver’s credit – The IRS can give you a special tax break if you’re a taxpayer within the low and moderate income range, and you’re saving up for retirement. For the year 2021, families with an adjusted gross income of $66,000 or less are eligible.
These deductions will require receipts or any other documentation that can be used as evidence, so check to confirm that you have all the necessary paperwork.
Collect the income data for you and your spouse
Remember to claim all the income you have received throughout the year. This includes:
• Lottery and casino winnings
• Alimony
• Home businesses
• Rental properties
• Money from investments
• Mention if you have more than one job
Lastly, also document all the taxes you have already paid. This is important, particularly if you are a contracted employee or own a business. But if you are employed, your employer will take the state and federal taxes from your paycheck.
Note all the life changes that have happened to you in the past year
Some life events can significantly affect your tax return. They can make you eligible to claim deductions. For instance, if you just had a baby, got married, divorced, changed jobs, or moved to a new state, the IRS might go easy on you if they have that information.
Conclusion
There are many ways to make filing your family taxes easier, and these are some of the top ones. Just remember that you should always make sure that you always file your tax returns on time. Be truthful with your income information to avoid problems with the IRS.
