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[D494]Do My Tax Returns

by Richard A. Chapo, Ric

Choices, Choices?

Tax deductions are a very simple part of a theoretically simple tax reporting system. If you've ever prepared your own taxes, you know this simply isn't true. Complicated tax forms can be a nightmare to fill out. Ever helpful, the IRS gives you an option of just taking a standard deduction instead of itemizing your deductions. So, what should you do?

The standard deduction is the easiest method because it requires no calculations or supporting documentation of any sort. You figure out your adjusted gross income and simply submit the amount for your classification. The amount differs based on whether you are filing as single, married, older than 65 or have kids.

Many people scoff at the mere idea of taking the standard deduction. As with all tax issues, deciding whether to take the standard deduction isn't so easy. If you have a fairly simple financial life and don't have many deductions, the standard deduction is almost always the best choice. For instance, if you make $45,000 as an employee of a company, rent a residence and don't have any major medical bills or losses, the standard deduction is probably going to save you more money than itemizing. Unfortunately, you can never be sure until you take a stab at itemizing your deductions in a rough draft of a tax return.

Itemizing your deductions is exactly what it sounds like. You literally go through your records and categorize every possible deduction. These deductions are then subtracted from your adjusted gross income to get a final figure from which tax is determined using the tax tables. Itemizing is the way to go if you have significant tax deductions or tax credits in your financial life. For instance, you almost always want to itemize if you own a home as mortgage interest can be deducted. Generally, you want to itemize if you own a home, have significant medical bills, can claim a tax credit or suffered some type of major loss. Obviously, there are other situations where itemizing makes sense, but this gives you an idea of the situation.

If you have a simple financial situation, claiming the standard deduction may be the answer. If life is a bit more complicated, itemizing is probably going to save you more on your tax bill.

If you are an employee, your employer probably withheld taxes from your paychecks. Business owners and self-employed individuals usually pay their taxes by installments throughout the year. Because tax payments are estimated amounts, it is rare the taxes you paid throughout the year are actual amounts owing to the IRS.

Why File Tax Returns?

It is common that individuals pay too much in taxes throughout the year. If this is the case, you will receive a tax refund check. If you don’t file your taxes, you won’t be able to get a refund check.

In other cases, not paying enough taxes throughout the year means you owe more money to the IRS. When you file your taxes, the IRS computers will calculated the difference so you can make an exact payment to the government.

Failure to do your tax returns can have harsh results. If you have overpaid in taxes, you could lose your refund after three years. If you owe money to the IRS, you can face fines and prison time. This is why it is important to file your tax returns each year!

What do I need to do my Tax Returns?

Your employer or clients will send you the necessary documents needed to complete your tax returns. If you are an employee of a business, you’ll receive W2’s. Your W2’s contain all the information the IRS needs, including your income from working and payments made to health insurance and retirement accounts. If you are an independent contractor, you’ll receive 1099 documents with the amounts paid to you throughout the year. You will also receive documents from investments you’ve made and interest earned from savings accounts.

You will also need receipts and other documents for deduction purposes to claim on your tax returns. Deductions reduce the taxes you owe because it tells the IRS that after deductions, your income is smaller. Owners of business will use receipts to justify deductions and students receive 1098’s to prove that they have paid tuition expenses.

How do I do file my taxes?

You can do your tax returns on your own or hire a tax accountant. Those with larger businesses or complicated deductions should hire a tax specialist to file their taxes.

However, most individuals and small business owners can do their tax returns on their own. You can fill out the form and mail it, or for added convenience, do them online. Nowadays, there are online tax filing systems that require you to plug in information from your documents. Simply click a button to efile your tax returns to the IRS. Online tax filing is easy, even if you’ve never completed a tax return in the past. The system tells you exactly what information you need, and guides you through the process, step by step.

Whichever option you choose, make sure you follow instructions and meet the deadline. Usually, the deadline for tax returns is April 15. You can find out more about tax returns by visiting .

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About Author

Both Richard A. Chapo & Robert Shaw are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Richard A. Chapo has sinced written about articles on various topics from Finances, Tax Deductions and Tax. Richard A. Chapo is with BusinessTaxRecovery.com - providing information on . Visit us to read more about. Richard A. Chapo's top article generates over 22200 views. to your Favourites.

Robert Shaw has sinced written about articles on various topics from Personal Finance, Where is my Tax Refund and Tax Preparation. Get the latest in tax returns know how from the only true source at http://www.taxplus2.com. Check out our pages.. Robert Shaw's top article generates over 1300 views. to your Favourites.