How To File Your Tax Return

As tax season approaches, you may find yourself wondering about the options to file your taxes. There are a couple of items we must address first. When is it officially tax season? What information do you need to gather before you can file?

When Is the 2023 Tax Season?

"Tax season" for the prior tax year is in the early months of the following year. For the 2022 tax year, the Internal Revenue Service (IRS) will begin accepting and processing returns on January 23 2022. Also, 2022 tax returns will be due on April 18, 2022, which is later due to the the weekend and the Emancipation Day holiday in the District of Columbia.

Information and Forms You Need To File Taxes

No matter which method you choose to file your taxes, the first step is assembling information. Among other things, you need to document your filing status, taxable income, the amount of tax you've already paid, and any deductions and credits for which you may be eligible. This means you will need to wait to receive all of your W-2s, 1099 forms, and other documentation, typically sent by end of January, before filing your taxes.

Here's what you'll need, depending on employment status and other life circumstances:

• Names, dates of birth, and Social Security numbers for yourself, your spouse, and any dependents
• Form W-2, which you receive from your employer (if you are an employee). This reports your income and the taxes already paid by your employer on your behalf
• Form 1099-NEC (non-employee compensation), which you should receive if you earned more than $600 working for a non-employer entity, worked a contract job, or had a side gig.
• Form 1099-MISC, which you would receive if you earned more than $600 in other income, including rents, prizes, fishing boat proceeds, or crop insurance payments
• Form 1099-INT, which you would receive from a bank or other financial institution if you earned more than $10 in interest during the tax year
• A record of your retirement account contributions

If you plan to itemize deductions, rather than take the standard deduction, these are the records most commonly needed:

• Property taxes and mortgage interest paid: This typically appears on a Form 1098, Mortgage Interest Statement, which you will receive from your mortgage lender. If you have no mortgage or do not have an escrow account paying your property taxes, you will need to keep a record of your property tax payments separately.
• State and local taxes you paid: This is on the W-2 form if you work for an employer. If you are an independent contractor, you will need a record of the estimated tax payments you made quarterly throughout the year.
• Charitable donations: Charitable donations are a tax-deductible expense; however, the amount you can claim is limited to a percentage of your adjusted gross income (AGI) .
• Educational expenses: Be aware: If you pay qualifying educational expenses with a student loan, it must be claimed in the year the expenses are made, not in the year the loan proceeds are received or repaid.
• Unreimbursed medical bills: For tax year 2022, you can deduct the amount of unreimbursed medical expenses that exceed 7.5% of your AGI.
• Last year's federal and state tax returns.

How To Prepare Your Taxes

There are several ways to prepare your taxes. The three main options for tax preparation are a tax professional, tax software, and filling out the forms yourself.

Do It Yourself

You can prepare your federal taxes on your own by downloading and printing the forms on the IRS website and sending the return in along with a check if you owe a payment.

Another option is to fill out the forms online and submit the return electronically with a credit card payment. All the federal tax forms can be found using the Forms, Instructions, and Publications Search tool.

State income tax forms are usually found on your state's official website.

There is no charge or fee for filing your own taxes. Doing so is a good way to learn more about your financial situation because it forces you to track your transactions, earnings, and spending.

Most people who file their taxes manually have a straightforward tax situation, an unchanged tax situation, or a personal interest in the subject. It can take only minutes if you have the right forms on hand.

Use a Tax Professional

For anyone with a complicated financial situation or a lack of confidence about finances, a tax professional is a better option. Capable tax professionals can help minimize the amount you owe and maximize the deductions you claim. Using a tax professional can pay for itself.

Use Tax Preparation Software

An intermediate option between filing your own taxes and hiring a professional is to use tax preparation software for your federal and state returns. You input your own information, but the software is designed to help you through the process step by step.

Professional support may be available online or by phone, or both.

If you use it for more than one year, the best versions of these programs automatically fill in your previous year's information.

The Bottom Line

Start gathering your information as soon as you can in January so that you can file your income taxes as quickly as possible. If you're owed a refund, you'll receive it more quickly the sooner you file. And even if you're not, you will make it less likely that you will be the victim of identity theft, a recurring problem during income tax season. You can figure your taxes on your own, with the help of a tax preparer, or by using software.