Tax Filing Season Is Here: Get Ready
The arrival of spring means much more than beach weather and spring-break. April 15th will be the official 2021 Tax Day (the last day to file tax returns), and it is a perfect moment to start preparing. Check out these Q&As to maximize potential tax refunds and minimize stress.
Why Do I Have to File Taxes?
In most cases, tax filing is required by law. On the other hand, tax filing makes you eligible for tax refunds, avoid extra charges, and protect your credit score.
How Does Tax Filing Work?
Whenever you have a new job, you have to fill a W-4 form. This form determines how much of your paycheck will be withheld and paid as taxes. Since payment withholding varies on a personal basis, you might over-or under-pay your fiscal obligations. Tax filing essentially means getting a record of the taxes you already paid to determine whether you overpaid and are owed a tax refund or if you still have payments due.
How Do You Fill Out W-4 Forms?
The W-4 form’s information determines how much is withheld from your paycheck and is publicly available on the IRS website. The first step is entering your personal information. Suppose you have several jobs or file jointly with your (also employed) spouse. In that case, you might need to use the online estimator offered at the IRS website to determine more or less how much you are liable to pay in taxes. Alternatively, you can also use the worksheet included in the form to roughly calculate how much should be withheld or submit two W-4 forms if you are working two jobs with similar pay.
Then, you write down how many people depend on your income. Finally, register any extra tax withheld from other income sources (such as dividends, pension, or interest), claim other deductions to reduce your withholding. After that, you need to sign it and make sure that your employer does too.
How Much Do I Owe in Taxes?
First, determine your taxable income by subtracting deductions from your total gross income. Then, depending on your marital and filing status (married or single and filing jointly or separately with your spouse with dependents), you need to figure out the income bracket you’ll fall in. Income brackets determine what percentage of your income(s) must be paid in taxes. If you are unsure how much you owe or how much to file for, you might want to talk with a tax advisor or hire a professional tax service to do it for you.
When is the Deadline for Tax Filing?
The last day to file taxes for the 2020 fiscal year is April 15th, 2021. You might want to prepare and file it before, though. If you fail to either do your tax filing or to ask for an extension of time (even if you cannot pay for all of it) in time, you will have to pay late-filing fines and interests.
What is the Easiest Way to File Taxes?
That depends on your needs. Aside from the traditional tax filing by post or in person, online tax filing (AKA e-filing) is possible at no cost through the IRS website and its partners at the Free File Alliance.
Bear in mind that although these sites can help you prepare and file your taxes online at no cost, you might miss deductions and credits and even be liable to pay penalties if you make mistakes. Plus, you have things to do and places to be, and filing taxes takes time.
Another alternative is hiring a professional tax service that will prepare your income tax filing for you at a price. These services can help you identify deductions and breaks you might not know about, avoid penalties, have representation in case of an audit, and save time.
Visit your nearest Cost-U-Less office to know more about our tax preparation and refund services. Our dedicated representatives will be available to discuss your needs. We guarantee quality and excellent services.