Why Do I Need to File Tax Returns?
Although filing your federal income tax return can seem overwhelming, it can be simple if you have the right tools and resources available to you!
The majority of individuals who work within the United States (both legal citizens and resident aliens) will pay federal taxes as required by the Internal Revenue Service. Individuals who have an ITIN, otherwise known as an Individual Taxpayer Identification Number, are still required to pay taxes even though they are not citizens of the United States.
The IRS, or Internal Revenue Service, is the federal agency responsible for enforcing tax laws and collecting taxes within the United States. Although you do not need to file taxes if your income is below a certain amount, you must file tax returns to get a tax refund or claim a refundable tax credit.
What Happens if I Don’t File My Tax Returns?
Generally, you should have your taxes filed by April 15th, and the deadline to file is the same every year. However, many people forget to file, so it’s understandable if you miss your deadline by a few days! You can potentially ask for an extension if you need more time, and it may be granted under certain circumstances.
If you continue to hold off on filing your taxes, there could be potential consequences. You may have to pay a file extension fee or a “failure to file penalty, ” meaning you will be required to pay a 5 percent penalty for each month on any unpaid taxes (capped at 25 percent). The IRS may decide to waive these penalties if there are extenuating circumstances, such as a natural disaster or if you were on military leave during the filing period.
I’ve Never Done My Taxes Before. How Do I File Tax Returns?
To file your federal tax returns, the first step is to choose how you want to file your taxes. There are typically three common ways to file your taxes:
- Fill out an IRS Form 1040 by Hand and Mail it (Which is Incredibly Slow)
- File Taxes Online Using Software such as TurboTax
- Hire a Tax Preparer to File Your Taxes for You
It has never been easier to do your taxes! Many tax software programs can offer access to real, human tax professionals that can potentially walk you through the process, do it for you, or answer any questions you may have about filing your taxes. The IRS offers a free file software program if your income is less than $73,000. However, regardless of your income, you can access tax forms that can be submitted electronically for free.
If you are having trouble with your tax return, it can be smart to hire a tax professional to do the work for you and review your tax return. A tax preparer can help you get your documents together and file your taxes without the hassle! You can even meet with some tax professionals online instead of at a storefront location.
What Do I Need to File My Taxes?
To file your tax returns, you will need to gather all of your financial information for the year, including your earnings statements or W-2 forms and any 1099 tax forms if you are self-employed or receive additional income. Additionally, you will need to have:
- Your Social Security Number (and Your Spouse/ Dependent’s Social Security Number if Necessary)
- Medical Bills That Need to Be Reimbursed (If Needed)
- Last Year’s Tax Returns (If Applicable)
- Retirement Account Contributions
- Charitable Donation Receipts
Other additional information or documents may be required during the filing, but the items listed above can give you a general idea of what you will need to have on hand in order to file your taxes.
What Happens if I Owe Taxes?
If you owe taxes, you will have plenty of ways to send money to the IRS, including through electronic payments, wire transfers, debit/credit cards, and checks. If you are unable to pay the total amount that you owe upfront, you can ask for an IRS payment plan to pay over time. This payment plan could be short-term or long-term, but either way, you will be required to pay back what you owe. If you’re in a bind and need to come up with a sum for payment, contact LoanMart about your options. It’s a last ditch, but the IRS gets what it is owed.