Things You Should Know Before Filing Your Taxes

Things you should know during tax season

There are only two sure things: death and taxes! Taxes were implemented to fund different government programs: income tax, sales tax, property taxes, etc. The list is endless.

how are they collected?

Your employer will deduct taxes from your paychecks throughout the year. At the end of the year, the government will see how much you paid in and how much you owe. If you paid more than you owe, you will get a refund but if you paid less than you owe, you will owe more taxes.

Process

  1. Collect forms like W-2, 1099, and any other income forms.

  2. Most likely, you will just be filling out a 1040 because it's the basic tax filing form.

  3. The deadline is April 15th!

Complications

Later on, if your taxes become more complicated, it may be a good idea to hire a CPA. They will cost money, but they will probably save you money based on their expertise and knowledge of the tax codes. There are tons of tax strategies and deductions you have probably never heard of!

Tax terms

1099 - This is an income form for self employed people. 

W2 - This is an income form for people hired by a company and earning a constant wage. It must be sent to you by Jan 31st.

1040 - This is the form you actually file your taxes on. Online programs will walk you through the process.

Standard deduction - These are a set dollar amount that subtracts from your taxable income

Itemized deduction - These are individual deductions that add up to be more than the standard deduction. However, this won’t be as common now with the new tax laws.

The tax brackets and deductions for your 2018 taxes can be found here.

“Money Tip of the Week”

Tips for avoiding fraud:

  1. Get a directly deposited refund instead of a check in the mail

  2. Keep your forms and information secure