US tax filing can be complicated where one might feel like navigating a maze. However understand the basics of tax filing or collaborating with a dedicated USA tax expert can make it less stressful.
Here are some of the steps involved in federal tax filing-
Know your tax situation –
It is important to assess the individual tax situation. Here are some of the things to be considered.
- Filing status: The marital status of the person on 31st December of the tax year significantly impacts the filing options.
- Income sources: Identify all the sources of income one received throughout the year, like wages from employment, investment income, and income from business and government benefits.
- Deductions and credits: It is important to research potential tax deductions and tax credits that one might be eligible for. Gather all the relevant documents to support the claims.
General steps –
- Gather the required documents:
- For self-employment income, freelance work, etc collect 1099 forms. Collect income statements W-2 forms from all the employers. Any other income related documentation e.g. 1099 K for online payments received.
- Gather the documentation for potential deductions and credits. This includes Receipts for qualified expenses like charitable donations, mortgage interest payments. Also gather statements or other supporting documents like student loan payment records.
2. Determine filing needs:
The ‘Do I need to File a Tax Return?’ tool of the IRS from their website lets you know if you are obliged to file tax based on your income level, filing status and tax situation.
3. Select the filing method:
- E- filing: IRS strongly encourages E-filing as the most secure, efficient and apt method.
- Paper filing: Paper filing is slower and can prone to errors. Refer IRS website for specific instructions if you opt for paper mode of US tax filing.
4. Complete tax return formalities:
Choose the correct form
The common form for individual tax filers is Form 1040. However IRS website provides guidance on which form is appropriate on the basis of specific circumstances of the filer. Consult IRS website or take help of tax expert to choose the correct form.
Know the deductions and credits
- Itemized deductions: If the total of itemized deduction exceeds the standard deduction amount, one may benefit from itemizing. This involves providing receipts for qualified expenses.
- Standard deductions: A fixed dollar amount is automatically applied to taxable income. IRS website offers current standard deduction amounts.
Cross – Check if the entries are accurate
Review all the entries and calculations to avoid errors. Double-check income, deductions and credits before submitting the return. Seek the help of a qualified tax advisor to ensure your US tax returns are filed efficiently and accurately. The dedicated tax experts possess extensive knowledge of US tax laws and obligations including the expat taxes and help you navigate the process without any hassle.