Free Tax Filing: What You Need to Know
Taxes can be a daunting task for many people and, even though some people may know how to “do” them, a tax professional can fill in the gaps where most people fall short. However, there are some people who would rather take a less expensive route, save some money, and file taxes online for free––that’s completely fine! Here’s what you need to know about filing your own taxes for free.
More than likely, almost everyone has to file taxes each year. The determining factors on whether or not you will have to file, include your income for the past year, level of education, age, and others. The factors may also include whether or not you can be claimed as a dependent on someone else’s taxes. Now, it comes as no surprise that there are some of you who will not have to file. If that is the case, you may want to consider filing anyway because there may be significant tax breaks. In any case, you may be required to file if any of the following scenarios apply to you:
- You were employed and had income taxes withheld from your salary.
- You qualify for certain tax credits.
- You applied last year’s tax refund to this year’s tax filing year.
If you are getting ready to prepare and file your own taxes, you will need to keep this important detail in mind––Compile. Compile. Compile.
Compile your tax information.
“Compile before you file.” In order to file your taxes, you will have to gather specific pieces of personal information that can deem you eligible for tax credits and provide the proof that the IRS needs to recognize that you have paid taxes over the course of a year. Here are a few examples of what you will need to gather to prepare to file:
- Personal information such as your full legal name and date of birth
- A valid mailing address if your tax refund needs to be mailed to you
- Social security numbers for yourself and your spouse and/or dependents (if applicable)
- A W-2 form, with details on your earnings and taxable income within the past year
- Contributions to your retirement plan
- 1099-R’s capturing distributions from Individual Retirement Accounts
- Donations to charitable organizations
- Educational expenses, such as paid student loan interest
If you have these items, then great! It’s also possible that you won’t need every single item on this list, depending on your tax situation. However, without these items, you may not be eligible to file your tax return, which makes you lose out on your hard-earned income from the previous year.
Free tax filing may not always be in your best interest.
If you’ve ever wondered, “Where can I get my taxes done for free?” you can choose to file your taxes with an online tax filing service such as TurboTax Free, or by manually filling out your tax documents and mailing them (which isn’t typically recommended unless absolutely required by the IRS). Free tax filing allows you to prepare and file a 1040 form at no cost to you. A standard 1040 tax filing form typically consists of W-2 information with limitations to dividend and interest income and a standard deduction. However, you will need to make sure that you qualify for free tax filing, prior to filing.
If you do qualify, you have the option of choosing from several free tax filing software solutions. There are many websites that can handle these tasks for you for free or at a relatively low cost. Some of them can even check for errors to help make sure you’re not at risk for an audit in the future. But, even as easy as it sounds, filing your own taxes has a number of drawbacks.
Preparing and filing your own taxes can take more time than you’d like. If you don’t understand how taxes work, including the requirements for your tax situation, regardless of how standard the tax return is, the filing process could take several hours to complete. While online tax services are great for streamlining and getting you through the process in a timely manner, you’ll be stuck in that software with no support if you don’t understand what the service is asking of you or if you’ve ran into a roadblock that won’t let you continue without the right information. More importantly, if you make what would seem to be a small error, like putting the decimal point in the wrong spot, you may put yourself at risk of having a stressful tax bill. Hiring a tax professional eliminates the error and puts you at a greater advantage in the long run.
Online services don’t know everything. Services like TurboTax and TaxSlayer are good to have if you know exactly what you’re looking for, but that doesn’t mean those services know every single tax benefit. At its core, online tax services are given specific instructions and operate based on standard algorithms, depending on your tax situation. Professional tax preparers give you an upper hand because they have a great wealth of knowledge on beneficial tax breaks that can help you make the most of your yearly earnings.
Importance of prevention. In addition to helping with tax preparation and filing, a good CPA should be proactive in their communication. Because taxes are assessed retroactively, December 31st is a common deadline for decisions to be made. Whether to incur an expense, donation or revenue must be completed months before the April 15th deadline. These conversations can help prevent you from making mistakes, incurring additional taxes or missing out on opportunities to save for years to come.
Find your financial clarity with Delta Wealth Advisors
If it turns out that you don’t qualify for free tax filing and don’t know where to begin to file your taxes, Delta Wealth Advisors is one of the most versatile and flexible accounting firms in Indianapolis. We offer a full suite of accounting, tax, and consulting services to meet your personal or business needs. You deserve every tax break that you qualify for, so contact us today to learn how you can make your finances work for you.
