On a similar note...
On a similar note...
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Tax filing can be daunting. So if you’re wondering how to file taxes online or on paper, here’s a cheat sheet on how to do your taxes and how to make tax filing easier.
1. Do you even have to file taxes? (Yes, probably.)
Even if you don’t have to file taxes, you might want to do it anyway: You might qualify for a tax break that could generate a refund. So give tax filing some serious consideration if:
2. Understand how your taxes are determined
The government decides how much tax you owe by dividing your taxable income into chunks — also known as tax brackets — and each chunk gets taxed at the corresponding tax rate. The beauty of this is that no matter which bracket you’re in, you won’t pay that tax rate on your entire income.
The progressive tax system in the United States means that people with higher taxable incomes are subject to higher federal income tax rates, and people with lower taxable incomes are subject to lower federal income tax rates.
3. Gather your tax filing information
You’ll need to do this whether you’re hiring a tax preparer or doing the tax filing yourself. The goal is to gather proof of income, expenses that might be tax-deductible or win you a tax credit, and evidence of taxes you already paid throughout the year. Our tax prep checklist has more guidance, but here’s a short version of what to round up:
Social Security numbers for yourself, as well as for your spouse and dependents, if any.
W-2 form, which tells how much you earned in the past year and how much you already paid in taxes. (If you had more than one job, you might have more than one W-2.)
1099 forms, which are a record that some entity or person — not your employer — gave or paid you money.
Retirement account contributions.
Property taxes and mortgage interest.
State and local taxes you paid.
Last year’s federal and state tax returns.
4. Choose how to file taxes
You have extra time to decide how to do your taxes in 2020 — the deadline is now July 15 — but you still have to get them done. There are three main ways to file taxes: fill out IRS Form 1040 or Form 1040-SR by hand and mail it (not recommended), use tax software and file taxes online, or hire a human tax preparer to do the work of tax filing.
File taxes online with tax software
If you’ve used tax software in the past, you already know how to prepare and file taxes online. Many major tax software providers offer access to human preparers, too.
TurboTax, H&R Block, TaxAct and TaxSlayer, for example, all offer software packages or support options that come with on-demand, on-screen or online access to human tax pros who can answer questions, review your return and even file taxes online for you.
The IRS Free File program can get you free online tax preparation software from several tax-prep companies, including major brands. You must have less than $69,000 of adjusted gross income to qualify.
File taxes online using your tax preparer’s secure portal
If amid the coronavirus outbreak you can't meet in person with a tax preparer but don’t know how to file taxes yourself, there’s a way to file taxes without leaving the house.
A secure portal lets you share documents electronically with a tax preparer, says Henry Grzes, lead manager for tax practice and ethics at the Association of International Certified Public Accountants. Typically, the preparer will email you a link to the portal, you’ll set up a password and then you can upload pictures or PDFs of your tax documents, Grzes says.
“If I've got documents, or I've got a list of questions that I might have for you, I might send it via the portal and you'll get a notification in your email,” Grzes adds. The portal is also how you can access your completed tax return when it’s ready for your review, he says. When it’s time to sign, you can either do so electronically or print out the signature page, sign it and upload the signed page.
For all of this to work, you’ll need to get or make electronic copies of your tax documents.
Some, like your W-2 or Form 1098, might be available online from your employer or lender.
For paper documents and receipts, you can take a picture of each of them with your phone and upload the photos. Several mobile apps convert photos to PDFs, if file format is an issue.
Virtual tax-prep services
Typically, these services — such as H&R Tax Pro Go, Ernst & Young's TaxChat or Picnic Tax — match you with a human tax preparer who may or may not be in your area. You upload your documents through a secure portal and then consult with the preparer one on one via chat or video. Prices vary depending on your tax situation.
H&R Block says the turnaround time is generally within five business days for its Tax Pro Go service once the tax pro receives all the client’s documents. The company says it has also shifted its brick-and-mortar operations to drop-off operations.
“Which means a client can drop-off their tax documents in a safe and secure manner or call an office to make arrangements to upload documents without visiting an office," an H&R Block spokesperson tells NerdWallet. "The tax pro will contact them with questions and to gather additional information. Once their taxes are done, clients can digitally sign the return and we’ll e-file on their behalf — no need to come back to the office."
5. Settle up with the IRS
If you owe ...
There are plenty of ways to send money to the IRS. Electronic payments, wire transfers, debit and credit cards, checks and even cash are among your options.
If you can’t pay your taxes all at once, an option might be an IRS payment plan, which is an agreement you make directly with the agency to pay your federal tax bill over a certain amount of time. There are two kinds of IRS payment plans: short-term and long-term. Either way, typically you’ll make monthly payments to settle what you owe.
If you’re getting a refund ...
There are a few things you can do to make sure your money hits your bank account as quickly as possible:
Avoid filing your tax return on paper. The IRS typically takes six to eight weeks to process paper returns. When you file taxes online, on the other hand, your return should be processed in about three weeks. State tax authorities also accept electronic tax returns, which means you may be able to get your state tax refund faster, too.
Have your refund sent by direct deposit. When you file your return, you can have the IRS deposit your refund directly into your bank account instead of sending a paper check. That cuts the time in waiting for the mail.
Track your refund. You can track the status of your IRS refund and your state refund online.