You may be wondering why you should file a tax return and not to mention the time and agony of doing it. If your income was below $73,000 in the previous year and you do not have any other major sources of income, then filing your taxes should be a straightforward process.
However, some people have more complicated financial situations that call for a little additional research and planning. If your taxes seem overwhelming to you, do not panic.
Getting your taxes done doesn’t need to be stressful or feel like an impossible task. Keep good records and file taxes easily. In this article, we will explain how taxes work and what filing means for you. We also offer advice on how to file your taxes if this is something you haven’t had to deal with before while providing some tips on how to save money.
What is Filing Your Taxes?
Filing your taxes refers to the process of submitting your tax return to the government. Your tax return is a document that reports your income and calculates your tax liability based on your income, deductions, and credits.
Completing your yearly taxes involves several steps, including reporting your income, making quarterly payments if needed, and taking advantage of any credits or deductions that could lower your tax bill. Filing your tax return is the ultimate action required to conclude this process.
How Do Taxes Work?
Taxes are an important part of the government’s revenue stream. They are used to fund programs and initiatives that help keep our nation strong and safe and protect the environment.
Taxes are a fee we pay for living in our country, rather than a source of income like it is for many people. A single person earning a median income of $86,000 will end up paying around $14,668.50 in taxes each year.
This covers things like Medicare, Social Security, and other government programs. These programs are important, so it’s worth paying the taxes to keep them running.
Why You Should File Your Taxes Anyway
You might think that it would make sense to wait to file your taxes until you actually owe money. However, many people choose to file their taxes on time each year, even if they don’t owe anything.
There are many reasons why you might want to file your taxes no matter what your situation is. If you file on time each year, you won’t have to worry about an audit popping up in the future and costing you money in the form of penalties or back taxes.
You also have the option to claim any credits that would reduce the amount you owe, like the Child Tax Credit.
When to File Your Taxes
You should start thinking about filing your taxes as soon as you know what your income looks like for the year.
The filing deadline for your taxes is typically April 15. If you get an extension, you have until October 15 to file.
If you file after the deadline, you will be charged a fine. The fine called a late fee, varies based on how late your taxes are filed.
Are You Required to File Your Taxes?
Filing your taxes annually is not only a wise decision but also mandatory if your earnings exceed a certain amount or if you have notable alternate sources of income. You are required to file your taxes if your income is higher than the standard deduction amount or if you have significant sources of income.
If your income is over $10,000, or $12,000 for a married couple, you are required to file a tax return. You are also required to file taxes if you have other sources of income.
Other sources of income include things like inheritances, Social Security benefits (if you work or have other income), investment interest, or self-employment income.
Estimated Tax Payments and Filing Your Taxes
If you owe taxes at the end of the year, but you don’t have the money to pay in one lump sum, you can make estimated tax payments throughout the year. You don’t need to be employed by the government to make estimated tax payments. You can make them on your own, or you can have a tax preparer do it for you.
Estimated tax payments are due on the following dates: – April 15: First quarter estimated taxes. June 15: Second quarter estimated taxes. September 15: Third quarter estimated taxes. January 15: Fourth quarter estimated taxes.
Conclusion
Filing your taxes is a great way to know exactly how much you owe and when you need to pay it. It’s also a good way to get ahead on your taxes and avoid any penalties.
As long as you keep track of your income and any deductions you are entitled to, filing your taxes should be a relatively straightforward process. However, if you haven’t filed taxes before, it can be a little intimidating. Luckily, there are plenty of resources available to help you file.