Preparing Your Taxes

Gathering everything you need in order to prepare your federal income taxes is often a bigger challenge than actually doing them. Though the process may feel overwhelming, it just requires knowing what you need and organizing your approach to gathering the necessary information. Below are steps to make the process smoother:

Step 1. Determine Your Filing Status
Before you start to file your taxes, it’s a good idea to determine your filing status. You want to choose the one that will allow you to pay the least amount of tax or even qualify you for a refund. Choose one of the following filing statuses:

Single
Married Filing Jointly
Married Filing Separately
Head of Household
Qualifying Widow(er) with Dependent

Visit the IRS online to determine your tax filing status.

Serving in a combat zone? Military and civilian individuals serving in a combat zone may qualify for an extension to file your taxes. To find out more, read IRS Publication 17.

Step 2. Obtain the Right Tax Form
Make sure you get the right tax form for your individual situation. Many people will use the same one they used for the previous year, but if your circumstances have changed, you may need to use a different form. The most commonly used forms include: 1040EZ, 1040A, and 1040. To identify and download the correct form, visit the IRS online at www.irs.gov.

Step 3. Gather Income Information
Your next task is to collect all of your income information. You will need documentation for:

Earned income (your W-2 form from your employer)
Partnership, S-Corporation, and trust income
Pensions and annuity income
Unemployment compensation
Rental income
Social Security benefits
State and local tax refunds
Earnings from the sale of your home or real estate
Investment income (interest and dividends, proceeds from broker transactions, and retirement plan distributions)
Alimony received
Jury duty pay
Gambling, prizes, and lottery winnings
Scholarships and fellowships

Step 4. Collect Deduction Information
If you plan to itemize your deductions, make sure you account for everything. Depending on what you are able to deduct, you’ll need to have records for outgoing expenditures including:

Mortgage interest
Real estate taxes
Rent
IRA or other retirement plan contributions
Miscellaneous investment related expenses (such as safe deposit box fees if used to store investment documents and computer depreciation if used to track assets)
Early investment withdrawal penalties
Medical/dental bills
Moving costs
Charitable donations and volunteer expenses
Auto loans and leases for vehicles used for business
Student loan interest
Alimony
Unreimbursed job-related expenses (travel, uniforms, union dues, education)
Job-hunting expenses
Child care expenses
Adoption expenses
Tax return preparation expenses

If you have difficulty locating these items, make a commitment to keep good records from this point forward. It will make this time next year a much less overwhelming experience.

Step 5. Determine if you Qualify For Earned Income Tax Credits
The Earned Income Tax Credit (EITC) sometimes called the Earned Income Credit (EIC) is a refundable federal income tax credit for working individuals and families of modest means. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

Read more about Earned Income Tax Credits. To find out if you qualify for the Earned Income Tax Credit, visit www.irs.gov/individuals.

Step 6. File your Return
If you choose, you can still file your tax return the old fashioned way, via snail mail. If you're receiving a refund, you may want to consider filing online. You could receive your refund in as little as 10 days by using the IRS online filing system called E-File.

Need assistance filing your taxes? Free filing assistance is available in many communities through the Volunteer Income Tax Assistance (VITA) program sponsored by the IRS. VITA provides trained volunteers who can fill out and electronically file tax returns for low to moderate-income families. Read more about VITA.

Need more time to file your taxes? Request an extension of up to six months with IRS Form 4868.

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