If you have a job that involves you regularly receiving a paycheck it’s likely you’ll have to pay taxes. You’re no doubt aware that your employer will withhold the tax that you owe. This is so they can be sent to state and federal governments. However, there is more to the tax-filing whole process than you may realize.
Why Tax Returns are Important
You should be aware that it’s unlikely your payroll withholding is right. When you set up your payroll when beginning your employment you could over or under pay your taxes. In addition to this, you could reduce the taxes that you owe. You could, therefore, get a refund on the money you’ve paid already. You could do this by taking credits or deductions that are provided for.
If you have another income you will need to report it by law. This may well mean that you could owe more taxes.
How to File your Tax Return
You can file your taxes using a 1040 form. Mail the completed form to the IRS in addition to any payments for personal taxes that you owe.
If you do not want to fill in the 1040 form yourself you could hire an accountant. They will work alongside you to ensure that you can maximize any refund you’re entitled to. They will also fill out the 1040 form on your behalf.
Thirdly, you can use some software or a website to help you do your tax return. You will have to answer quite a few questions to they have your details correct. However, the form can be filed electronically which is often to much easier.
How your Taxes are Calculated
Your complete income will determine how much money you will need to pay in taxes. The federal government uses a system that works out how much money you make. When it knows how much you make it can work out how high your tax rate is.
If you earn between $91,900 – $191,650 some of your earnings will come with the 28% tax bracket. This means that you won’t have to pay 28% in taxes on the first $91,900.
Did you know that you can get deductions on the amount that is taxable? You could get a refund on any medical care