The Guide to eFile Your Tax Return
Everything You Need to Know to Do Your Income Return
Each year, United States taxpayers are required to file a federal tax return with the Internal Revenue Service (IRS). There are different forms depending on your living situation, and also at least three different ways to submit your annual (or quarterly) income tax returns.
The Different Types of Tax Returns
There are several different tax return forms for U.S. taxpayers, and which one you fill out depends on your residential status (U.S. resident/nonresident or alien) and other factors such as whether or not you have dependents to claim.
Taxpayers must choose the form that corresponds to their particular life situation in order to correctly claim their income, deductions, as well as any applicable credits. You may determine whether or not you are required by the Internal Revenue Service (IRS) to file a U.S. federal tax return by reading our FAQ below.
Generally, you do not have to file an income tax return if your income is below a certain threshold. This threshold varies depending on your age and filing status, among other things. Most of us do have to file a tax return every year, and Locus Tax can help make it easier on you.
Keep reading for information about some of the most common U.S. income tax forms, and how they’re used.
Form 1040 | U.S. Individual Income Tax Return
This is the standard federal tax return form used by individual U.S. taxpayers. It’s sometimes referred to as the “long form” because it is more detailed than other tax forms such as the 1040-A or 1040-EZ.
The regular Form 1040 can be more time-consuming to fill out, but it’s time well spent if you have one or more ways to reduce your overall tax bill. Use this form to claim tax credits and expenses, adjust income, and itemize deductions, all of which may lower the amount owed.
While some taxpayers may be able to choose between filing a 1040, 1040-A, or 1040-EZ, if you identify with any of the following, you are required to file a 1040 form:
● Taxable income is over $100,000 for the fiscal year.
● You owe household income taxes.
● Itemized deductions, income adjustments, or tax credits.
Income derived from one of the following sources also requires that you fill out the Form 1040: farm income, business income, income received as the beneficiary of a trust or estate, self-employment income, unreported tips, shareholder/partner income from an S corporation, or dividends on insurance policies that are above the total net premiums paid for the contract.
Form 1040-A | U.S. Individual Income Tax Return
The 1040-A is a simplified, two-page “short form” that individual taxpayers may choose if they don’t fall into one of the categories above. Form 1040-A is available for taxpayers of any age and filing status.
This form is shorter than the regular 1040, and it does not allow individuals to itemize deductions. There are also limitations on the tax credits you’re able to claim with the 1040-A.
Form 1040-EZ | Income Tax Return For Single and Joint Filers Without Dependents
Taxpayers who meet certain requirements have the option of using the 1040-EZ. This is the shortest possible standard income tax return form, and it’s designed for single taxpayers or married couples filing jointly
To be eligible, you must:
● Have no tax credits (other than the earned income tax credit) or deductions to claim.
● Not be claiming any dependents.
● Be under the age of 65.
In addition, to be eligible you must only receive income from one or more of the following sources: wages, tips, salaries, unemployment, taxable academic scholarships/fellowship grants, $1,500 or less of taxable interest, or Alaska Permanent Fund payments.
1040-NR and 1040-NR-EZ | Income Tax Forms for U.S. Nonresident Aliens
The 1040-NR-EZ is specifically for nonresident aliens with no dependents. To file this form, your income must be from these sources: wages, salaries, tips, refunds of state and local income taxes, and/or taxable scholarship and fellowship grants.
We’ve written an in-depth comparison of Form 1040NR & Form 1040NR-EZ here.
Additional Tax Documents
W-4 Form | Employee’s Withholding Allowance Certificate
Employers are required to withhold income tax from every employee’s paycheck. But you can request to have more or less money withheld each pay period when you fill out your W-4 form. It’s basically some worksheets to help prevent over- or under-withholding of federal taxes.
W-2 Form | Wage and Tax Statement
The W-2 form contains details about how much income an employee received through an employer, and any taxes that were withheld. Taxpayers receive the W-2 form from their employer, who is required to send a W-2 to each employee no later than January 31st each year.
How to Your File Tax Return
There’s more than one way to file tax returns. The traditional method is to mail a hard-copy to the IRS, but recent years have seen a sharp rise in e-filing. Whether you submit your income tax return online or by snail mail, you’ll find helpful hints below for each of the various methods.
Traditional Paper Filing
Sending in a paper copy of your federal tax return may soon be obsolete, as taxpayers are discovering the benefits of e-filing. One of the downsides to paper returns is that they take longer to be processed. If you owe taxes, that’s probably ideal. But if you’re waiting on an income tax return, you’ll get it faster if you use a different method.
Filing Online: Tax Preparation Software
For many people, e-filing tax returns is the best option. It’s convenient, quick, and easy. Tax preparation software can help. Designed to answer questions, these programs usually help simplify the otherwise complex process of doing your taxes.
Hiring a Tax Return Professional
As everyone knows, the IRS can be complex. So many people opt to hire a tax professional to ensure a thorough and accurate tax return. This method is more expensive than doing it yourself, and it means handing over full control to another person. But there are a lot of good reasons to go this route, especially if you’re short on time or are less-than-confident about your ability to file income taxes correctly.
6 Steps to Prepare and File Your Return
If you are filing your federal tax return yourself rather than handing it over to a tax preparer, here are the steps to completing your annual income tax return online or by mail.
1. Gather the Necessary Documents
If you’re filing by mail, the paperwork you’ll need includes the actual tax form itself. You can easily find and print these from the IRS website.
Otherwise, before you begin the process, you will want to have:
● All the IRS forms needed, including your W-2 and other income statements.
● Proof of health insurance coverage.
● Additional documents like charitable donation receipts, interest statements, and earning statements.
● Your bank routing number and account number (for direct deposit purposes).
While you’re preparing your return, you may wish to check your credit report. It’s a good idea to do this at least once a year, and it can help ensure there’s no previous tax debt owed to the IRS.
You should also know how often you’re required to pay income taxes. Some taxpayers may be required to pay estimated taxes quarterly, because they have on income that’s not subject to automatic withholding. That might include interest, self-employment income, and dividends.
2. Check Your Filing Status
Your filing status is determined by factors such as your marital status (filing separately or jointly with your spouse), whether you identify as head of household, and the amount of money paid by all members of your household to keep up your home.
Your filing status is important because it determines how much you are required to pay, what tax benefits you’re eligible to receive, as well as the amount of your standard deduction.
3. Choose Your Filing Method
Determine what method is most suitable for you — whether it be an e-file tax return or paper filing. You can also check the IRS website to see if you qualify for their free tax preparation service. This is available to households below a certain income level, members of the military and their families, seniors, taxpayers with disabilities, or individuals with a limited understanding of the English language.
4. Calculate Your Total Taxes and Credits
Now that you’ve gathered documents, determined your filing status, and chosen a method, you’re ready for the fun part – math! Add up all your sources of income, including interest earned through investment and banking accounts, retirement or pension accounts, as well as your salary. Then figure out if you’re eligible for credits and deductions. These may include child care expenses, education (such as student loan interest), and charitable donations you have made throughout the year.
5. Claim Your Exemptions and Dependents
Here’s the actual fun part – claiming deductions and lowering your tax bill! Use the IRS rules to claim qualifying dependents, such as children or other relatives. Exemptions refer to deductions from your and/or your dependents’ taxable income.
6. Mail or E-File Your Tax Return
Almost done! Once you’ve completed the preparation process, filled out your forms, file your taxes using whatever method you’ve deemed most suitable for your living situation. If you want to file your taxes the easy way while also maximizing deductions, start your return with Locus Tax today! Just click the button.
Frequently Asked Questions
Do I need to file a tax return?
This depends on several factors including age, filing status, and whether or not your total income exceeds a certain threshold. Generally, taxpayers are required to file returns for years that their income exceeds the sum of the government’s fixed standard deduction and exemption amounts.
These numbers are posted annually before each filing season.
If your income is less than or equal to that amount, it’s not taxable. Yay! You’re not required by the IRS to file a return. But only for that specific year.
This goes without saying, but tax-exempt income should not be considered when determining whether or not you need to file a return.
Examples of tax-exempt income:
● Income not subject to taxes, such as veteran benefits, welfare, and Social Security benefits.
● Income received through investments such as qualified Roth IRA distributions, some death benefits, academic scholarships, tax-exempt interest, and municipal bonds.
Taxpayers age 65 or older who receive Social Security benefits have a higher income threshold before they’re required to file a return. Unless they are married and file a separate individual tax return from their spouse.
Taxpayers who are claimed as a dependent on someone else’s tax return — regardless of age — are subject to different filing requirements. Specifically, they cannot claim their own exemption.
However, dependents who receive unearned income are required to file a return if their unearned income — e.g. from dividends or interest — exceeds $1,050.
What are the benefits of doing my tax return online?
While some taxpayers are under the impression that filing through traditional means or using an in-person tax professional is the most secure and accurate method of filing a tax return, this is not necessarily the case.
According to the IRS, up to 20% of paper income tax returns have at least one mistake. Compare that to the 1% error rate when filing online. Between this and the increased wait time for processing paper returns (and therefore getting your refund), it’s easy to see why so many people have turned to e-filing.
The Other Benefits of E-Filing Include:
● Quicker Processing, Faster Refunds — The IRS processes e-filed returns more quickly, so you’ll get your refund faster. It can take up to six weeks to receive your refund if you file a paper return. Online is quicker.
● Direct Deposit into Your Bank Account — This option allows your refund to be deposited directly the bank account of your choosing, as soon as your return is processed.
● It’s Much More Convenient — This is great for people without the financial means to hire a tax professional. Plus you don’t have to deal with finding stamps and printing forms.
● Instant Proof of Filing — When you e-file, you’ll get proof of filing immediately, and then a notice once your return has been received and accepted by the IRS. Usually within 48 hours of e-filing.
● Extremely Safe and Secure — The sensitive information you’re sending is encrypted throughout the process of e-filing. Make sure to use a credible online service like Locus Tax to ensure confidentiality.
When do I have to file? What are the deadlines?
The tax deadline varies slightly year by year, but it’s always mid-April. Tax day is announced in advance by the IRS for taxpayers filing both annual and quarterly tax returns.
This year, the deadline to file is April 17th, 2019.
See the official IRS website for a calendar and deadlines for self-employed individuals and small businesses paying quarterly taxes.
Special exceptions may apply to individuals serving in a combat zone as a member of the U.S. Armed Forces. Or anyone hospitalized for injuries sustained under the same circumstances, who are in the hospital at the time of the deadline.
Can I get an extension on my tax return?
You can! Request an extension with Form 4868 (Application for Automatic Extension of Time To File U.S. Individual Income Tax Return). This must be filed no later than the official tax day of that year, and does not change the deadline for payments.
What if I live abroad?
Generally, the same rules that apply to U.S. taxpayers who reside in the United States also apply to those living abroad. No matter where you live, be sure to file taxes for all worldwide income.
One important difference if you live abroad is a two-month extension for filing a return. You do not have to request this extension. However, any tax that is not paid by the April due date may result in interest charges.
How much does it cost to e-file my taxes?
The cost of tax return services varies. Some are free, including the official IRS free tax preparation program. (This is only available to specific populations.)
Reasonably priced e-filing services range from $20-80, as well as an additional $30-50 to file a state tax return.
For comparison, the National Society of Accountants reports that the average fee for filing a simple 1040 form with no itemized deductions is $176. Fees tend to be even higher in metropolitan areas, averaging $329 on the west coast. This is to have a professional file a 1040, state tax return, and Schedule A.
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