Everyone over the age of 18 has to file income taxes each year in most countries. In this article we will give you some tips on how to file your income taxes if you are a United States citizen.
To avoid complication we will assume that you are eligible for filing taxes in U.S. or Canada. If you are not eligible for income tax filing, this article will not do any benefit to you. Some examples of ineligibility for income taxes are not a permanent resident, not a citizen, under age of 18 etc. Please check your country federal regulation to learn more about these criteria.
Determine how you would like to file your taxes. There are many ways to do it. As for example, filing the typical way by yourself and send all the paper works to government, filing income tax through government online website, filing income taxes with help of professional or agency etc.
Based on your status, income taxes filing can be little different. If you have spouse, children or any dependent, you will need to do some extra work and fill some more papers. Therefore, at this step you need to decide your filing status. Federal income taxes for student are also different than a regular person.
Calculate all your income. If you are filing using any special software like Quick Tax or Turbo Tax, all your calculation should be very easy. Software normally asks you series of questions and all you need to do is answer them correctly. It will put the right number in right place and calculate the final figure for you. If you are self employed, you also need to calculate or show your income to government at later stage of tax filing.
Keep in mind that there are many type of incomes that are taxable and many of them are not.
Calculate all your deductions and necessary adjustments. You can choose to do a standardized deduction or itemized deduction. Deduction is basically the income tax you are subject to pay federal government.
A simple formula to calculate your income taxes is as follows:
Amount you will need to pay tax on= Taxable Income – (any adjustment) – deduction- exemptions.
Tax table or schedule will help you to find the correct tax number for the amount you will need to pay tax for.
You can also receive tax credits in many ways depending on your status and expense. There is always different tax credit for students, charity donations, low income individual etc. Tax credit rules changes every year. Therefore, make sure you are aware of the most current information.
After calculating all of the above, you should be able to get an estimated tax payment number that are withheld by your employer (different for self employment), the amount you have been paid last fiscal year and the tax credit amount.
For most U.S. citizens, the amount at this stage reveals underpayment. But if you are Canadian citizen, most likely you are subject to a refund. You may have underpaid taxes but make sure there is no huge significant difference.
Fill out all your tax forms accordingly and you are set for your last year’s income taxes.
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