How to Prepare Your Federal Income Tax Return

Chris Bibey
by Chris Bibey

 

If you understand how to prepare your federal income tax return there is nothing intimidating about the process. Although you may run into some details that you’re unsure of, there is always a way to find the right answer.

Have you had issues with tax preparation in the past? If so, the following suggestions will be useful:

Gather the appropriate documents. Preparing a tax return is much less stressful when you are organized and have all the proper paperwork laid out in front of you. In general, this includes income statements (W-2 and 1099 tax forms) as well as receipts for tax deductions and contributions.

Decide which filing method is best for you. You typically have 3 tax filing options: paper filing, tax preparation software, or hiring a professional.

Even in today’s day and age of digital technology, many people still feel more secure preparing taxes with good old pen and paper. With paper filing, you are in charge of every detail from start to finish – but there is no immediate help available.

Tax preparation software is becoming more and more popular for many reasons. Most tax preparation programs will be able to answer any questions you may have. Additionally, much of the software is built to help you take advantage of as many tax deductions and tax credits as possible. Websites such as 1040.com allow you to complete, print and e-file your return quickly and securely.

When you hire a professional to prepare your federal income tax return, you are generally cutting out all of the “guesswork.” You can be confident that your return is accurate and that you are saving as much money as possible. The downside to this is that you will pass the control to the tax professional, and of course, you have to pay for this tax preparation service.

No matter what option you choose to prepare your taxes, one thing remains the same: you need to be organized and have the proper documents on hand.

Take your time. If you are filing a paper return or using tax preparation software, you are responsible for moving from one line to the next in a calculated manner. A professional who has been preparing taxes for many years may be able to move along quickly without making a single mistake. But since you only file once a year, you will want to be much more cautious.

Mail or e-file? Those who are filing a paper tax return will need to mail it to the IRS upon completion. On the other hand, if you are using tax preparation software or filing through a tax professional, e-file may be a better option. Tax returns that are submitted electronically are often processed faster, which means a faster tax refund for you.

Tax preparation can be simple and stress-free if you make an effort to understand the process and your options. Avoid common tax return mistakes by taking the time to double (and even triple) check your work.

[See related articles “Tax Preparation Checklist” and “Tax Preparation Tips”]

File your income taxes online HERE.