Recent statistics indicate that only about one in 10 American adults ages 25-55 fail to pay their income taxes. Are you one of them? Has your filing status recently changed? Are you a business owner overwhelmed by calculating and filing your business income tax?
If you fall into any of these categories, then individual income tax services are the answer.
In the following article, you’ll learn more about what income taxes are, how to file them, and what the penalties are for failing to uphold your civic duty.
What Is Income Tax?
First things first: what is an income tax, and does it apply to you? In a nutshell, if you’re earning money from any number of sources and you live in the United States, then you likely need to pay income tax. Income taxes provide revenue for the federal and state government, and you’re expected to pay a percentage of your income for this purpose.
Income taxes apply to both individuals and businesses. Every source of income counts, so it’s crucial to document where you get your money from when you file your taxes.
The percentage you’re expected to pay will depend on how much you actually earn. If you earn a higher income, then you’ll likely pay more in taxes. Lower-earning Americans often don’t have to pay any taxes; they likely will get money back.
If you work for a business, then they will usually withhold a percentage of your income and pay that money to the government for you. If you own a business or are a freelancer, then you’ll need to pay these taxes in the form of a self-employment tax when you file. Income tax services can help you keep track of your income and expenses throughout the year, and they can also help you withhold money if you have a bad habit of not doing so yourself. You can learn more about how to file income taxes below.
How to File Income Taxes
So, how do you actually file your income taxes? First, you need to know how much you’ve earned throughout the year. If you worked for a business, then they’ll send you a W2 via mail or email. Use the income listed on this form when you file your taxes.
If you’re self-employed, then you’ll need to calculate how much you earned based on your 1099s, paystubs, paychecks, or direct deposits. You’ll also want to determine how much you spent on your business expenses. Subtract your expenses from your income to come up with your AGI (adjusted gross income).
Next, research your options for tax deductions. This step can be confusing because tax laws change every year. To ensure you maximize your deductions, it’s a good idea to consult with a tax preparer before you file.
Finally, it’s time to fill out forms. You can opt to use downloadable tax forms, electronic forms, or file your taxes directly with income tax preparation services. If you opt for the latter, your tax preparer will ensure all the proper forms get sent to the IRS.
What Do I Need For Income Tax Preparation?
Filing your taxes each year can feel daunting, but it doesn’t have to be. Income tax preparation services can help ensure that filing your taxes is simple. All you’ll need to do to prepare is:
- Gather any tax documents that were sent to you by mail or email
- Calculate your income and expenses if you’re self-employed
- Gather identifying information (Social Security numbers, as well as dependents’ birthdays and SSNs)
- Reach out to your tax expert
Hiring an expert can help you avoid IRS penalties in the event the service makes an error on your taxes. That means you won’t have to worry about wage garnishment or other surprises from the IRS.
Are You Ready to File Your Taxes?
Filing your taxes isn’t something that should cause you stress and anxiety. It’s also not something you should only think about one day out of the year, either. Instead, you need to find a balance between stressing over your taxes and ignoring them until Tax Day. You can achieve this feat by hiring bookkeeping services to keep your business or personal finances straight throughout the year.
Are you ready to file your taxes? Or are you ready to enlist the help of a tax preparation service? Whatever your tax needs, Tax Group Center can help. Leave your contact information on our online submission form now to hear back from one of our tax experts ASAP.