Tax Filing 101: Everything You Need To Know

It’s tax season again, and if you’re filing your taxes for the first time or need a refresher, this tip guide will help. Most Americans file their tax returns every year. Filing your tax return sooner can help you get your tax refund faster if you are eligible. The tax season can get complicated, but knowing the basics can help simplify the process and reduce stress. Here are tips you should know about filing your 2023 taxes this year.

1. Figure out if you have to file

Although most individuals have to file a tax return, not everyone needs to. If you make under a certain amount of income, you may be tax-exempt and not have to file a tax return. If you earned less than the standard deduction last year, you should not have to pay taxes this year. However, sometimes you may be eligible for tax credits, so it might be worth doing your tax return to make sure you aren’t missing out.

The IRS changes the standard deduction every year, and it’s a good number to know. You can use the standard deduction to reduce your taxable income if you do not want to itemize your tax deductions.

2. Know the filing deadlines

Your 2023 tax return is due to the IRS by April 15, 2024. If you need more time to file, you can request an extension. Keep in mind that if you owe the IRS tax money, you still need to pay your bill by April 15 — even if you receive a filing extension.

3. Gather your relevant forms and paperwork

Whether you’re filing online, working with a CPA, or mailing in your tax return, you’ll want to have your documents ready to go. Depending on your situation, these might include:

• W-2 for employer income
• 1099-K, 1099-NEC, or 1099-MISC for other income types
• 1099-INT for interest received from savings or investment accounts
• 1098 for interest paid on student loans or your mortgage

You may receive additional tax forms if your situation calls for them. You should have a copy of last year’s tax return handy and copies of all relevant expenses you plan to claim. If you have capital gains or crypto transactions, make sure you have this information as well.

Gathering these documents in January and keeping them in the same place can make the tax season less cumbersome. Don’t wait until March to start collecting your documents. A headstart will reduce stress and help ensure you report all of your income.

4. Determine your tax filing status

Next, you’ll want to figure out your filing status. This is important because it directly impacts your tax rate and the amount you’ll receive when claiming deductions and credits. There are five main filing statuses, including:

• Single
• Married filing jointly
• Married filing separately
• Head of household
• Qualifying surviving spouse

The IRS has criteria you must meet to file as a certain status. Be sure to become familiar with these rules so you know you’re choosing the right filing status. If you think you qualify for more than one status or need help determining the right filing status, use the IRS filing status questionnaire tool.

5. Review your eligible tax deductions and credits

Even if you’re working with a tax professional, it’s a good idea to brush up on the credits and deductions you’re eligible to claim. A tax credit reduces your tax bill directly and, if refundable, may boost your refund. A tax deduction lowers your taxable income and, in some cases, could drop you into a lower tax bracket with a lower tax rate.

Most people claim the standard deduction. If you have enough deductible expenses, compare both types of filing to see if you’ll save more by itemizing your taxes and claiming these deductions or by taking the standard deduction.

It’s a good idea to review some of the most common tax breaks to make sure you’re not missing out on a benefit you didn’t know existed. An accountant or tax preparer can walk you through various tax deductions and credits to help you save money.

6. Review and file your return

Once you’ve filled out the required forms and entered your information, review your tax return one final time to make sure there are no mistakes. Double-check your personal information to make sure your address and social security number are correct and review income forms (like your W-2) to make sure you didn’t accidentally mistype a number.

If everything looks good, it’s time to file and pay your tax bill or request your refund. To pay your bill, you can visit the IRS payments portal to submit your payment along with your state revenue department. If you need more time to pay, you can request a short-term or long-term payment plan from the IRS. You should still pay as much as possible upfront to reduce IRS penalties and fees.

For those getting a refund, make sure you enter the correct bank account information. Double-check to make sure the account numbers are correct so that your refund isn’t delayed.

7. Track your refund

Though the IRS normally turns over more than 90% of refunds within 21 days, you’ll want to track your return to ensure it was accepted and keep an eye out for your refund. Refund timeframes may vary as determined by the IRS. 

It’s best to request a direct deposit refund, as a paper check refund can sometimes take months to get to you. That way, you can quickly use your return for any purchase or investment. 

If you need help tracking your refund, use the IRS’s “Where My Refund?” tracker.

8. Get Ahead for Next Year

Keeping your finances organized throughout the year can make filing during next year’s tax season easier. Hang on to tax documents you receive and keep track of receipts for expenses you encounter. Keep these documents in a safe place so you have them all together during next year’s tax season.

Filing your taxes isn’t fun, but it’s a necessary part of life for most Americans. The good news? MoneyLion is here to help. Learn more about filing taxes (for free), How to Get the Maximum Tax Refund, and more here. 

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