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By information.com — Published September 26, 2017
With the influx of technology in government operations, the process of filing taxes has become pretty simplified and convenient enough to be performed with just a few clicks on your computer. Not only does filing taxes online saves you a lot of time and effort but also allows you to stay on top of your tax obligations without missing out on the payments for want of spare time at hand. If you are planning to file your federal taxes, here are a few important steps that you might want to follow to ensure a hassle free procedure.
Filing of federal taxes is mandatory for a majority of US citizens except certain low income groups including children. However, the filing requirements stipulated by the Internal Revenue Services or the IRS are different for different people based on an array of influential factors including filing status, age, gross income and so on.
As aforementioned your tax filing status typically influences your tax filing requirements as stipulated by the IRS. For those of you who are not adequately informed, tax filing status typically refers to the marital status of an individual tax payer and may include categories such as married and filing separately, married and filing jointly, single, qualifying widow/widower with a dependent child and head of household. However, if you fall under more than one category, you can practice your discretion in filing under the status that equates to the lowest amount of tax liability.
Another great advantage of real estate investment is that it offers you substantial tax exemptions on your rental properties. For instance, the income that you procure from the rent on your property is exempted from self-employment tax. In Addition to this, the federal government also provides tax breaks for real estate investors for the purpose of covering their travel expenses, maintenance repairs, insurance, property depreciation, property taxes and legal fees. And what’s more! By investing in a real estate property you also enjoy lower tax rates on your long-term gains.
In case you are employed in a company and your employer does not directly pay the taxes from your paycheck, you would need to report your tax related information to the government from your side. Forms 1040, 1040A and 1040EZ are typically used for filing your federal taxes in the US. While the 1040EZ is the simplest of them all and can be filled by applicants with taxable income of $100,000 or below, the 1040A can be filled by applicants that do not qualify for the former. In some cases, the taxpayers might also be required to fill out the 1099 form.
According to the federal law, all the taxpayers in the US are allowed to claim personal exemptions for not only themselves but also their dependents. In essence, personal exemptions may be touted as similar to the regular tax deductions in the fact that they typically cut down on your taxable income. The maximum personal exemption that can be filed by an individual US citizen is subject to revisions every year and the current figure for the year 2017 has been stipulated at $4,050. Since, they have a major impact on the amount of federal taxes that you are liable to pay, you must be cautious of furnishing absolutely accurate details of your personal exemptions to the government.
A majority of the tax filing websites allows taxpayers having incomes below a certain range only to apply online, and it would be worthwhile if you have the details of your adjusted gross income or AGI at hand before you login for the actual filing process. A common method to proceed with the rough approximation of your AGI involves multiplication of all your personal exemptions by a factor of 4000 and then deducting all your itemized or standard deductions/exemptions from the total income to arrive at a rough estimate figure.
Now that you are all set with the relevant documents and AGI estimates, you can now go online and search for an online filing system that would help you with the filing of your taxes. A lot many websites allow users to file their taxes at no extra charge and the most popular among them is the official IRS website. However, the IRS website allows taxpayers to file their taxes online only if their AGI equates to $60,000 or less. If however, your AGI is more than that, you might be required to file your taxes on other websites at a nominal processing fee.
Once you have decided which website you would like to file your taxes on, you can begin the actual process by furnishing all the relevant details that are required on the tax filing program. A majority of the website including Turbo Tax will offer sequential instructions as well as error notifications for the users to enter accurate data as required. Some websites also offer a chat feature that you can use to interact with tax filing executives who can help you out with the instructions in real time.
Apart from entering the details on a computerized database, the online tax filing website also offer the users the facility of printing their duly filled tax forms and posting them directly across to the concerned authorities.