Tax Preparation 101 large

Tax Preparation 101

December 5, 2022

Don't let taxes confuse or overwhelm you this tax season! You may be thinking things like:

  • What personal information do I need to have? 
  • What form(s) am I supposed to use? 
  • What kinds of deductions and credits do I qualify for?

Understanding the basics of doing taxes can help you complete them with confidence. Read each of the sections below to learn more. 

When is Tax Season?

Tax season starts on January 23rd this year and ends with the tax filing deadline. The deadline is April 18th. Checking every year for the exact date is a good habit of keeping in mind. Any entity you worked for the previous year must send you your W-2 before January 31st.

You should receive your W-2s for the previous year in the mail or electronically between January 31st. This gives you roughly two and a half months to file your taxes before the deadline. Note: If your employer uses electronic W-2s, you may not get a copy in the mail. Make sure to check your email for a notice regarding these W-2s during this date range.  

Which Form Should I File?

To figure out what form(s) you need to complete, you will need to ask yourself a few questions about your:

  • Employment status.
  • Income level.
  • Marriage status.
  • A number of dependents.
  • Any other important personal info.

These questions will decide which form you will need. For example, you might need a 1040EZ, which is common for people with no dependents. 1040 may be needed to report self-employed income and income from sales and property. Another form you might need is a 1040A to include tax credits and capital gain distributions. If you are not sure which form to use, the Internal Revenue Service (IRS) provides a page that can help you.

You must file taxes for both the federal and state government. Download the federal forms from this page and the Illinois forms from this page.

Which Documents Will I Need?

Before you get started, make sure you have your W-2 from your employer. If you worked more than one job the previous year, you should have a W-2 for each one. If you are self-employed, you will need a 1099 form.

You will also need to know your social security number and the social security numbers of any dependents you are claiming. If you are not sure who you can claim as a dependent, check out the IRS Who Can I Claim page. If you have any other documents relating to your income and investments, you will need them as well. These include interest income, alimony, and income from rental properties, to name a few.

What are Deductions and Credits?

Deductions will lower the amount of your taxable income. This, in turn, will lower the amount of taxes you owe. There are many different things you can receive deductions on, including:

  • Dependents.
  • Education credits.
  • Home mortgage interest.
  • State and local tax.
  • Work-related expenses that aren't in your W-2.
  • Charitable donations.
  • Interest paid on student loans.

However, to claim any deductions, you must provide documentation. This could be in the form of receipts, statements, and other documents. The IRS provides an Itemized Deductions List you can use to determine what deductions you qualify for.

Credits are like deductions, but they work a bit differently. A credit is an amount that you can subtract from your tax. The key difference is that deductions only lower how much of your income is taxed. If you qualify for a credit and claim it, you will actually owe less tax. Also, credits are dollar for dollar, unlike deductions. The IRS provides a list of Credits for Individuals if you are curious.

Where do I file?

Now that you are ready to file your taxes, all you need to do is determine how you want to file them. You can file them via mail, online, or with a tax preparation expert. If you choose to mail your returns, you can print off your State Tax form on the Illinois Department of Revenue (IDOR) website and find the mailing address for your Illinois Taxes here.

For your Federal taxes, you can find the forms on the IRS website and determine where to send them here. According to the IRS, the safest and easiest way to file your taxes is online. You can file your Illinois state taxes online for free with IDOR, and you can file your federal taxes online for free with the IRS. You can also use tax software such as TurboTax and H&R Block to speed up the process. If you decide you don't feel comfortable doing your taxes, or you prefer that a tax professional does your taxes for you, you can search online for Tax Preparation Services in your area to find someone near you.

Before you file your tax returns, make sure you have signed them. If you don't, your returns will not be considered valid.

What is a tax refund?

If the IRS or the IDOR withholds more than required in income tax, you will get the difference as a refund check. If you have a refund, you should get it in the mail within three weeks of the IRS getting your return. You can also have your refund directly deposited if you would like to get it faster.

On the other hand, if the IRS or IDOR withholds too little, you will owe them the difference. If you do, you will have to enclose a check when you mail your return.

Helpful Tax Resources

The IRS has several articles and resources on its website to help with filing your taxes. View the items below to make sure your questions are answered:

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