What's So Special About Tax Returns?

Summary: Tax returns are documents all taxpayers must file by April of each year. These documents contain your income information from the previous year. Each year, you must file your tax returns with the IRS so the government bean counters can properly calculat your tax payments. If you are an employee, your employer probably withheld taxes from your paychecks. Business owners and self-employed individuals usually pay their taxes by installments throughout the year. Because tax pa...

Tax returns are documents all taxpayers must file by April of each year. These documents contain your income information from the previous year. Each year, you must file your tax returns with the IRS so the government bean counters can properly calculat your tax payments. If you are an employee, your employer probably withheld taxes from your paychecks. Business owners and self-employed individuals usually pay their taxes by installments throughout the year. Because tax payments are estimated amounts, it is rare the taxes you paid throughout the year are actual amounts owing to the IRS. Why File Tax Returns? It is common that individuals pay too much in taxes throughout the year. If this is the case, you will receive a tax refund check. If you don't file your taxes, you won't be able to get a refund check. In other cases, not paying enough taxes throughout the year means you owe more money to the IRS. When you file your taxes, the IRS computers will calculated the difference so you can make an exact payment to the government. Failure to do your tax returns can have harsh results. If you have overpaid in taxes, you could lose your refund after three years. If you owe money to the IRS, you can face fines and prison time. This is why it is important to file your tax returns each year! What do I need to do my Tax Returns? Your employer or clients will send you the necessary documents needed to complete your tax returns. If you are an employee of a business, you'll receive W2's. Your W2's contain all the information the IRS needs, including your income from working and payments made to health insurance and retirement accounts. If you are an independent contractor, you'll receive 1099 documents with the amounts paid to you throughout the year. You will also receive documents from investments you've made and interest earned from savings accounts. You will also need receipts and other documents for deduction purposes to claim on your tax returns. Deductions reduce the taxes you owe because it tells the IRS that after deductions, your income is smaller. Owners of business will use receipts to justify deductions and students receive 1098's to prove that they have paid tuition expenses. How do I do file my taxes? You can do your tax returns on your own or hire a tax accountant. Those with larger businesses or complicated deductions should hire a tax specialist to file their taxes. However, most individuals and small business owners can do their tax returns on their own. You can fill out the form and mail it, or for added convenience, do them online. Nowadays, there are online tax filing systems that require you to plug in information from your documents. Simply click a button to efile your tax returns to the IRS. Online tax filing is easy, even if you've never completed a tax return in the past. The system tells you exactly what information you need, and guides you through the process, step by step. Whichever option you choose, make sure you follow instructions and meet the deadline. Usually, the deadline for tax returns is April 15. You can find out more about tax returns by visiting http://IRS.gov.