How to Do Your Taxes EXPLAINED!

Summary

This video guides viewers through the process of filing taxes as an employee, breaking down the steps into manageable sections. It explains the importance of the W-4 form, which helps determine how much tax is withheld from your paycheck, and the role of other documents like the W-2 and 1099 forms. The video also highlights using tax software or professional help to prepare and file taxes, offering helpful tips for staying organized throughout the year. With a focus on simplicity and clarity, it ensures that viewers are equipped to navigate the tax filing process with confidence.

Takeaways

• 😀 Fill out your W-4 form correctly to ensure the right amount of tax is withheld from your paycheck.
• 😀 Exemptions on the W-4 reduce your tax burden, but fewer exemptions mean more tax is withheld from your paycheck.
• 😀 A tax refund is when you overpay throughout the year and get money back after filing your tax return.
• 😀 Review and update your W-4 form every year to avoid unexpected tax issues or surprises.
• 😀 You may want to adjust your W-4 to withhold more than you owe, treating the refund as a 'savings account,' but there are more effective ways to manage your money.
• 😀 Make sure you have all necessary forms, like your W-2 and any 1099s, to complete your tax return accurately.
• 😀 Use tax software or IRS.gov's free resources to file your taxes efficiently. They can guide you through the process and help with both state and federal filings.
• 😀 Choose the appropriate tax form (1040EZ, 1040A, or 1040) based on your situation when filing your tax return.
• 😀 If you can't file your taxes by April 15th, fill out form 4868 to get an automatic six-month extension, but remember this only extends the filing date, not the payment deadline.
• 😀 If you're unsure about preparing your taxes, consider hiring a licensed professional, like a CPA or Enrolled Agent, for assistance.
• 😀 Keep track of your income and expenses throughout the year, ideally using software, to make filing your taxes easier when the time comes.

Q & A

What is the purpose of the W-4 form in the tax process?

The W-4 form is used by your employer to determine how much state and federal income tax should be withheld from your paycheck throughout the year. It helps predict how much you owe and spreads the payments out instead of paying everything at once.

What does claiming exemptions on the W-4 form mean?

Exemptions on the W-4 reduce your tax burden. The more exemptions you claim, the less money is withheld from your paycheck. Fewer exemptions result in more money being withheld.

How can incorrect completion of the W-4 affect your taxes?

If you incorrectly complete the W-4, you may end up having too much or too little tax withheld from your paycheck. This can lead to a tax refund or, conversely, a tax bill at the end of the year.

What is a tax refund and how does it work?

A tax refund occurs when you have paid more taxes throughout the year than you actually owe. The government returns the excess amount to you after your tax return is filed.

Why is it important to review your W-4 every year?

Your life circumstances can change each year, such as a change in marital status or dependents, so reviewing your W-4 annually ensures that the correct amount of tax is withheld.

What are some examples of additional income information forms other than the W-2?

Additional income forms may include the 1099-INT (for interest income), 1099-DIV (for stock dividends), 1099-G (for state income tax refunds or unemployment benefits), and 1098-T (for education expenses).

What is the role of Schedule A in the tax filing process?

Schedule A is used to itemize deductions. If you have specific deductible expenses, such as mortgage interest or medical costs, you would use Schedule A to claim them on your tax return.

What is the difference between the 1040EZ, 1040A, and 1040 forms?

The 1040EZ is the simplest form, designed for individuals with straightforward tax situations. The 1040A is a shorter version of the regular 1040, but with more deductions and credits available. The 1040 is the long form, used for more complex tax situations.

What should you do if you cannot file your tax return by April 15th?

If you can't file by April 15th, you should submit a Form 4868 to request an automatic six-month extension. However, this extension only applies to filing, not to paying any taxes owed.

What options do you have if you don't want to file your taxes yourself?

If you don't want to prepare your own taxes, you can hire a licensed professional, such as a Certified Public Accountant (CPA) or an Enrolled Agent (EA). These professionals can also represent you if your tax return is audited.