All citizens of the United States must pay federal and/or state taxes. The taxes you pay go to the government to invest in technology, education, and provide goods and services to the American people. Here are a few basic types of taxes that you must pay. There are income taxes that are collected when people receive an income from the United States. This includes wages/salaries, tips, dividends, unemployment checks and gains made from investments. Next are payroll taxes, taken from one’s paycheck, that go to one's Social Security, Medicare, and unemployment. Sales tax is the tax we receive on goods and services. Property taxes are implemented on vehicles, homes, and property owners based on the assessed value of the property evaluated at the local level. Property taxes primarily pay for emergency response departments and road work.
What you need to do to do your taxes
Step 1: Gather your paperwork. Think about how your situation has changed over the past year. This will affect the amount you pay and tax breaks you can receive. Did you get married or divorced, have a baby, pay extensive medical bills, start a retirement fund, or collect Social Security benefits? Gather these documents: last year’s tax return, W-2 and 1099’s, interest statements, and if it’s a contribution to retirement accounts and charitable donations, receipts of bank statements to support to deductions.
Step 2: Study what tax credits and deductions you qualify for so that you can optimize your return. From there, it will be easier to determine what tax forms you need to file.
Step 3: Explore your tax filing options.
- Free tax return preparation is provided by the IRS for those who qualify. This includes volunteer income tax service for those who make less than 55,000 a year and tax counseling for elderly.
-Free File software is another option. They can be confusing at first but they can save you money if you learn how to use it right. The IRS also provide free help for these services.
-Lastly there are paid tax filing software/services such as TurboTax, H&R Block, and etc. This is the easiest route for filing your taxes but you often receive less money as you have to pay those who do the work for you.