Tax season sneaks up on most of us as we hustle to prepare our paperwork and information for tax returns. For many Americans, tax refunds help pay for excess bills, investments, and even college debt. But maybe you’re wondering “how much will I get back on my taxes?”.
Here’s how the process works.
The Process
So how does a tax return work, anyway? You request a refund from the government by annually filing a tax return. This reports important tax information such as your earnings and expenses throughout the past year. When finished, it’ll help you calculate how many taxes you need to pay, schedule those payments, and request a refund if you overpaid.
When the government receives your tax return and files the information, it’ll approve you for the refund and send you your refund money. If you have things you’ve paid for that are deductible, you can add these to your income tax return and receive a lower amount to be paid back.
What’s Needed to File
First off, what do you need to file your return? You’ll need to include basic personal information including your Social Security Number or your Tax ID number, date of birth, address, and phone number. Don’t forget to list your spouse and any dependents!
Grab your W2 (or 1099 if you’re self employed), your investment information, and your bank account information. Your W2 will show how much of your earnings were withheld for taxes, your bank account information shows how much interest you earned on any savings account. Your bank should send you a form 1099-INT with this info on it.
If you went to college, form 1098-E will be vital for filing. It shows how much interest you paid on student loans and matters as you may deduct the interest on your taxes.
Self-employed? Grab that 1099 from clients who paid you more than $600 throughout the previous year. These need to be shared via your tax returns, and they’ll get listed as income.
What Else Do I Need?
Tax deductions are important to keep track of with your filing. By deducting from your gross income, you can help lower your taxable income. The more deductions you claim, the lower that taxable income goes down (and the less taxes you end up paying). Some deductions to include are charitable donations, interest paid on your mortgage, self-employment expenses, and interest paid on your student loans.
Keep in mind tax credits, too. These differ from deductions as tax credits are directly subtracted from your total tax bill. There are a few different tax credits including child tax credit, adoption credit, dependent credits, and homeowner credits.
Okay, I still need tax help
World is here to make tax returns easier. We offer a free, no-strings-attached estimate on your taxes. The process is fast and easy—you can get started here or visit your local branch.