Illustrated by Cristi Cash
Last Updated March 12, 2024
5 min read

Completing a Tax Return

In this article:

Filing your tax return can be daunting, but understanding the process and taking it step by step can make it more manageable. This article guides you through the essential steps to ensure a smooth and accurate filing experience.

Step 1: Decide How to File

There are multiple ways to file, each one with different time and cost requirements.

  • Paper Tax Return: Print, fill out, and mail in your tax forms to the IRS. This option is often more difficult than e-filing, as you will have less guidance on what to do, and leads to slower processing times. Learn more about paper filing here.
  • Free File: If your adjusted gross income is $79,000 or less, you may be eligible to use an IRS Free File partner to e-file your taxes. With this, you select a partner, answer a series of questions, and receive a properly filled-out tax form, including information on whether you owe taxes or will receive a refund, all for free. Go here to find a free file option.
  • Free Fillable Forms: If your adjusted gross income (AGI) is over the limit for Free File, you can also use the free digital fillable forms by visiting this site. You can either print the document or use PDF editing software to fill it out, but you must input the data and do the math yourself.
  • Commercial E-Filing Software: You can use commercial e-filing software such as Turbo Tax, H&R Block, Tax Slayer, etc. to guide you through the filing process. These programs may offer more advanced filing options, such as assistance with audits and state filing, but they come at a cost, usually ranging from $100 to $200.
  • Hire a Professional: If you have a complex situation, it may be worth it to hire a professional to do your taxes for you. They will let you know what documents they need, fill out your tax return, and ensure everything is correct when they send it to the IRS. The drawback is that professionals can be expensive. The most basic tax return typically costs around $220 and increases from there.

Gross Income is all the taxable income you have in one year, including earned income, investment income, and certain other forms of income.

Adjusted Gross Income is the total gross income minus adjustments such as contributions to IRAs, half of any self-employment tax paid, qualified moving expenses, and alimony paid.

Step 2: Choose Filing Status

Your filing status is the category of life situation you fall into, as designated by the IRS. The options are single, married filing separately, married filing jointly, head of household, or qualifying widow(er). The one you select/fit can significantly affect your tax liability. If you’re unsure about which status to choose, the IRS provides a helpful tool called the "filing status tool" here to assist you in determining the appropriate filing status.

Step 3: Gather Documents

Filing your taxes requires lots of specific documentation. This will include your Social Security number, details of dependents, income documentation such as W-2 and 1099 forms, and receipts or documentation for deductions and credits. Depending on your situation, you may require additional information or documents such as rental income, self-employment income, and Social Security benefits. The following Coach can help you learn what documents you’ll need so that you have them ready and on hand when you go to file.

Click here to read how this tool works, and for disclaimers.

Step 4: Calculate Your Deductions, Credits, and Overall Liability

When calculating your taxes, several factors come into play. Your tax bracket is the most significant, as it sets the baseline for your overall liability. Basically, each section of your income will fall into a certain bracket and be taxed the corresponding percentage. This article explains more about how tax brackets work.

Deductions reduce the amount of your taxable income, which can help move you down a bracket or change how much money is taxed at a certain percentage. Some common deductions include mortgage interest, state and local taxes, and charitable contributions, but most people take the standard deduction since it’s often more. For tax year 2023, the standard deduction is $13,850 for single filers and those married filing separately, $27,700 for those married filing jointly, and $20,800 for heads of household.

Once you know how much you owe from your tax bracket, credits can reduce your liability even further. Common credits include the Earned Income Tax Credit, the Child Tax Credit, and education-related credits. When you use e-filing software to file your taxes, you’re asked about eligibility for many deductions and credits. Most won't apply to you, but those that do can save you significant money.

Once both your deductions and credits are taken into consideration, you’ll have your overall tax liability. This is what you owe in taxes for the year. From there, you’ll compare that number with what you’ve already paid throughout the year. If what you’ve paid is higher, you’ll get a refund of the excess money. If it’s lower, you’ll need to make up the difference.

What’s the difference between a tax deduction and a tax credit?

When it comes to taxes, deductions and credits can help reduce how much you owe, but each works slightly differently. Let’s look at an example. Say a single filer earned $50,000 in 2023. They owe around $6,300 in income tax if no deductions or credits were considered. But, if they applied the standard deduction of $13,850, they lower their taxable income to $36,150 and, instead, owe about $4,120. Tax credits are applied directly to that amount, lowering it even further. Let’s say this person has a child under age 17 and qualifies for the $2,000 Child Tax Credit. That lowers their $4,120 tax liability to a total of $2,120. That means, overall, deductions and credits saved this person $4,180 in tax liability.

Step 5: Submit Official Filing

Once you‘ve entered all your information and calculated your total liability, you’ll receive a digital copy of the file. Double-check that everything is accurate and fix any errors you find before filing. It’s much easier to correct mistakes before submitting your taxes than after. Also, save a copy of the file securely for future reference. If you’re e-filing, you must authorize the software you use to send your taxes to the IRS for you. This process is relatively easy, but you must check a few boxes and provide an electronic signature. Depending on your information, the process can take a few minutes to a few hours.

After You File

After filing your taxes, it's essential to stay updated on the status of your submission. The IRS typically confirms receipt of your digital submission within minutes, but the processing time can vary greatly depending on the time of year, from a few days to several months to fully process.

If you’re getting a refund, you can receive it as a paper check through the mail or have it directly deposited into your bank account. If you owe taxes, you’ll generally pay them when you file. This page from the IRS includes more information about paying your taxes. If you can’t afford to pay your tax bill before the deadline, you may be able to get on a payment plan, which will give you a bit more time. This page has more information about what to do if you can’t afford to pay your taxes. Please note that the IRS will never call you on the telephone.

Remember that the IRS can audit any of your yearly files and request verification of the information you filed. Although audits are rare, they can still happen, which is why you need to keep all the necessary documentation. If you cannot prove that your information is correct, the IRS may charge you additional taxes and penalties. For minor errors, the process is usually straightforward, but if the IRS suspects intentional fraud, the consequences could be more severe, including imprisonment.

Filing your taxes can be a stressful and intimidating process. Remember to take your time, gather all necessary documents, and consider seeking professional assistance. With careful attention to detail, you'll ensure an accurate and timely tax filing.

Disclaimer
While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.

Neither Banzai nor its sponsoring partners make any warranties or representations as to the accuracy, applicability, completeness, or suitability for any particular purpose of the information contained herein. Banzai and its sponsoring partners expressly disclaim any liability arising from the use or misuse of these materials and, by visiting this site, you agree to release Banzai and its sponsoring partners from any such liability. Do not rely upon the information provided in this content when making decisions regarding financial or legal matters without first consulting with a qualified, licensed professional.

The above disclaimer pertains to Members First Credit Union and all Members First’s partners.