It’s a new year. Time to get in shape, eat healthy, start a new side hustle, and… file your taxes. Really? Already? Really.
While the deadline to file 2022 taxes isn’t until April 18, 2023, now is a great time to get organized and make some important decisions. This way, you can avoid the headaches, and you won’t be scrambling to get your taxes filed online at the last minute.
Not sure where to start? We’ve outlined how to do your own taxes in six easy steps.
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Step 1. Determine if you need to file and how will you file
Free tax filing is available online through the Internal Revenue Service (IRS), including free guidance for qualifying taxpayers. Anyone who doesn’t meet those qualifications – or has a more complicated tax situation – may want to pay for online tax preparation software or a tax professional.
The first step in filing your taxes is determining which option makes sense for you.
Where to file taxes for free
If your tax situation is straightforward enough or if you qualify for free tax filing with guided preparation from the IRS, you should take advantage of it! Head to the IRS Free File site to get started.
Here’s how it works for the 2022 tax year:
- If your adjusted gross income is $73,000 or less: You qualify for a free federal return, guided preparation, tax filing on an IRS partner site, and state tax preparation and filing for select states.
- If your adjusted gross income is above $73,000: You can still use free electronic forms on the IRS website, but:You’ll have to file yourself.
- You’ll have to file yourself.
- You won’t receive any guidance.
- State preparation and filing won’t be included.
Note: The adjusted gross income (AGI) threshold is $73,000 for the 2022 tax year, regardless of whether your filing status is single or married filing jointly.
Paid tax software
Alternatively, you can spend some money and use one of the more popular DIY tax software tools, like Intuit’s TurboTax or H&R Block. These tools make sense if your tax situation is complicated, you made $73,000 or more in 2022, or you need to file state and local taxes.
These tax software programs make e-filing your taxes super easy since they use a Q&A format that walks you through the process. Paid plans come with more benefits; however, most popular options offer a version that lets users with simple tax returns file for free.
If you have a more complex or unique tax situation, consider upgrading to a paid version to ensure you submit everything correctly.
Sometimes, even paid software can be confusing. To minimize your chances of errors on your tax return, you can go with a certified tax professional. Search the IRS website with your zip code or state to find a local tax preparer.
Step 2: Gather all your tax forms and documents
To file your taxes, you’ll need to fill out important forms and documents. Each person’s list of forms and documents will look different depending on their finances. Still, in general, you’ll need:
- W-2s for any job you worked as an employee
- 1099s for other income, like money you earned as a contractor, interest from a bank account, or capital gains from a house sale
- Mortgage interest and property tax statements
- Retirement account contributions
You’ll also need Social Security numbers for yourself, spouse, and any dependents; last year’s federal and state tax returns; documentation of any estimated taxes you’ve already paid; and, if applicable, educational expenses, unreimbursed medical bills, and charitable contribution statements.
W-2s and 1099s are the most common tax forms you’ll need. Here’s a breakdown of each:
- Form W-2: If you’re employed by a person or a company, you’ll get a Form W-2 sometime in January. This form states the amount of money you earned in 2022, as well as how much you paid in federal and state taxes.It also includes other payroll deductions, such as the amount you contributed to an employer-sponsored retirement plan. This is the main income form you’ll need when filing your tax return.
- Form 1099: A 1099 represents a collection of tax forms for alternative income. For example, if you have a side hustle or started a business in 2022, you’ve likely completed a Form W-9 for your clients. If you earn more than $600 with a particular client (who should have your W-9 on file), they would then fill out a Form 1099-MISC indicating how much you were paid for the year.
A copy of this form will be sent to both you and the IRS. You then report this income when you file your taxes online. You may receive other 1099 forms for different types of income sources.
Step 3: Understand taxes: Learn about credit and deductions
If you’ll be filing taxes online, with or without guidance, it’s a good idea to familiarize yourself with a few key tax definitions and dates.
Key tax terms
We’ve built out a detailed crash course in all the important tax definitions you should know before filing, but if you’re in a hurry, make sure you understand these three key terms:
- Tax deductions: Also known as tax write-offs, tax deductions are expenses that you can claim to reduce your overall taxable income. For example, a pre-tax contribution to a retirement account qualifies as a deduction, reducing your overall tax liability for that year.
- Tax credits: While tax deductions reduce the overall income amount that you’ll be taxed on, tax credits represent an actual reduction in what you owe. For example, if you owe $5,000 in taxes but qualify for a $2,000 tax credit, you’ll only pay $3,000 in taxes.
- Tax brackets: How much you owe for every dollar earned depends on which tax bracket you’re in. The more money you make, the higher your tax bracket – and the more money in taxes you’ll owe.
2023 tax dates
For the 2022 tax year (filing in 2023), you’ll need to know two key dates:
- January 31, 2023: The estimated date for when you can start to file your taxes. The IRS can change this date.
- April 18, 2023: The deadline for filing 2022 taxes.
Step 4: Choose between standard and itemized deductions
Deductions are important to consider since they can lower your taxable income, potentially giving you a bigger refund or a lower tax bill. As you file your taxes, you’ll have two options: You can take the standard deduction or itemize your deductions.
- Standard deduction: If you have a 9-to-5 job and will be receiving a W-2, you may be able to take the standard deduction. For 2022, the standard deduction for individuals is $12,950 and $25,900 for married people filing jointly.
If you use this standard deduction, you can’t itemize deductions as well. Instead, you’ll just fill out Form 1040 and submit it with your tax return.
- Itemized deductions: If itemizing all the deductions you qualify for gets you above $12,950 (filing single), you should itemize. Most tax preparation software and accountants can determine which is the better option for you.
In general, you may want to itemize if you own property, run a small business, have major out-of-pocket medical expenses, or made large contributions to charity in 2022. If itemizing, you may need to fill out one or more of the new schedules in addition to the Form 1040.
For example, suppose you have capital gains, unemployment compensation, gambling winnings, or any deductions to claim (including student loan interest deduction, self-employment tax, or educator expenses). In that case, you may want to fill out Schedule 1.
If you plan on filing schedules for 2022, prepare and organize your itemized deductions in advance, especially when filing your taxes online. Having these deductions in order can save you big bucks by lowering the amount you owe or perhaps even netting you a tax refund.
Remember, if you plan on itemizing deductions, the IRS requires proof to back up your claims, so save all important receipts and paperwork. Here are some of the more common itemized deductions:
- Home mortgage interest
- Charitable contributions
- Medical expenses
- Self-employment expenses
- Home office and other associated deductions
- Educator expenses
- Child care expenses
Step 5: Fill out your tax forms
After gathering your forms and deciding on a filing method, you’ll finally be ready to start filling out all your required tax forms, using your software of choice.
Prepare yourself: Filling out the forms can take a while. You can potentially save some time by using intuitive tax preparation software that guides you through the process. Some will even auto-populate the information for you when you upload your tax documents.
Such software uses interview-style questions and user-friendly guides that can turn a complex tax return into one that’s relatively simple to input.
The IRS also provides additional resources, like a list of free forms to help ensure you fill out everything correctly.
Step 6: File early and sign up for direct deposit
If you think you may be getting a tax refund for 2022, there’s more of an incentive to prepare your taxes and e-file early. The sooner you file, the sooner you’ll get your refund, and you know what this means – more money in your savings account.
If you want your cash as fast as possible, choose direct deposit. It’s the safest and easiest way to get your funds.
How long does it take to get your tax refund? The IRS states that, when you e-file, choosing to receive your tax refund through direct deposit gets you your refund in 21 days or less, while a check can take up to two months (and is less safe).
The IRS pays out refunds based on a schedule that prioritizes e-filed returns and direct deposit refunds. Sign up with the IRS for a direct deposit payment straight into your bank account to be a part of that group. You can do this when you file your tax return electronically.
Filing your taxes online is quick, unlike mailing in a paper tax return, which takes time to reach the IRS. After you file your taxes online, you’ll get a notification from the IRS saying that it was successfully received or that an error occurred.
Mistakes happen: Here’s what to do if your tax refund is deposited into the wrong account.
Is it hard to file your own taxes?
Depending on your financial situation, filing your own taxes can be relatively straightforward, especially if you use free online software to complete the forms. However, if you have investments, own a home, or have other more complicated finances, it may be wise to seek the advice of a tax professional who can help you get the right credits and deductions.
What happens if I don’t file my taxes at all?
You may not have to file a tax return if your income was less than the standard deduction. However, if you make more than the standard deduction, you will either be penalized for failing to pay your taxes or miss out on a tax refund if you don’t file.
Failure to file also results in a penalty of 0.5%² each month on any unpaid taxes, capped at 25%, which can add up to a large chunk of change that you will have to pay out.
Can I ask for an extension to file my taxes if I miss the deadline?
You can use the IRS Free File tool to request an extension online before the deadline passes. Take a moment to consider if you should file an extension – because it doesn’t mean you don’t still have to pay taxes on time.
Extensions for filing will be automatically approved, but if you owe taxes, you still need to pay by the deadline. If you can’t pay your taxes on time, you will need to establish a payment plan with the IRS.
To request an extension to file your tax return after the deadline has passed, you can contact the IRS directly to discuss your options.
Running behind? Here’s what happens if you file your taxes late.
How do I know if I need to file taxes?
You don’t need to file taxes if:
- Your filing status is single and your 2022 income didn’t equal or exceed the standard deduction limit of $12,950.
- You’re a married couple filing jointly and your 2022 income didn’t equal or exceed $25,900.
This assumes you do not owe any special taxes or have any special tax situations. Because choosing not to file can be a big decision, check out the IRS’s tool for determining filing requirements if you’re unsure.
Even if you didn’t make enough to file, you may qualify for certain refundable tax credits, like the Earned Income Tax Credit (EITC). By not filing, you might be leaving money on the table! When in doubt, it’s a good idea to file.
Cut out the stress of tax season
Knowing how and where you can file your taxes can take a lot of stress out of tax season. If you can, choose direct deposit to get your refund faster.
You can save money by using free tax filing, but if you’re feeling overwhelmed or have a complicated tax situation, it might make sense to spend the money on a tax professional. Plus, a certified accountant might be able to find every tax write-off you qualify for – ones you might miss if you’re filing by yourself.