Tax Day is May 17 this year, so you officially have two months to get your federal income taxes in order. The federal filing date was pushed from April 15, but it’s important to note that this does not change state deadlines that are typically also April 15. If you have yet to start the process, now is the perfect time to do it so that you’re not left scrambling at the last minute.
See Our Full Guide: Everything You Need To Know About Taxes This Year
1. Figure Out If You Actually Need To File Taxes This Year
Depending on your circumstances, you may not have to file taxes at all. You may be able to skip filing for 2020 if you had low income, turned 65 (or older) or were a dependent.
2. Set an Alert for April 15 and May 17
If you do need to file taxes, you want to make sure you don’t miss the deadline to file. Set an alert in your phone or add a note to your calendar to file state taxes on April 15 after confirming that is your state’s deadline, but also set a reminder for the federal filing of May 17. If you requested an extension to file, note that your return will be due on Oct. 15.
3. Gather Personal Information for Yourself and Your Dependents
You will need your Social Security number, as well as the Social Security numbers of any dependents and your spouse if you are filing jointly. You will also need dependents’ addresses (if different from your own) and bank account information for yourself if you will be opting for direct deposit of your refund.
Make sure you have these numbers gathered ahead of time so you have them handy when it’s time to file.
4. Gather All of the Documents You Need
You should have received most, if not all, of the forms and documents you will need to file your taxes by now. If you’ve been receiving paper copies, gather them together so they are all in one place. If you’ll be accessing your forms electronically, download all of the forms and place them in a folder on your computer.
5. Determine Your Tax Filing Status
Your tax filing status is mostly determined by whether you were married or unmarried in 2020, but there are some other factors that also come into play when determining your status. There are five filing statuses: single, head of household, married filing jointly, married filing separately and qualified widow(er). Figuring out which status to choose will depend on your specific situation and which status will allow you to owe the least amount of taxes if you qualify for more than one.
6. Decide How You Will Be Filing Your Taxes
Now is the time to decide if you will be filing your own taxes or hiring a tax professional. If you decide to hire a professional, you should do so ASAP as they will be extremely busy for the coming months. If you decide to file on your own, figure out if qualify for free tax help or which tax software is best for you and your needs if you don’t.
Not sure if you should spring for an accountant or DIY? These are the signs it’s worth it to hire a pro.
Did You Know: Best Tax Apps for Your 2020 Taxes
7. Determine Which Deductions You Will Take
If you work with a tax professional, they can help you figure out what deductions you may qualify for. But if you’re doing your own taxes, now is the time to figure out what deductions you can take. You should also gather all the necessary documents to support any deductions.
Do the math to determine if it is best for you to itemize your deductions, or to just take the standard tax deduction.
8. Figure Out If You Qualify for Any Tax Credits
In addition to tax deductions, you may also qualify for tax credits. Tax credits you may qualify for include the earned income tax credit, the retirement savings contributions credit and the green energy tax credit.
Even if you didn’t qualify for credits last year, you may now qualify for the 2020 tax year. Here’s a list of new and improved tax credits and breaks for your 2020 return.
9. Figure Out If You Will Owe Money to the IRS
Once you’ve gathered all of the necessary documents and determined what deductions and credits you can take, it’s time to crunch the numbers to determine if you owe taxes. Even if you don’t file right now, it’s a good idea to know if you will owe — and how much you will owe — so that you can start setting that money aside. Any federal income taxes owed are due on May 17.
10. Come Up With a Plan for Your Tax Refund
If, after crunching the numbers, you see that you will be receiving a refund, start making a plan for what you will do with that money. This can help prevent you from making any impulse splurges once that check comes to you.
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