Calculating what you owe the IRS is not an easy task. Especially if you want to take advantage of the different credits, tools, and other benefits that come with developing a strong tax plan, it is a time-consuming procedure that requires your complete attention.
Choosing the appropriate method for submitting your tax returns will affect how much you pay and whether you pay according to federal and state requirements. Making a mistake during this process will result in more time and, worse, large fines that may have a long-term impact on your finances.
Although it is preferable to speak with a specialized professional, such as a tax accountant, you may (and should) educate yourself on how the process works and what types of supporting papers, forms, and actions are required to complete your taxes and comply with IRS regulations.
If you are new, join us as we explore the resources made available by the IRS to assist you navigate this process more efficiently.
What are the first steps the IRS wants you to take when filing taxes?
The first step is to create or access your IRS account. The IRS has built a portal where you can receive important information about your tax history, such as your most recent tax return or adjusted gross income.
It will also provide you access to records of your former salary and other earnings. You can also read the most recent IRS emails to keep up with how the filing process has developed. Once you’ve gathered all of the relevant information, you can proceed with your tax payments or request a payment plan adjustment.
If you have engaged a specialist professional, he can use the account to manage your tax affairs and be granted power of attorney. Finally, you can choose how you want to be notified by the IRS and track the status of your return.
The second step is to organize your entire taxpayer record. They include Form W-2 from your employer, Form 1099 from banks (which may be related to unemployment compensation, dividends, pensions, or retirement plan distributions), Form 1099-K or 1099-MISC for gig economy income, Form 1099-INT for interest, and other documents or records pertaining to your digital asset transactions.
How does the IRS connect all your information?
If you live in the United States, you have a Social Security Number (SSN)., which is a code that summarizes your whole financial history. If you are not eligible for one, obtaining an Individual Taxpayer Identification Number (ITIN) is your best alternative.
It is critical to remember that an ITIN expires if it is not used on a tax return for three years in a succession. For example, if you did not use it in the returns for 2021, 2022, or 2023, it would have expired by December 31, 2024.
Having an ITIN will make other daily tasks easier, such as opening a bank account or collecting a tax refund. If your ITIN has expired, you may still be able to file your tax return.
However, your tax credits may take longer, causing your tax refunds to be delayed. Whether you use your SSN or ITIN to file your taxes, you should protect your IRS account by acquiring an IP PIN, a six-digit number that serves as an extra security measure to prevent an unauthorized party from completing a federal tax return on your behalf. To receive one, log into your IRS online account.
If you want to expedite your tax return, the best option is to file it electronically and use direct deposit rather than an outdated paper check.
Assume you do not have a bank account to get your tax return. In that scenario, you can open one, enroll in the Veterans Benefits Banking program (if you are a veteran), or use prepaid debit cards or mobile applications.
