Tax return preparation is a necessity for US taxpayers that they must complete every year to fulfill their tax obligations. However, it requires a great deal of professional knowledge to do it successfully. Due to the lack of expertise in preparing taxes, most Americans often end up asking the question: How to prepare a tax return?
Simply put, preparing a tax return is not easy as it demands fulfilling multiple legal requirements. Any error in tax calculations could lead to several legal problems later on.
Before preparing your taxes, you need to check your filing status and gather important documents. Don’t worry! We have explained the entire procedure for tax preparation in this blog post. Besides this, you will also get to know the fees and the time required to execute the tax preparation process effectively. Read on!
Taxpayers must choose their tax filing status to prepare their tax return for 2024. For individuals and married people, the choices for statutes available are single, married filing jointly or separately, head of household, and qualified widow (er).
Note that the tax brackets are defined for different tax filing statutes. You must specify your filing status after considering the rules enlisted in the Internal Revenue Code (IRC).
Execution of the tax preparation process requires taxpayers to gather all the important tax paperwork. It is necessary for taxpayers with a given filing status to calculate taxes correctly and reduce their tax liability.
Collect all the tax forms from your employers, clients & financial institutions to ascertain your income. Also, businesses & individuals must specify their income along with their expenses. Different forms required to state the incomes clearly are as follows:
| Form Type | Purpose |
|---|---|
| Form 1040 | Reports incomes, tax credits & deductions of individuals |
| Form W-2 | Includes employee incomes from employers and various taxes |
| Form 1099-NEC/1099-MISC | Reports earnings of non-employee compensation and miscellaneous compensation |
| Form 1099-INT | Records interest earnings above $10 in a tax year |
| Form 1099-DIV | Records dividends and distributions(at least $10) |
| Form 1041 | Reports incomes, deductions, profits, losses of estates or trusts |
| Form 1065 | Reports financial performance of partnerships |
| Form 1120 | Reports income, gains, deductions, losses, and credits of domestic corporations |
| Form 1120S | Reports income, gains, losses, deductions, and credits of S Corporations |
After you gather the tax forms concerned with your income, it is also important to know about the deductions. Subtracting these deductions (standard or itemized) would help reduce the overall taxable income.
Additionally, it is vital to calculate tax credits as they directly lower the tax amount. Thus, they significantly reduce the overall tax liability.
Until now, you know how to prepare a tax return, it is time to discuss the time required and the total cost for this financial process.
Well, the charges taxpayers are required to pay for tax preparation depend on their income bracket. Hence, the total amount will vary for different individuals and businesses.
As per the usual trend, most Americans go for either tax preparation services or professional accountants to prepare and file their taxes. They charge either flat rates or hourly fees for offering their tax solutions.
Several factors decide the total amount charged to prepare a tax return. The major ones are the category of tax return, location, skills of a tax preparer, complexity, and volume of work.
Well, it requires an average time of 10-15 hours to prepare a tax return by taxpayers. However, the time duration depends on certain factors and varies from the situation of one taxpayer to another.
Preparing taxes involves many complex processes such as record keeping, tax planning, submission of forms, and several other tasks. One effective way to reduce the time for tax preparation is to ensure the records are well-organized and error-free.
Now you know how to prepare a tax return and the related details. So, it is high time to prepare and file taxes using your favorite options.
As per the IRS announcement, the tax filing season starts on January 29. April 15 is the due date for filing a tax return or seeking a 6-month extension in most parts of the nation.
According to this, the extension seekers can file their taxes till October 15 to avoid unwanted penalties. It is better to seek an expert tax service to get done with all the important tax formalities.
At Aspire Tax, we offer multiple tax services to help our visitors complete their taxation tasks. With us, you can outsource tax preparation services and enjoy our filing support to get done with all the important tax formalities in 2024.
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