Did you know that 43 of 50 states charge their citizens an income tax? Are you looking for a guide on taxes and wondering what is an efficient way to file for the fiscal year?
In this article, you’ll learn all about filing taxes in 2020 for your 2019 taxes. Read on to explore all about e-file, tax payments and why you need to file to better understand the benefits.
What Is Income Tax?
Income tax is a charge you receive based on your annual income. It can include your salary, rent, dividend, interest, royalties, and other earnings. It’s revenue for the federal government of the United States. Those who pay income tax are individuals, estates, trusts, and corporations. Several states that don’t charge state income tax, including Nevada, South Dakota, Florida, Texas, Washington, Wyoming, and Alaska, but every state is subject to federal income tax.
Here’s a fun fact, did you know that the first income tax was in England in 1404?
When Are Taxes Due?
You might be wondering when can you file taxes in 2019 for 2020? The IRS due date for federal taxes due from 2019 is April 15, 2020. Your 2019 State Income Tax returns are due on April 15, 2020, as well and between April 15- October 15, 2020, you can estimate when you’ll receive your federal refund from the IRS.
Individual personal income tax returns are due on or before midnight, April 15th. Prior to April 15th, you can request an automatic 6-month extension to file your return, but please note that it is an extension to file your return, not to pay any tax that might be due. So you should pay the additional amount that you think you will owe for 2019 with the extension request.Charles Kunz, CPA/PFS, CFP
When Are Taxes Refunded?
You might be wondering when your taxes will be refunded. The IRS sends out most refunds less than 21 days after filing. You can expect to see it 3 weeks after filing your tax return.
Pay attention to tax cuts from the prior year to see how it’ll affect your return amount.
Tax refunds for electronically filed returns that are directly deposited into your bank account are usually deposited within 5-10 working days. Refunds issued via a check take a little longer. Paper filed returns requesting a tax refund can take 6-8 weeks to receive.Charles Kunz, CPA/PFS, CFP
How Can You File Taxes?
There are multiple ways you can file your tax return, such as hiring someone, using software, or doing it by hand. If you hire someone else to do it, it’ll take very little time. Using software, you can expect it to take 1-2 days, and doing it yourself it can take up to a week.
Hiring someone to do it for you is the easiest for effort, and doing it yourself is the most. Mr. Kunz suggests that “tax returns should be filed electronically but you can still paper file your return.”
Is Turbotax Free?
Turbotax is extremely popular with many choosing it as the way to file taxes. Turbotax does have free file options, but certain requirements do require a paid option. Turbotax won’t be free if you have itemized deductions, sold investments, a health savings account, unreported tip income, a 1099-MISC income, or rental properties.
Also, deductions, credits, and student loan interest deductions don’t qualify for the free version, or if you’re self-employed. You can benefit from the free version if you have a W-2, have an earned income tax credit, claim the standard deduction, and certain income requirements.
Turbotax is an inexpensive and quick way for you to file your taxes instead of having to hire an accountant or do it manually.
How Much Time Do I Need?
You’ll want to have 1-2 days available for filling out your taxes. If you run a business or have a side gig, allow for an extra day.
How Much Will I Spend?
If you’re using basic software, it can cost between 20-50 dollars. If you need to file for state return preparations, it’ll cost extra. Software options such as Turbotax have free options as well. Hiring a tax professional can cost an estimated amount of $300. On the other hand, filing by hand will be free minus postage but takes a while to complete.
How Involved Do I Want to Be?
Most people choose to file online, rather than do tax payment refunds by hand. However, if you’re really into tax codes and want to be in control of the tax return process, you can do it by hand. If you’d rather not be involved at all and don’t mind paying for a filer, you can hire a professional.
For those who want to be involved somewhat, seeing what’s happening but not doing it all manually, the software is a reasonable option since it’ll save you time and is reasonably priced.
Benefits of Filing Early
The sooner you submit your tax return to the IRS, the sooner you’ll receive your refund. If you have large bills coming up, it’s a great way to have that extra money to pay for them. If you’re unsure whether you’ll wind up owing money or receiving money back, when you get it done sooner you can plan for any surprises.
You should get all of your tax forms necessary by the end of January, so if you haven’t received anything yet, reach out to the companies you’re waiting on.
Looking at the Best Way to File Taxes
When you’re looking at the best way to file your tax returns, the software is a clear winner since it’ll save you time and money. Are you ready to save money and have an easy time doing your taxes this year? Don’t miss the tax deadline!