IRS Releases Draft Form 1040 Here’s What’s New For 2020 from www.forbes.com
The Internal Revenue Service (IRS) is responsible for collecting taxes from individuals and companies throughout the United States. And every year, taxpayers must file their taxes with the IRS by April 15th, in order to remain in good standing with the IRS. If you are an individual or company and you are planning to file your 2020 tax returns, it is important to understand the process and the different forms that the IRS requires.
2020 Tax Return Basics
The first step in preparing and filing your taxes is to understand the different forms that the IRS requires in 2020. The most commonly used forms for filing taxes are Form 1040, Form 1040-SR, and Form 1040-NR. Form 1040 is the most commonly used form and is used to report all of your taxable income, deductions, and credits. Form 1040-SR is used by seniors and is specifically tailored to those over the age of 65. Form 1040-NR is used by those who are non-residents of the United States who are required to file a tax return.
Filing Your Tax Return
Once you have determined which form you need to file, the next step is to actually complete and submit the form. You can either file your tax return manually or electronically. To file your tax return manually, you will need to fill out your form and submit it to the IRS by mail. To file your tax return electronically, you will need to create an online account with the IRS and use their online filing system.
Filing Status
When preparing your tax return for 2020, it is important to understand your filing status. Your filing status determines your tax rate and the amount of deductions you are allowed to take. Your filing status is either single, married filing jointly, married filing separately, head of household, or qualifying widow or widower.
Deductions and Credits
When filing your 2020 tax return, you may be able to take advantage of deductions and credits that can help lower your total tax liability. Some of the most common deductions include the standard deduction, state and local taxes, charitable contributions, and student loan interest. Additionally, certain credits such as the Earned Income Tax Credit and the Child Tax Credit may be available to you.
Taxable Income
Your taxable income is the amount of money that you must pay taxes on. This includes all of your income, such as wages, interest, dividends, and capital gains. Additionally, it includes any gains or losses from investments or business activities. Your taxable income is calculated by subtracting your deductions and credits from your total income.
Tax Withholding
Tax withholding is the amount of money that is taken out of your paycheck and sent to the IRS throughout the year. This amount is based on your filing status, number of dependents, and other factors. It is important to understand your withholding so that you can ensure that you are not underpaying or overpaying your taxes throughout the year.
Filing an Extension
If you are unable to file your tax return by the April 15th deadline, you may be able to file for an extension with the IRS. This will allow you to have an extra six months to prepare and submit your tax return. However, you are still responsible for paying any taxes that you owe by April 15th.
Getting Help With Your Tax Return
If you are having difficulty understanding the tax filing process or preparing your tax return, you may want to consider seeking help from a professional tax preparer. A tax preparer can help you understand the forms, maximize your deductions, and file your taxes accurately and on time.
Conclusion
Filing your taxes can be a complex and confusing process. However, understanding the basics can help make the process smoother. By understanding your filing status, deductions, credits, and taxable income, and gathering the necessary documents, you can ensure that your 2020 tax return is prepared accurately and on time.