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The IRS' commonly used 1040 form. |
Are You Prepared to File Your Taxes?
Most people must file tax forms every year with the U.S. Internal Revenue Service (IRS). They report their income during the past year on these forms, called returns. This year the deadline for filing tax returns on 2007 income is April 15.
The facts in this article come from the IRS's "Publication 17 (2007), Your Federal Income Tax." This article gives basic facts. The Web site is http://www.irs.gov/publications/p17/index.html.
A good plan is to get help from a person who professionally prepares tax returns. Accountants often prepare tax returns. This person will give advice so that forms are complete and correct. Everyone's situation is different.
Who must file taxes?
These people must file taxes:
• U.S. citizens, residents living outside the U.S., residents of Puerto Rico, and people with income from U.S. possessions
• Dependents
• Children under the age of 18
• Aliens
• Self-employed people.
The first task is to collect all income and expense information during 2007. Income information includes:
• Form W-2. This form comes from employers. It states the money earned in 2007 and the taxes already paid.
• A list of commissions, bonuses, tips and other work income not on Form W-2
• Interest income from savings and other accounts
• Rental property income
• Pension, social security and annuity income
• Unemployment compensation
• Alimony
• Money gained from the sale of a home.
People can use expense information during 2007 to reduce their income tax returns. This includes:
• Rental property expenses and depreciation
• Medical and dental expenses
• Money paid for education related to work
• Taxes paid, such as real estate taxes, and taxes paid on a large purchase like a car
• Interest on home mortgages
• Contributions to charities
• Losses from theft
• Business expenses, such as car and travel, or business losses.
People can use other expenses to apply for credits. These include:
• Child care and dependent care
• Elderly or disabled people
• Education
• Rent paid.
People need to decide if they must file tax returns. This depends on their income, marital status and age. People under certain income levels do not need to file.
Children under 18 may need to file
Parents must file separate tax returns for children under 18. Yet if a child's income is only interest and dividends, parents can include this on their tax return. Then the child does not have to file a return.
People must file one of these three forms - Form 1040EZ, Form 1040A, or Form 1040. People may need to file more forms. This depends on each person's situation.
Help with preparing tax returns is available for a fee at many businesses. These resources are listed in the phone book. Be careful who you use. Some companies promise to give you your refund up front. However, you may be charged for this service. IRS refunds arrive quickly enough when you file by computer.
People can get free help at Volunteer Income Tax Assistance (VITA) sites. They must have incomes in 2007 of $40,000 or below, or do not speak English, or are handicapped or elderly. Call VITA at 1-800-829-1040 for locations. Also check with your local Wisconsin Technical College or University of Wisconsin Extensions.
After the returns are complete, people may mail them to the IRS or send them electronically by using IRS e-file.
More help is at www.irs.gov, or, VITA - www.irs.gov/individuals/ article/0,,id=107626,00.html