State vs. Federal Taxes: What You Should Know Before Filing
Taxes are a part of life, but as much as they are a part of life, we don’t always know all that we should in order to accurately file our taxes. From federal to state taxes to filing both, there are a lot of things you’ll want to find out when it comes time to do your tax return. Every state is required to file federal taxes. Not every state has state taxes. Here are a few things to keep in mind when filing:
Find out if your state requires state tax
The good news is that not every state requires state tax. The bad news is that the state that you live in might. With some states requiring both federal tax, as well as state tax, there’s a lot to keep in mind as a tax paying citizen. Some states require you to file state tax so take time to get familiar with what’s expected of you when it comes to filing both.
You want to be sure to research the ways that state tax differs from federal income. From sales tax to property tax and more, you want to get familiar with your state’s specific guidelines so that you can be confident that you’re getting the most in savings.
Know what’s expected with federal income tax
Regardless of the state that you live in, federal tax is something that you do need to be responsible for filing. It’s required in every state. With federal income tax, you’ll need to report the income that you make by using the Form 1040. The more income you make, the higher the tax rate. However, be sure to look for deductions and credits that you may qualify for.
Whether you’re using tax preparer software or you’re working with a professional to help you file your tax return, make sure you have it in by the 15th of April.
Various types of forms
In order to know how to file and what to expect, you need to know how your income is being shared with the IRS. There’s a W-2, a 1099, a W-3 and many more, so it’s important that you find out what the corresponding form is that you should be expecting from your employer or clients, if you’re an independent contractor.
This can help you prepare for your taxes and help to ensure that you’re doing it correctly, especially because you may need to make estimated tax payments throughout the year if you’re an independent contractor.
Get organized
Getting organized to set yourself up for tax success is the way to go if you want to be confident that you’re filing correctly. That means saving business expenses if you have them and keep receipts. It also means using tax software if needed and keeping up with estimated tax payments if that’s required of you. Keep all of your tax documentation so that you’re prepared if it comes to an audit or some other type of tax situation.
Hire a professional
It’s not always easy to get taxes right, especially if you don’t have a lot of experience doing it. If you feel that filing your return alone feels a bit challenging and over your head, it doesn’t hurt to file with a professional. They can help make sure you do it accurately while also providing you with support to find potential ways to save and get deductions.
While it’s a small investment to hire a professional, it’s one that is worth it when you can have peace of mind and even save thousands of dollars. They can help you with both state and federal tax if needed, so don’t be afraid to browse around for the best.
In Conclusion
Work with a professional if your taxes are overwhelming you but do some research yourself to make sure you’re doing your state and federal taxes correctly.
