The 2023 tax season has started.
Here is the best way to file your taxes (from a CPA):
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The first step in preparing your taxes is to think back to 2023.
Did you work a W-2 job? Did you sell any stocks? Did you have a mortgage? Did you earn interest income?
The answers to these questions will determine the documents you will receive:
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The most common income documents are:
Form W-2 - Wages and Salaries (9-5 income)
Form 1099-INT - Interest income (bank)
Form 1099-DIV - Dividend income (brokerage)
Form 1099-B - Investments sold (brokerage)
Form 1099-NEC - Non-employee compensation (contractor)
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When you are ready to file your taxes, you will need the information from these documents to file your taxes.
I use FreeTaxUSA to file my taxes:
• $0 for federal
• $14.99 for a state tax return.
Regardless of the software used, most will have a similar flow:
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Once you get into any tax software, you will see a few different tabs:
Personal, Income, Deductions/Credits, Misc, State and Final Steps.
The software will guide you and ask applicable questions.
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The "Income" section would have all the items that you need to enter for the money you received, like wages, interest income, business and rental income.
Importantly, just because you haven't received a form, doesn't mean you don't have to report it (e.g. side income)
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The "Deduction" section is pretty straightforward.
For 90% of people, standard deduction is higher than itemized, and none of these deductions will really have an impact on your taxes.
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The "Miscellaneous" section will include additional rare items, such as 2023 estimated payments (extra payments), penalties, and foreign incomes.
This may not apply to most people with a W-2 job, but make sure that you enter this information if it applies to you.
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The software will automatically transfer your information to the state return if you live in a state that requires filing.
Each state has unique additions or subtractions.
Some popular ones include 529 plan or state K-1 forms.
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When you are done filing, make sure to download copies of the federal and state tax returns for your records. Also, keep all the receipts and forms you have.
P.S. If your tax situation is complex, I highly recommend hiring a reputable CPA.
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If you found this thread valuable, please
1. give me
@money_cruncher
a follow
2. retweet the first post so others can learn about tax filing.
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P.S. if you want to learn more about how to lower your taxes and improve finances, you need The Crunch.
It’s a free, weekly newsletter:
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@money_cruncher
You crushed this thread. People can go into tax season a little prepared after reading this.
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@money_cruncher
This is an awesome post!
Excellent simplified overview of the tax filing process that applies to most people!
I love your point about the standard deduction being higher than itemized deductions for 90% of people.
I see and hear people often say "you can deduct that on your…
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