Have you filed your taxes yet? The tax season officially started on January 29, 2024, when the Internal Revenue Service (IRS) started accepting and processing returns. Before you submit your 2023 tax return, however, there are some things you’ll need to think about first, like your filing status, sources of income, and if you’re eligible for any tax deductions. You’ll also want to brush up on common tax terms you might come across during the process.
Gathering your documents ahead of time can help your tax filing process go smoother. Some of the things you’ll need are your social security number, retirement account contributions that you’ve made, any state and local taxes that you’ve paid, and your W-2 form(s) from your employer(s). Another thing to keep in mind is any forms related to tax deductions or credits. Here are some common tax deductions and breaks you might qualify for.
Determining your filing status is one of the first steps for completing your tax return. There are five different statuses to choose from, including single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child. Your tax bracket is dependent on the filing status you choose, so it’s important to choose the filing status that is the best fit for your family.
Need help determining your filing status? Use the Interactive Tax Assistant tool on the IRS website.
Aside from gathering your documents and determining your filing status, there are some common tax terms that you’ll come across while filing your taxes.
1. Adjusted Gross Income
Your adjusted gross income (AGI) includes all your taxable sources of income. This includes wages, tips, dividends, retirement accounts, capital gains, and more.
2. Deduction
Deductions benefit taxpayers by reducing the amount of income that’s eligible to be taxed. There are two types of deductions to be aware of, standard deductions and itemized deductions. The standard deduction is a fixed amount that’s based on your filing status, whereas itemized deductions are calculated dollar-by-dollar.
Learn more about the differences between these two deductions.
3. Withholding
When you get paid, you might notice there are certain funds withheld from your paycheck. The funds subtracted are an estimate of what you’ll owe at tax time and are sent directly to the government. When you file your taxes, receiving a refund means that you paid too much, whereas, if you owe, then you didn’t have enough taken out of your paychecks.
If you haven’t filed your taxes yet, it’s not too late! The tax deadline for 2024 is Monday, April 15. Make sure to gather the documents your tax professional will need ahead of time to make the process go smoother. Once your taxes have been filed, the general rule of thumb is to keep your returns for at least three years, however, depending on the circumstance, the IRS may suggest keeping them for longer. If you typically owe when filing your taxes, consider a personal loan to help pay for this year’s tax bill. Additionally, you can start saving for next year’s tax bill by opening a First Bank savings account.
Neither First Bank, nor any of our affiliates, provide tax advice. As always, consult with a certified tax professional for this year's tax guidelines and rules.