Listen up, babies. We’ve been dancing around the issue of taxes for a while now, and it’s time we got to it. Yes, we’ve explained the importance of taxes as a fee for membership in civilization. We’ve told you why you should file your taxes ASAP. And we’ve even told you about that time I got audited!
It’s time to face the beast head-on. It is our sacred duty, as your duly appointed Bitches, to take you through this unpleasantness step by step.
Yea, though you walk through the valley of the shadow of income tax, you shall fear no audits; for We art with you; Our gifs and Our snark they comfort you.-The Book of the Bitches, 3:7-9
The stupidest tax system on Earth
The United States is known for many things. It’s the global center of hot dog eating contests; the birthplace of Dwayne “The Rock” Johnson; and one of the only countries whose tax collectors say, “We know how much you owe in taxes this year, but we want you to take a guess at it. And if you guess wrong, we’re going to punish you.”
No seriously: that’s literally what tax filing season is all about.
Most people with jobs get taxes deducted from their paychecks throughout the year. The Internal Revenue Service (IRS), the entity responsible for handling tax matters in the United States, keeps pretty good records of that shit. They almost always over-tax some of us for reasons that are convoluted and boring and best left to another article. And others get under-taxed for much less complex reasons.
But what that means is, at the end of a tax year, the IRS will owe some of us money, and some of us will owe the IRS money. And we have to file paperwork with the government (“filing taxes“) to get that all sorted out.
When the IRS owes you money
The government refund on your taxes is known as a tax return. “Tight!” say you, thrilled to get a little extra folding money at the start of the year.
Yet allow me to play Devil’s Wet Blanket a moment. You’re getting money back from the government because they overcharged you on your taxes. It’s not extra money you’re getting… it’s money that should’ve stayed in your pocket in the first place. It’s money you could’ve received in your paychecks throughout the previous year. And let’s be real: you probably could’ve used that money last year.
Instead the feds hung onto it, preventing you from using or investing it until now.
When you owe the IRS money
Getting a tax return is really the best-case scenario. But some people will actually owe money during tax season. This is either because they’re self-employed, independent contractors, have multiple jobs, or for whatever reason didn’t get taxed on their income.
If you’re one of these people, you’re not getting taxed on your income every pay day. It can be easy to put on some rose-colored glasses, look at those fat stacks of Tubmans, and ignore the fact that some of them ain’t yours. You’ll eventually have to pay some of your income to the government as taxes… but how much?
One of the most difficult parts of tax filing season for those who owe taxes is determining how much of their income to save up ahead of time to pay in taxes. The hard and fast rule: 25-30% of your income. Yep.
Who needs to file taxes
As of 2019, here are the parameters for how much money (at minimum) you have to make in order to be required to file taxes:
- Single filing status:
- $12,200 if under age 65
- $13,850 if age 65 or older
- Married filing jointly:
- $24,400 if both spouses under age 65
- $25,700 if one spouse under age 65 and one age 65 or older
- $27,000 if both spouses age 65 or older
- Married filing separately:
- $5 for all ages (this is not a typo)
- Head of household:
- $18,350 if under age 65
- $20,000 if age 65 or older
- Qualifying widow/widower with dependent child:
- $24,400 if under age 65
- $25,700 if age 65 or older
Them’s the rules! But note: while you may not have to file your taxes based on the parameters above… you still can! In fact, filing taxes even if you’re below the income threshold might mean you get some money back from the government for your troubles. Plus, it’s good practice.
But if you’d rather not bother when you’re under the income threshold… no G-men in dark suits will come after you. We think.
When to file taxes
Beware the Ides of April
Taxes are due on April 15th every year. What this means is that you have from January 1st to April 15th to file your taxes with the IRS for the previous year. So if you made money in 2019, you have until April 15th, 2020 to finish up that paperwork.
Filing your taxes as soon as possible (January, if you can) is a great idea! As Kitty explained, there are all kinds of benefits to filing your taxes early.
For one thing, if you’re owed a tax return you’ll get your money a helluva lot sooner! This has the added benefit of lining your pockets with smugness and a sense of superiority. Plus there’s the relief of having the whole unpleasant tax filing process behind you for another year.
You will usually get your tax return within three weeks of filing your tax return (even earlier if you allow them to deposit it directly into your checking account).
Something tells me if you owe taxes… the IRS will swipe it from you a lot faster than three weeks.
Importantly in this frightening digital age of HAXX0RS and THE DARK WEB™: filing your taxes early lessens your risk of identity theft. Get your money before those nefarious, 1997-looking (I assume) Dark Web brigands get to it!
If you file your taxes late—or worse, pay your taxes late—you could be fined. According to the IRS, “The penalty for filing late is normally 5% of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25% of your unpaid taxes.” I quoted that exactly as an example of the stilted language the IRS likes to use when dealing with us plebeians.
That said, if you know you’re going to be late because of extenuating circumstances, you can request an extension from the IRS here.
What you need to file taxes
You won’t be ready to file your taxes until you’ve gathered the following documents. And note: some of these don’t apply to you! And that’s ok! Tax requirements can vary pretty drastically from person to person and household to household.
I’ve also left out some of the more unusual forms and things that apply to people who have a lot more assets than the average citizen of Bitch Nation. I made the call to keep it (relatively) simple and I stand by that decision.
So just check all that apply and consider yourself lucky that your taxes aren’t more complicated.
- Personal information
- Social Security Number (SSN) or Individual Tax Identification Number (ITIN or just TIN) for everyone on your tax return. That means spouses and dependents if you have any. If you don’t have an SSN or TIN, here’s where you can apply for a TIN.
- The exact date of birth (DOB) for everyone on your tax return.
- Income and investments
- Form W-2. This bad boy shows how much you earned in income and how much was withheld for taxes. Your employer (or employers WHAT UP AMERICAN WAGE DEFICIENCY) will send this form to you by February. And if they don’t, urgently request it from them! Even if you only worked there for a few weeks during the year, you’re still owed a W-2 from the employer.
- Form 5498. If you contributed to an IRA (Individual Retirement Fund), you’ll need this one. If you didn’t, don’t worry about it!
- Form 1098-E. You’ll need this one from your lender if you have student loan debt.
- Form 1098 Mortgage Interest Statement. This one is for if you have a mortgage on a home.
- Form 1099. This baby comes in many shapes and colors. You’ll get her if you’re self-employed and received more than $600 from a client (1099-MISC); if you received investment dividends (1099-DIV); the government gave you money or benefits (1099-G); you took distributions from a retirement plan (1099-R); or if you made money from third-party transactions through services like PayPal or Venmo (1099-K).
- Medical records
- Receipts for medical expenses that did not get reimbursed by your health insurance: glasses, hearing aids, prescriptions, preventative care, etc.
- Form 1095. This is your health insurance coverage form, and you might get a few different ones: if you’re enrolled through the Marketplace you’ll get a 1095-A; your insurance provider will send you a 1095-B if you have health insurance; and if you get your health insurance through your employer, you’ll get a 1095-C.
- Social Security benefits. Our readership trends young (anybody here remember Fraggle Rock?), so most of you won’t have to worry about this. But if you’re a beneficiary of Social Security, you’ll get an SSA-1099.
- Charitable donations.
- If you donated to a charity or nonprofit, they should’ve sent you a receipt. You have the option to use that receipt to deduct your charitable donation from your taxes. But you don’t have to if you’d rather avoid the trouble of itemizing your deductions. More on that later.
- Home ownership information.
- If you own property, you’ll need your property tax statement from the county where you own the property; a mortgage interest statement (Form 1098); and any property tax receipts. These documents are pretty redundant, so if you get only one of them, you’re probably still ready to file your taxes.
- Documents you don’t necessarily need to file your taxes:
- Lease or rental agreement
- Birth certificate
- Every pay stub or check you’ve received in the last year
- Every receipt for purchases you made in the last year
- High school or college transcript
- Car loan paperwork (though you can deduct it if you want)
How to file your damn taxes
Filing federal taxes
To file your taxes, you need to fill out Form 1040. In the halcyon days before the interwebz ruled our lives, this was a literal piece of paper you mailed in to the IRS. But these days you can mostly fill it out online.
You can file your federal taxes through the IRS’s free-file site or through any tax preparer. We recommend going straight to IRS.gov, but if you need a helping hand, your city or county might provide free, in-person consultations with volunteers trained in tax preparation. Find these angels here.
You may also go to online tax preparers like TurboTax. This is a valid choice… but make sure you read to the end of this article before making that choice.
Form 1040 itself looks complicated. This is another reason why you might want to get help from those angelic volunteers or a professional tax preparer. But if you’re feeling bold, then here, I got you this: line-by-line instructions on how to fill out your federal tax return.
You’ll be doing a lot of looking information up on your various forms (W-2, 1099s, etc) and writing them in the various boxes on Form 1040. It’s not hard, just headache-inducing. Once your done, you a) sign the damn thing and send it in with a check if you owe money, or b) sign the damn thing and send it in with your account information so you can receive money.
And by “send it in” I mean “click the ‘submit’ button” on your browser. Let’s be realistic.
Filing state and city taxes
Since you had so much fun filing your federal taxes… you get to do it again with your state and city taxes! Try to contain your excitement.
You’ll need to fill out another Form 1040 for your state taxes. You’ll know which one to fill out because it’ll have your state’s name on it.
If you went through a tax preparer’s website, they’ll use the information you’ve already entered for both forms so you only have to go through the process once. It’s super convenient, I’ll admit.
Again, here are those line-by-line instructions for filling out the 1040, and you can get your state’s 1040 at their department of revenue website.
Taxes get complicated when we start talking about deductions. An itemized tax deduction is basically when you tell the IRS “I donated to charity and paid a bunch of money in student loans this year” and they tell you “Yes, good job, here’s some money back for your good deed and undue burden of citizenship.” They’re expenses allowed by the IRS that decrease your taxable income.
You can either deduct all your charitable donations, mortgages, and student loans, or you can file the standard deduction. The standard deduction is a lot less work. It’s the flat-rate, no-questions-asked reduction to your income.
Nerdwallet has an excellent piece on when the itemized deduction or standard deduction is the right choice.
For most of us, tax deductions are minuscule. Controversial statement, but… with few exceptions I think they’re generally not worth the trouble. DEBATE ME IN THE COMMENTS, HATERS!
The tax preparer lobby is evil and they want you to pay for something that is literally free
I’d be remiss if I ended this how-to without getting my social justice warrior on. For there is something rotten in the state of tax season! And that thing is the tax preparer lobby, which represents TurboTax, H&R Block, Intuit, and their ilk.
In 2017, ProPublica broke the story that the makers of online tax filing systems like TurboTax were lobbying the government to the tune of millions of dollars. They wanted to pass a bill that would “permanently bar the government from offering taxpayers prefilled filings.”
Remember way back at the beginning of this article where I made the bold but absolutely true statement that ours is “the stupidest tax system on Earth”? Because it’s a system so complicated that it necessitates a how-to article like this one?
It could be better. We could have the IRS send us a short form with all the information already filled in—a “prefilled filing,” if you will. Something simple, for the purposes of taxpayer review and approval. We could sign it, send it back… and then be fucking done.
But such a simplified system would put tax preparers out of business. So they have a vested interest in keeping the system stupid and more complicated than necessary.
The ProPublica reporting on the case is fascinating and definitely worth the read. But to sum up: the tax preparer goons kind of lost that battle but briefly won the war. They’re now required to offer basic tax preparation for free (and most people only really need the basics). But they found a couple loopholes: 1) they can bury their free filing option behind so many internet trap doors it’s impossible to find, and 2) they found a way to prevent the IRS from advertising its own free-filing option after trying to legally prevent the IRS from even having a free-filing option.
These problems have largely been fixed (again, thanks to journalists exposing the dastardly scheme), but we don’t believe in rewarding bad behavior even after the fact.
All of which is to say…