January 4, 2024

The IRS Is Open for Business: Why E-Filing Is a Smart Choice

The IRS is expected to officially kick off the 2023 tax season on Jan. 23, 2024, which would make this the first day the agency begins accepting both e-filed and paper income tax returns.

If you’ve already completed your 2023 return — great! Your return should be one of the first in line for processing by the IRS. But if you haven’t filed your taxes yet, don’t fret. You have plenty of time to get started.

In fact, you can easily begin today by selecting the 2023 TaxAct® product that best fits your tax situation.

Why e-file your taxes?

Choosing to electronically file (e-file) your tax return is the quickest and most efficient way to submit your taxes to the IRS. But that’s not the only reason you should consider e-filing your return this year. Let’s go over a few more reasons why e-filing may be the best option for you this year.

1. Fast and accurate filing: no math required

When you e-file using tax prep software such as TaxAct, you can complete your return faster and with greater accuracy. That’s because tax software like ours does the math for you and guides you through every step of your return, even potentially helping you identify opportunities for tax savings.

Not only that, but the IRS can process your income tax return faster when you e-file your taxes. You don’t have to rely on snail mail, which tacks on extra time before the IRS has your return in hand.

E-filing also lessens the risk of someone at the IRS mistyping your information from a paper form into their system, so it can reduce the likelihood of human error causing a problematic typo on your tax return.

2. Get your tax refund faster

If you’re due a tax refund for 2023, e-filing usually means your money will hit your bank account much quicker. When you e-file your tax return, it’s immediately sent to the IRS for processing, whereas paper tax returns take much longer. You can use the IRS Where’s My Refund? tracking tool 24 hours after e-filing your tax return, but you’ll have to wait up to four weeks to track your refund if you paper filed your tax return.

Want your tax refund even faster? Make sure to select direct deposit as your method of receiving your tax refund to have your money in hand as quickly as possible.

3. Receive confirmation for peace of mind

One of the main benefits of e-filing is that you can elect to get an electronic confirmation when the IRS receives your tax return. No more waiting and wondering if the return you gave to the mailman has reached its intended destination. Once you file your return using TaxAct and it’s accepted by the IRS, we’ll send you an email or text notification letting you know processing is underway.

4. E-file now, pay later

It is a common misconception that you must pay any taxes owed immediately when you e-file your tax return. In truth, you have some flexibility.

You can pay tax amounts owed when you e-file, or you can e-file early and set up an automatic payment to be made on the tax deadline (April 15, 2024). Payments can be sent electronically from your bank account, with a check, through a money order, or by credit card.

While you still must pay your tax bill by the tax filing deadline, filing early gives you more time to prepare and save for any unexpected taxes owed.

5. Stay organized

Using DIY software to file your taxes creates a permanent electronic record of your tax return. This allows you to easily access it for future use, like when tax time rolls around next year. If you continue to use TaxAct as your means of e-filing, we’ll already have your 2023 tax return data from the previous year, meaning we can immediately transfer last year’s information into your new tax return to save time.

Plus, let’s be honest, it’s much easier to keep track of a digital copy saved on your computer than having to track down a paper copy. With TaxAct, once you file this year’s tax return, you can access it for seven years at no charge. Goodbye, cluttered filing cabinets!

6. Keep more money in your pocket when e-filing

Don’t spend more money than necessary to file your income tax return. With just a little comparison shopping, it’s easy to identify affordable options, and our prices are hard to beat.

Ready to beat the rush and put tax filing behind you? Start e-filing your tax return today.

This article is for informational purposes only and not legal or financial advice.

All TaxAct offers, products and services are subject to applicable terms and conditions.

The post The IRS Is Open for Business: Why E-Filing Is a Smart Choice appeared first on TaxAct Blog.

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5 Self-Employed IRS Tax Forms for 2023

Updated for tax year 2023.

If you’re even a moderately successful freelancer, you likely know must file a tax return and pay taxes on your income. But which tax forms do you need to file your self-employment taxes?

At a glance:

In addition to the usual Form 1040, if you are self-employed, you will likely need to attach certain schedules, like Schedule C or Schedule SE.
Use any 1099-NEC forms you receive to accurately report your self-employment income.
Form 8829 can help you figure the home office deduction, if applicable.

Here are five Internal Revenue Service (IRS) self-employed tax forms and information that might be relevant to your tax situation.

1. Form 1040, U.S. Individual Tax Return

Most U.S. tax filers use Form 1040 even when they’re not self-employed. This form is comprised of different sections where you can report your income and claim tax deductions. Whether or not you owe taxes, you might qualify for certain tax credits.

Certain types of income or deductions may require you to attach additional schedules. For instance, if you choose to itemize your deductions instead of taking the standard deduction, you’ll need to include Schedule A with your Form 1040.

As a freelancer in particular, you might need to attach other specific schedules to your Form 1040.

2. Schedule C to Form 1040, Profit or Loss From Business (Sole Proprietorship)

Speaking of schedules, one you’ll probably need to become familiar with as a self-employed taxpayer is Schedule C. If you are a sole proprietor, this is an essential form for you. Since sole proprietors take all business profits as personal income, you use Schedule C to report all income and expenses from your business to determine your profit or loss.

Schedule C consists of two sections:

Income: Starting with income, record all payments you received from your clients. You might have different amounts of gross receipts or sales, gross profit, and gross income.
Expenses: Schedule C organizes your expense amounts into numerous line items. For example, auto, advertising, depreciation, and supply expenses are all recorded in separate categories.

Although you don’t have to fill out a separate IRS tax form for business use of your car, it makes sense to understand what you can claim for Schedule C. You can only deduct all expenses for operating your car if you use it exclusively for your business. If you drive for both business and personal use, you must keep careful records of how many miles you drive for each. You can use the standard mileage rate or the actual expenses method to calculate your business mileage deduction.

3. Form 1099-NEC, Nonemployee Compensation

After the end of the year, each of your clients should give you a Form 1099-NEC, Nonemployee Compensation, for the total they paid you that year if it exceeded the baseline amount that the IRS specifies ($600 in 2023).

Compare every Form 1099-NEC you receive to your records to make sure the amounts are consistent. Your clients file Form 1099-NEC with the IRS, so you don’t want there to be a notable discrepancy if the client claims they paid you more than they did.

4. Form 8829, Expenses for Business Use of Your Home

You might be able to claim certain expenses for business use of your home by taking the home office tax deduction. In order to do so, your home office must meet the following criteria:

It must be your principal place of business or a place of business where you meet with patients, clients, or customers.
This area of your home must be used exclusively for business purposes.

If you determine part of your home is regularly used as your principal place of business, you can calculate the actual expenses of your home office using Form 8829. Deductible expenses might include mortgage interest, insurance, utilities, and repairs. You won’t be able to deduct the full cost of these expenses, but you can deduct the percentage of your home that is dedicated to your home office. For instance, if you use 15% of your home exclusively for business, you will be able to deduct 15% of your home expenses as part of this business deduction.

However, if crunching those exact percentages sounds like a hassle, a quicker way to calculate your expenses is to use the simplified method, where you simply deduct a flat rate per square foot. The qualification requirements are the same, but the process of figuring out the deduction and your recordkeeping obligations may be more straightforward.

Fortunately, TaxAct® makes it easy by doing those calculations for you — all you have to do is answer a few interview questions.

5. Schedule SE (Form 1040), Self-Employment Tax

In most cases, self-employed people who earned at least $400 in net self-employment income (in 2023) have to pay self-employment tax (SE tax). You can do this by filing Schedule SE with your Form 1040. The SE tax is 15.3% of your net income, and it covers your Social Security and Medicare taxes. Thankfully, you can claim 50% of self-employment taxes owed as a tax deduction. Schedule SE will help you figure out this deduction and direct you to enter it on your Form 1040.

The bottom line

Always check that you’ve got the correct versions of all IRS tax forms for the year and follow all directions carefully. The forms might change, so you don’t want to use a piece of outdated information.

Using a tax software program, like TaxAct, helps ensure you’re using the correct documents for the current tax year. Simply answer a few questions about your specific tax situation and our program generates the appropriate tax forms for you.

This article is for informational purposes only and not legal or financial advice.

All TaxAct offers, products and services are subject to applicable terms and conditions.

The post 5 Self-Employed IRS Tax Forms for 2023 appeared first on TaxAct Blog.

– ​Tax Tips and Tax Planning Resources | TaxAct Blog

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