Doing Your Taxes

Mention the word taxes and many people start sweating . . . The maze of tax forms you must wade through can seem overwhelming, and following the rules can seem impossible. But take heart: The Internal Revenue Service (IRS) has worked hard in recent years to try to simplify the process for most taxpayers. Not only that, but there are many organizations that offer free help.

Filing incorrectly may bring heavy penalties, so it's important to take advantage of all the help you can get. You may want to hire a professional tax preparer if you can afford it. Using a professional can result in thousands of dollars in tax savings and the reassurance that your return should be filed correctly.

Generally, the IRS requires that you file a tax return by April 15 of each year unless you request an extension in writing.

Save and categorize all of your deductions throughout the year so you will be organized and ready to file when the time comes. This brochure will help you decide what tax forms to use, how to fill them out and how to get help if you need it.

Everyone must file the basic tax form 1040 (or 1040EZ or 1040A). You must include additional forms depending on the type and amount of income earned and deductions taken. Read the list below for a general overview of the forms you may need.

• 1040EZ. You may be able to use this form if you are Single or Married Filing Jointly, you have no dependents, you and your spouse are under 65 and not blind, your taxable income (which can only be from certain sources) is less than $50,000, your earned interest is less than $400 and you do not itemize deductions.
• 1040A. You may be able to use this form if your taxable income is less than $50,000 and you do not itemize deductions.
• 1040. Everyone can use this form to report all types of income. Generally, you must use this form if your taxable income is greater than $50,000. The 1040 is also the form used when you itemize your deductions instead of taking the standard deduction (which is generally the amount the government allows each person to claim instead of itemizing deductions). The amount of the standard deduction changes annually and is listed in the tax form booklets.

The following is a list of the schedules most commonly used with the 1040:

• Schedule A (itemize deductions)
• Schedule B (report taxable interest or dividends in excess of $400)
• Schedule C or C-EZ (report profit or loss from a business)
• Schedule D (report capital gains and losses)
• Schedule E (report supplemental income and losses)
• Schedule EIC (claim earned income tax credit)