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Shedding Light on Tax Season

 

Filing your income tax returns can be frightening, but it doesn’t have to be. It is something that everyone has been doing since 1913 and is something you will be doing for the rest of your life. The following are some things you should know to make the whole process easier.

Your income tax return is due on April 15th of the following year. For example, your 2010 return is due on April 18, 2011. You can file earlier if you wish. You should get your W-2 by the end of January and your 1099 forms shortly thereafter.

For most people the information needed is simple – your employer will send you a Form W-2 for your wages and your financial institutions will send you 1099’s with information on your dividends, interest and other investment income. Income subject to tax includes: wages, investment income, distributions from retirement plans, self employment income, and a few other items. Deductions for itemized expenses include: state and local taxes paid, mortgage interest, charitable contributions and a few other less common items. The net of these items is your taxable income.

Once you have your taxable income calculated, you then apply different tax rates based on the bracket of your income. There are different rates for single individuals and married couples filing joint returns.

Be sure to keep copies of your actual tax returns forever and copies of any supporting documents for three years following the due date of the return.

Everyone’s tax situation is different, so if yours is complicated or if you do not feel comfortable with any part of preparing your return, find and use the services of a qualified tax professional.