How to File Your Taxes: The Complete Guide to Business and Individual Tax Filing

How Do I File My Taxes?

How To File A Tax Return

To file your taxes, you can choose from one of three filing options:

  1. Manual - fill out the correct IRS form according to your needs, then mail it in by the deadline
  2. Electronic - use a tax software program or website, answer questions via the platform and allow them to file your return for you
  3. Use a professional to help you with your filing

Information Needed For Filing Your Taxes

To prepare for tax filing, it will be helpful to gather some information in advance to make the process easier.

Individual Tax Returns

  • Personal information
    • The date of birth and social security number for you and your dependents
    • A copy of your previous year's tax return
    • Your bank account number and routing number (if you would like your tax return via direct deposit
  • Income Information
    • W-2 - your employer will deliver a copy of your W-2 either via mail or online
    • 1099 - if you do freelance or independent contract work, businesses will send a copy of your 1099s either via mail or online
    • Information about alimony, business income, rental properties, and other miscellaneous income
  • Deduction Information
    •  Expense records - business expenses, home expenses, rental property expenses, investment interest expenses, medical expenses
    • Child care, education, and adoption costs Charitable donation records

Business Taxes

  • General Information
    • EIN - Employee Identification Number, also called a Federal Tax Identification Number, which is used to identify your business for tax purposes
  • Income Information
    • Income reports - sales records, returns & allowances
  • Deduction Information
    • Expense reports - advertising, insurance, travel, internet, interest, depreciation, commissions
    • Wage reports - Forms W-2, W-3, 1099, 1096 o Federal tax reports - Forms 940 and 941

How Are Taxes Determined?

Individuals

Individual tax returns are taxed based on federal tax brackets. For taxes due April 2020, the federal tax brackets and rates are as follows:

Tax Rate 10% 20% 22% 24% 32% 35% 37%
Single

$0 -

$9,700

$9,701-

$39,475

$39,476-

$84,200

$84,201-

$160,725

$160,726-

$204,100

$204,101-

$510,300

$510,301+

Married filing jointly

$0 -

$19,400

$19,401-

$78,950

$78951-

$168,400

$168,401-

$321,450

$321,451-

$408,200

$408,201-

$612,350

$612,351+

Married filing separately

$0 -

$9,700

$9,701-

$39,475

$39,476-

$84,200

$84,201-

$160,725

$160,726-

$204,100

$204,101-

$306,175

$306,176+
Head of household

$0 -

$13,850

$13,851-

$52,850

$52851-

$84,200

$84,201-

$160,700

$160,701-

$204,100

$204,101-

$510,300

$510,301+

Your taxable income is divided into brackets with each portion taxed accordingly in a progressive tax rate. In the following example, we can see $100,000 of taxable income for someone with a single filing status.

How Taxes Brackets Work: An Example

 

 

How Are Businesses Taxed?

Businesses are taxed according to their structure and nature.

  • Sole Proprietorship 
    • "Pass-through" - income is reported on your personal tax return and taxed at a personal income tax rate.
    • Subject to self-employment taxes for Medicare and social security.
  • LLC
    • 2 options
      1. "Pass-through" - can be taxed on your personal income tax returns and taxed as a sole proprietorship or partnership.
      2. Can elect to be taxed as an S-Corp or a C-Corp at the corporate tax rate.
  • Partnership
    • "Pass-through" - each partner is taxed on their own personal income tax return at a personal income tax rate and is subject to self-employment taxes.
  • S-Corp
    • "Pass-through" - shareholders report the business’ income on their own personal tax returns and the profit is subject to the personal income tax rate.
    • Salaries are subject to self-employment taxes.
    • Dividends, called distributions, are not taxable to shareholders.
  • C-Corp
    • "Double taxation" - the corporation is subject to an income tax rate of 21%, the shareholders get taxed again on their personal tax returns once the profits come as dividends.
    • Employee salary is subject to self-employment taxes.
    • Dividends are subject to dividend tax rates.

Which Tax Forms Do I Need?

Business Tax Return Forms

Filing Based on the structure of your business, there are different IRS forms and attached schedules that you are required to file.

Sole Proprietorships Form 1040 with Schedule C
Partnerships Form 1065 with Schedule K1
S-Corps Form 1120S with Schedule K1
C-Corps Form 1120
Non-Profits, Charities, Exempt Status Form 1065

Employment Tax Return Forms

If you are an employer, you are required to report and deposit employment taxes to the IRS. Depending on your employees, you must submit the following forms, as well as Forms W-2 and W-3.

Federal Income Tax Employee W4, Form 941, Form 944 yearly if withholding $1,000 or less, Form 945 for nonpayroll payments
Social Security & Medicare Employee W4, Form 941, Form 944 yearly if withholding $1,000 or less
Federal Unemployment Tax (FUTA) Form 940

Excise Tax Return Forms

Depending on the nature of your business, you may need to pay indirect taxes on goods or services.

Form 720

Used to report:

  • environmental taxes
  •  communication taxes
  • air transportation taxes
  •  fuel taxes
  • the first retail sale of trucks, trailers, and tractors
Form 2290

Used to report tax on:

  • Trucks, trailers, and buses with a gross weight of 55,000 pounds or more used on public highways
Form 730 Used to calculate tax on wagers received
Form 11-C Used to register wagering activity

Individual Tax Return Forms

Your individual tax return is filed via the IRS form 1040.

Do I Have To Attach A Schedule To My Individual 1040?

As of 2018, the IRS has added 6 new available schedules for the individual form 1040. Note: For filing April 2020, self-employment tax has been moved from schedule 4 to schedule 2.

 

Schedule 1

Additional Income & Adjustments to Income

  • local income tax
  •  alimony received & paid
  • business income
  • rental property income
  •  capital gains
  •  farm income
  •  unemployment compensation
  • educator expenses
  • business expenses
  • health savings
  • self-employment taxes
  • SEP, SIMPLE, IRA,
  • student loan deductions

Schedule 2

Tax

  • self-employment tax
  • alternative minimum tax
  • excess advance premium tax credit 

Schedule 3

Nonrefundable Credits

  • foreign tax credit
  • child tax credit
  • dependent care expenses
  • education credit
  • retirement savings credit
  • residential energy credit

Schedule 4

Other Taxes

  • unreported social security
  • unreported Medicare
  • additional tax on IRAs
  • household employment
  •  first-time homebuyer credit
  • health care

Schedule 5

Other Payments & Refundable Credits

  • tax extensions
  • excess social security
  • refundable credits

Schedule 6

Foreign Address & Third Party Designee

Needed if you have a foreign address and need to allow another person to discuss your tax return with the IRS

 

2018 2019 Updated Form 1040 Schedule Guide

When Are My Taxes Due?

Knowing when and what is due is crucial for your tax preparation. See our quick guide below, or visit our full calendar of 2020 tax deadlines.

Initial Filing Deadlines & Extension Deadlines:

Individuals

April 15 - Filing Deadline

October 15 - Extension Deadline

Partnerships

March 16 - Filing Deadline

September 15 - Extension Deadline

S-Corps

March 16 - Filing Deadline

September 15 - Extension Deadline

C-Corps

April 15 - Filing Deadline

October 15 - Extension Deadline

Non-Profits, Charities, Exempt Status

May 15 - Filing Deadline

November 16 - Extension Deadline

Quarterly Payment Deadlines:

Quarter 1 April 15
Quarter 2 June 15
Quarter 3 September 15
Quarter 4 - Corporations December 15
Quarter 4 - Individuals January 15

2018 2019 2020 Tax Filing Deadline Calendar: Dates When Your Taxes Are Due

Get Professional Tax Help

What If I Need An Extension?

If you need to file an extension for your business or personal taxes, you can submit a form to the IRS that will allow you an extra 6 months to file. Partnerships, S-Corps, and C-Corps may all file an extension via the same form - a 7004. Individuals may file via a 4668. Non-profits may file via an 8868.

Do I Have To File Taxes?

  • Individuals
    • May not need to file a tax return if all of the following are true (updated for April 2020 filing):
      • Single
      • Under 65
      • Earn less than $12,200 of income (the standard deduction)
      • No other special circumstances
  • • S-Corp
    • Must pay estimated taxes if expected to owe more than $500 in business taxes annually
  • • C-Corp
    • Must pay estimated taxes if expected to owe more than $500 in business taxes annually

How Do I Pay My Taxes?

If you owe taxes to the IRS, regardless of when you file, your bill is due to be paid on your filing deadline. You will submit your payment when you file your taxes.

If you cannot pay the bill owed, the IRS can offer the following options:

  • • Payment plans
  • • Offer in compromise - allows you to settle the debt for less than the full amount owed
    • Form 656-B
  • • Deferment - delays the collection of the debt
    • Form 433-F (General)
    • Form 433-A (Wage Earners & Self-Employed Individuals)
    • Form 433-B (Businesses)

When Will I Recieve My Tax Return?

If you are eligible for a tax refund and have elected for a direct deposit, you should receive your tax return within 21 days, or 3 weeks, of filing your tax return online. You can also check the status of your tax refund 24 hours after you have filed your tax return online, or 4 weeks after you have mailed your return manually.

Need Professional Help With Your Taxes?

Posted: 17 Dec, 2019

The Ageras authors don't provide any personal advice with regard to financial or fiscal matters - but accountants do. Fill in the form and receive non-binding quotes for professional tax advice.

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