Preparing your tax return can be a complex process, and needs to be done properly and with care. If you’re feeling confused or overwhelmed, it’s okay—and normal!

There are lots of resources available to guide you through the process until your taxes are completed. One great way to familiarize yourself with the process is by asking questions.

Below are the top tax return questions we see most often.

1. What Forms Do I Need To File My Taxes?

The tax filing process can be document-heavy, and also differs among all individuals.

To ensure that you have the right forms, here’s just some of the information, forms, and documents you should be prepared to have on hand when the time comes to begin the filing process:

  • Personal information such as your social security number (SSN), tax ID number, and routing and account numbers to receive your refund by direct deposit. Also, the same information is required for your spouse if you’re married.
  • Dependent(s) information, such as dates of birth, SSN, childcare records, income, and Form 8332, if you are divorced or separated from your spouse.
  • Sources of income depending on your type of employment (IE: 1099, W2, or others).
  • Deduction forms, such as those relevant to home ownership, charitable donations, medical expenses, childcare expenses, educational expenses, or retirement.

2. What Is The Difference Between Marginal And Effective Tax Rates?What’s a W-2 Employee?

The marginal tax rate is the amount of additional tax you pay for every additional dollar earned as income. In other words, it’s your highest tax rate depending on where your income lands in the tax bracket.

The effective tax rate is the average rate of tax payable by a person or organization. Simply put, the effective tax rate is the actual amount of federal income tax payable on one’s income.

In a nutshell, the main difference between these two tax rates is that effective tax rates are lower than marginal rates since they measure the actual tax rate that is paid for your taxable income. Marginal tax rate, however, varies based on the tax bracket you fall in.

3. How Can I Reduce My Tax Bill?

This is a very common question, and a complex one at that. There are many strategies that can be used to lower your tax rate, specifically through deductions and credits. Deductions allow you to reduce your taxable income, and credits allow you to directly reduce the liability on your taxes.

One way to reduce your taxable income is by contributing to a retirement plan, either through your employer or individually with an IRA. Other high deductible accounts like an HSA or FSA allow you to contribute pretax dollars and save money.

For other tax planning strategies that can help you lower your tax bill, check out our blog.

4. Should I Itemize Or Claim The Standard Deduction?

According to the IRS, you should itemize deductions if your itemized deductions are greater than your standard deduction or if you must itemize deductions because you can’t use the standard deduction. You may be able to reduce your tax rate by itemizing deductions using a 1040 form.

The standard deduction nearly doubled in 2018, which made it more difficult to justify itemizing your deductions. The standard deduction now comes to $12,950 for single taxpayers and $25,900 for married taxpayers.

5. Can I Deduct Medical Expenses?

The IRS allows you to deduct unreimbursed medical expenses if they exceed 7.5% of your adjusted gross income (AGI). 

Deductible medical expenses include, but are not limited to payments of/for:

  • Fees to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners.
  • Inpatient hospital care or residential nursing home care.
  • Acupuncture treatments or inpatient treatment at a center for alcohol or drug addiction.
  • Participation in a weight-loss program for a specific disease.
  • Insulin and for drugs that require a prescription.
  • Admission and transportation to a medical conference relating to a chronic illness of you, your spouse, or your dependent.
  • False teeth, reading or prescription eyeglasses, contact lenses, hearing aids, crutches, wheelchairs, and for a guide dog or other service animal.
  • Transportation used to receive medical care.
  • Insurance premiums you paid for policies that cover medical care.

We’re Here For You This 2023 Tax Filing Season

We understand that tax preparation can be stressful, and we know how important it is to ensure it’s done properly.

That’s why we’re here to help you. Rest assured that our HAS tax experts will explain all the steps and get you through the tax process.

Contact us today for more information or to get help with your taxes!