Income Tax 2020 to 2023. Free tax tools. Let’s do some wealth preservation with income tax preparation. Some resources you want to keep in mind when learning income tax law, income tax preparation include tax software, can you get access to tax software, possibly for free, we touched on that in a prior presentation.
00:25
We’ll touch on it again here. And then resources from the IRS itself found on the IRS website. So you want to memorize the URL for the IRS website, which is quite easy. It’s simply irs.gov Rs dot G O V, you can memorize it as irs.go V.
00:48
V for victory over taxes or something like that. Some of the free resources on that website include IRS Free File, which sorts out another way to sort out access to possible other third party software’s for free, we’ll take a look at that shortly. You also has the tax withholding estimator, which is kind of a projection tool.
01:11
So that’s a great tool to kind of run different scenarios and projections with possibly if you don’t have access to IRS or tax software, you can use the projection tool in a similar way. It also helps you to make estimates for your W four for your withholdings for your W two withholdings to fill out a form W four. And obviously, you have access to the forms on the IRS website.
01:38
So it’s always a great tool to just be able to search for the forms such as the form 1040. And and look at the actual data input areas on the form 1040. So let’s look at some of those resources now. So last time, we looked at some of the resources buy into it because into it’s one of the larger providers of tax software. So we’ll look at that.
02:01
And then we’ll look at the IRS website. So into it is INTU it.com intuit.com, they have some of their resources up top, they’ve got their products dropped down here,
02:14
I would go all the way to the bottom to look at their products because the bottom has been this way for some time, whereas the rest of their page obviously changes over time. And the for your accountant. Here’s the tax audits where we will we I will once again be using a cert mainly, for demonstration purposes,
02:33
you don’t need to be using the cert however, you can test out the Pro Connect the Pro Series, if you can get access to these softwares I think those are going to be a little bit easier to practice with because again, the data input and the jump into the tax returns might be a little bit faster.
02:49
Then there are other software, which is going to be the turbo tax software, which is more of an interview process, that software that you would typically use if you’re just doing one tax return your tax return,
03:00
as opposed to Solitaire you might use if you’re doing multiple tax returns. Now let’s go to the IRS website. So I’m going to go you want to memorize this URL, which is IRS dot G O V irs.gov irs.gov I rs.go. V,
03:17
however you want to memorize it, it should be fairly easy to do, because it’s a fairly easy website, right? Anytime you see the dot g o v, that means that you’re usually it should mean that you’re going to a government website whereas.com or something like a.net is going to be a private website, typically.
03:36
So some resources, when you go into the IRS website, obviously you can look at you could sign into your account, if you’re looking at your personal information. And then up top, sometimes you might want to look at the news.
03:49
So that’s another area that can be informative if you’re working in the tax field and you want to check that out from time to time.
03:58
But when we’re practicing, you’ve got you’ve got the file your taxes for free, that’s going to get us to that free file that might give us access to the actual software’s again, third party software, obviously you can make a payment if you’re talking about your individual taxes to pay online.
04:15
And then we have your account, get your tax records. So if you’re looking for your records for your tax information, you have that here get answers to your tax questions. And then this is the other one I was looking for find forms and instructions. Now you can go in here to look up forms and so on.
04:33
Or of course, you can just type it into your search engine up top. If you’re looking at the form 1040 You can type in form 1014. Let’s go into some of these. I’m going to right click on this one and open it in a new tab. So this is going to be the Free File the IRS Free File. Now you can you can also find that by just typing in up top IRS Free File.
04:54
They’ve been advertising this for some time, so you would think it would still be like on the first page other website as it is here pretty clearly and easily findable.
05:04
And down here it says choose your IRS Free File guide to tax preparation, let the software do the work. Now, this isn’t products provided from the government.
05:15
These are just links to third party software. But it gives you a kind of an organization and helps you possibly to sort those, they also have the Free File fillable forms, which is kind of similar to doing your taxes by hand.
05:29
But I wouldn’t recommend using the free file fillable forms for most people, because if your income is below a certain threshold, then you might have access to the free software.
05:40
And so you might as well use the free software, because it’s better to use anyways, because it’ll help you to reduce the amount of errors that might take place.
05:48
And if your income is higher than a certain threshold, and you don’t have access to the free options of the software, you still probably want to buy tax software at the minimum, because now your tax return is getting complex on the high end side of things.
06:04
And therefore software would be the minimum that you would want. If you have more income, you also have more tax planning capacity, possibly or the need for tax planning,
06:13
that’s when you might want to actually hire a tax professional at that point in time. So they can help you not just with the immediate need of tax preparation. But also with the tax planning.
06:24
As you have more complex and more cash flow going forward. As a tax preparer, that’s the same thing that you’d want to kind of understand from from your side of the table, right.
06:34
So if you’re saying, you know, if your income is on the low end, end side of things, at the least, you would want to have the tax preparation software to help. But even that can be difficult on the low income side of things, in part because of the complexity that has been increasing over time.
06:51
On the low income side of things with things like the refundable credits, the earned income tax credit is quite complex, even with software, you know, it gets like gets quite messy, the way it’s been structured in the last couple of years,
07:04
so having a tax preparer help you and that even would be good, the earned income tax credit, the credits with relation to health insurance and stuff like that educational credits,
07:17
those get quite complex, when you get into the higher income side of things, then you’re not going to have the complexity with some of those credits, because they might start to phase out the phase out in and of itself being complex.
07:30
But when you get to the high end side of things, then you have tax planning that will be involved. So not only do you have the need for a complex tax return,
07:39
but now you’ve got the need for tax planning. So the Free File fillable forms then don’t really fit into the picture at all, because I don’t think there’s really a point where you wouldn’t want to at least get either the free software or pay for the software.
07:54
And if your incomes gets high, you’re not going to do your taxes for free with the fillable forms, you’ll probably then hire someone or pay for the software. That’s the way I would think of it. Now if you go into this free guide to tax preparation, you got the IRS Free File guided stuff here.
08:12
So you’ve got browse all products, or IRS Free File online lookup tool, this tool will kind of help you to narrow down the options of the software, they often advertised that right here you can see if your AGI is under 73,000.
08:28
But that’s clearly the highest AGI offer because they’re trying to look as good as possible. These are software’s that are on the market, these are not provided by the IRS. So the best offer is going to be 73,000.
08:41
But it’s probably going to have some other qualifications, such as possibly not having access to some of the states that you might need to have access to, and so on. So you can go through here to find the offers that are that are geared to us specifically, or you can browse all the options.
08:57
Now this could be an it’s an interesting exercise just to look through the software’s that they do provide down here because I don’t even think Intuit is down here.
09:07
I think and which is funny because I think Intuit might offer TurboTax for a free if your income is below a certain threshold, but for whatever reason, they’re not participating in the IRS kind of thing down here, which is kind of interesting, but if you look at some of their software’s, then you might get a feel for the marketing software’s that are out there.
09:29
Now note that these software’s are going to be the types of software similar to a TurboTax,
09:34
which are kind of like the software for an individual tax return most likely designed unlike an interview type of process, if you can get free access to it. It’s great for practice problems still, but probably not as easy to work with a practice problem to change the variables as like a professional software
09:53
because you got to go back and forth between that interview process but if you can get access to one of them to practice with and run scenarios that would be great. So you got the tax act, you got the IRS Free File program delivered by EZ tax return.
10:08
Oh, LT online tax. So I’ve never used any of those free tax USA, you’ve got the tax act. I love the name of tax Slayer. I think they’ve actually been doing better. They’ve been they’ve been. I’ve heard about them more lately. So it’s kind of interesting. But again, I’ve never I’ve not used them.
10:27
So this was the options that they these are the companies that they are now working with, or promoting on the IRS website, which is interesting. It’s also interesting to note the companies that are not on their I don’t see I think h&r block has a has a software you can download.
10:43
I’m pretty sure that. And obviously I don’t see into it on there, which is conspicuously absent, which so it’s kind of unusual. But in any case, those are those options. If I go to the first tab, let’s go back in sign into your account, get tax answer tax questions, find find forms, I wanted to take a look at the tax withholding estimator.
11:08
So I’m going to go up top here, I’m just going to type in tax with holding estimate tour and see if I can find that. So this is another useful tool. So use this tool to estimate the federal income tax you want employer to withhold from your paycheck. So because this has become more we paid taxes as we go. So we’ve got to pay as we go.
11:33
And we’ve got to tell our employer how much to withhold by issuing or giving them a W four, it used to be fairly easy to do this when people’s we had a one income household, and you had people working for the same company their entire life, and the tax code wasn’t changing all the time.
11:50
Now, the tax code is changing all the time, there’s more than one income household, and people are switching jobs like crazy all the time. So so it becomes a lot more difficult to estimate your taxes in a progressive tax environment where you have to pay as you go.
12:06
So you really need kind of software to try to, to really get x some kind of accuracy in terms of how much your withholdings should be how much your estimated payments should be.
12:16
Now this so the best tool to do that would be to have like tax software, say that would be projecting into the future. So there’s going to be like if you had an Intuit tax software, for example, the cert, but then you had the software,
12:30
that’s projection software, that’s going to try to project what’s going to happen in 2023. Like you could you could try to say, Well, I think 2023 is going to be similar and use 2022 software to try to project your income in 2023.
12:47
But there’s problems with that, because of course, the laws could change for 2023 versus 2022, and so on. And obviously the law could change as the year goes and everything as well. But that would be the best thing to have some kind of tool that you can project out into the future.
13:03
And this tool is getting better and better at that. So you might be able to use this tool, for example, as like a type of, of, of software of type type of tax software.
13:16
And it’ll give you it’ll give you it’s got to calculate basically your taxable income and so on so that they can estimate how much tax you’re going to owe in the year so that it can estimate how much you would need to be withheld withholding.
13:27
So it’s it, it’s getting better and better a more robust tool over time. So if you don’t have access to any tax software, and you just want to run scenarios, this is another kind of projection tool that works in a similar way that can be used for that purpose.
13:42
And of course, if you’re talking to clients and whatnot, you need to be able to tell them, you know, if their withholdings are too much or too little, that they need to change their withholdings and the way to do that one place you can go is his tax withholding estimator. To do that.
13:59
All right, back to the first tab, find forms. So if I go into the Find and the forms, so you’ve got your popular forms, obviously the 1040, the W four, the W nine, and so on and so forth, you’ve got all your forms.
14:15
Down here. Clearly, if I was looking for any actual form, I can go to list all current forms and instructions. And then it gives us basically our list of forms.
14:24
Again, if you just typed in the name of the form up top form 1040, then you’d probably get to where you need to go there as well. But if I need to find my form here form 1040 searching. So there’s the form and there’s the instruction.
14:40
Note that obviously this is a great tool because when we’re working in the practice problem, we’re going to do the data input into software possibly in order to populate the forms, but the end result is clearly the tax form.
14:55
So we’re always going to be bouncing back over here to the tax form. trying to increase the size of this thing, and they switched up how to do it. So clearly, if you have the actual form 1040, this is going to be basically the end result.
15:10
And we’ll also going to have other, you know, 1040 and related schedules that we will be dealing with over here. So you can look those up, but realize that there’s going to be the form 1040, or whatever form you’re looking for, and the instructions related to it.
15:26
So usually, when you’re thinking about or researching something, that’s one of the first places you want, you’re going to want to go right, what how do I do the data input into this form, you can look at the the actual instructions related to the form.
15:41
And oftentimes, that will give you more of a technical data input analysis, but they will also often guide you to other resources, such as publications into the law,
15:52
so that you can then research if you have any questions about about more detailed questions like do I have to include this in income or not, and so on, and so forth. So clearly, as we go forward.
16:05
And if you don’t have access to the tax software, or even if you do have access to the tax software of some kind, you want to have the forms available, either in the format of the tax salts or and or on the IRS website.
16:19
So that you can kind of keep them in front of you as a as a guiding tool, we’re also going to be creating an Excel worksheet, which will act kind of like the forms but being a more simplified or formulaic format. And that’s another tool that that you can basically keep in front of you so that you’re following along with these tools.
16:37
And you can practice the data input, remembering that really understanding the tax law from a functional practical perspective, works very well to just keep on running scenarios, just increase and decrease the income levels, increase and decrease, you know, the amount of deductions and so on, into tax software,
16:57
into our Excel formula into the estimator tool up here and observe what is changing in the code and then you can end the actual end result on the tax forms. And then you can deconstruct why it is that has happened and you can make the change. You can think in your head what’s going to happen.
17:15
And then you can look and see what actually did happen. If something happens that you didn’t think would happen, then you want to say why and dig down and say, Okay, there’s a phase out that happened here, or my income line item had an impact on the adjusted gross income,
17:29
the Adjusted Gross Income, lowered the amount of child tax credit or something like that. So those are the kinds of scenarios that will start to run. These are the tools you can use to follow along as we do