The 2024 tax season is open. So, how do we file our taxes?
Preparation
The first step in preparing your taxes is to think back to 2024. Did you work a W-2 job? Did you sell any stocks or crypto? Did you earn interest income from a bank? Did you have a mortgage? Did you receive any income from selling?
The answers to these questions will partially determine the documents you will receive.
The most common income documents are:
→ Form W-2 – Wages and Salaries (Your 9-5 income)
→ Form 1099-INT – Interest income (Received from a bank)
→ Form 1099-DIV – Dividend income (From brokerage)
→ Form 1099-B – Investments sold (From brokerage)
→ Form 1099-NEC – Non-employee compensation (Contracting)
→ Form 1098 – Mortgage Interest Statement (Mortgage)
Then, we will use the information from these forms to file our taxes.
Software to file
I personally use FreeTaxUSA¹ to file my taxes:
• $0 for federal return (no matter how complex, any income level, includes self-employment, rentals, investments, sale of homes, etc)
• $14.99 for a state tax return, or $0 if you don’t require a state return:
• W-2 import
• Filed over 71 million of tax returns with the IRS
P.S. If you want, you can use my affiliate link to sign up as a way to support my content.
Filing
Once you get into FreeTaxUSA, you will see a few different tabs:
Personal, Income, Deductions/Credits, Misc, State and Final Steps.
The software will guide you and ask various questions, like:
“Do you have a W-2?”
“Do you have 1099 Forms?”
“Do you own a home?” and that will help you fill out the information.
The “Income” section would have all the items that you need to enter for the money you received, like wages, interest income, business and rental income.
Now, just because you haven’t received a form, it doesn’t mean you don’t have to report it (e.g. side hustle income).
The “Deduction” section is pretty straightforward.
For 90% of people, standard deduction is higher than itemized, and none of these deductions will really have an impact on your taxes, but it will for some; so always enter the information you can.
The “Miscellaneous” section will include rare items, such as 2024 estimated payments, penalties, and foreign incomes.
It may not apply to most people with a W-2 job, but make sure that you enter this information if it applies to you.
The FreeTaxUSA software will automatically transfer your information to the state tax return if you live in a state that requires filing. Each state has unique additions or subtractions (e.g., a 529 plan or K-1s), and the software will guide you through these questions to ensure you get all the deductions.
When you are done filing, make sure to download copies of the federal and state tax returns for your records. This will be helpful in case there are any discrepancies.
Also, keep all the receipts and forms you have. They will help you navigate an audit if that happens.
Overall, I’m using FreeTaxUSA for my fourth tax season to file my own taxes (it’s cheaper than commercial pay-per-return software!). I’ve found that they cover complex situations, are more transparent, and cost less than competitors.
If you want to sign up, here’s the link.
See you next Saturday.
MC, CPA
Disclosure:
¹ I decided to partner with FreeTaxUSA to bring awareness to their affordable & effective tax filing software. As you know, I haven’t promoted anything on The Crunch, but I genuinely believe they are the best in the business and have personally used them for 4 tax years.