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Every year around the 15th of April, tax returns are due. A tax return is a set of documents prepared for the Internal Revenue Service, the IRS. They can be prepared in several ways, but one of the most common ways is by a company that offers tax service in Denver. A company like this is an accounting company and they have accountants on staff. Not all of the workers are CPAs, certified public accountants, but some are. These accountants understand the work it takes to prepare tax returns and they understand tax law. Tax laws tend to change from year to year and accounting firms must keep up with this. A Denver tax service business generally uses tax software to complete returns, and this software is updated each year to reflect all of these changes. When you go to a Denver tax service company, you will meet with one of the accountants there and she will go through numerous steps of the return with you. Income The first part of tax preparation is recording the amount of income a person has earned during the last year. If the person works for a company, the company would have given the person a W-2. This is a tax statement that records several key pieces of information. It contains the person's earnings for the year and this is stated in one lump sum. It is the gross wages the person earned for the entire year, and this number is used for determining a person's income for the year. In addition to this information, there is also other information on the W-2, but this information is used at a later point in the tax preparation process. If the person has any other income, it should be discussed with the accountant. The income might be listed in the form of 1099s. These are also tax documents, but they are used for other types of income. One common type of income listed on a 1099 is interest income. If you have earned any interest on accounts you have, it should be recorded on your tax return. Your bank would have issued you a 1099 that stated this information. Another type of income is self-employment income. If you happen to own a business, you may have self-employment income to record on your tax return. Your accountant will let you know what information is needed to determine your self-employment income. Deductions There are several ways that a person's income is reduced and this is all calculated by Denver tax service companies. A person may choose to itemize his deductions. The alternative to this is to choose to take the standard deduction. The standard deduction amount for 2012 is $11,900. If you have itemized your deductions and the amount is higher than this amount, it is best to use the itemized deduction amount. You can also write off exemptions. This amount is $3,800 per person for 2012. If you have four qualifying people, you will get to write off this amount times four, or $15,200. The purpose of all of these things is to reduce the amount of taxable income you have. The taxes you have paid will also be applied to this, and you will end up with a bottom line figure. This figure will show one of two things. It could show that you have overpaid your taxes and this will result in receiving a refund check. The other option is that it could show that you have underpaid your taxes. In this case, you will owe money and will be required to send a check for this amount to the IRS when you send in your taxes.
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