Basic Guide to Filing Taxes for the First Time
Filing your taxes may feel intimidating, especially if you have never done it before. Thankfully, you can lower the stress of filing taxes by exploring a few basic tips. Here are a few things you should know when you start filing taxes for the first time.
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Collect Tax Documents
Before filing your taxes, you will need to make sure you have all your tax documents collected and stored in a safe place so you don’t lose them. A few important tax documents you may receive include:
- 1099 Forms
- Tax forms reporting other sources of income (such as online selling or running your own business)
- Tax deductions
- Relevant receipts (such as business expenses)
Of course, the forms you need will vary depending on what you did in the past calendar year. Several common things that may impact your taxes include finding a job, selling stocks or mutual funds, paying college tuition or student loan interest, getting married, having a baby, buying or selling a house, and contributing to a retirement fund.
Determine Your Dependency and Filing Status
Before filing taxes, you should determine whether you are a dependent. This will depend based on your living situation in the past year. If your parents covered more than half of your expenses for the year, such as providing you with housing, utilities, and food, you are considered their dependent. If you decided to live on your own and managed your own finances, you would claim yourself. It’s important to make sure that you and your parents are on the same page regarding your dependency before filing.
Then, you will need to determine your filing status. For example, if you are single and have no children or dependent relatives, you would file as single. Single parents or guardians that have dependents living with them for the majority (or all) of the year and are covering the majority of their living costs can pay less tax by filing as the Head of Household. Married couples would generally file jointly. Of course, there are instances where couples may choose to file separately, so you’ll want to talk with your spouse prior to filing.
Give Yourself Plenty of Time and File Electronically
One mistake many first-time tax filers make is waiting to file at the last minute. You should give yourself plenty of time before the tax deadline to get your taxes filed so you don’t find yourself scrambling. Not only will planning ahead making filing less stressful, but you’re less likely to make mistakes as well.
Additionally, it’s recommended that tax filers file electronically rather than on paper. By filing electronically, the IRS will receive your return sooner than if you were to go to the post office. If you are expecting a tax refund, e-filing your return can also speed up the process in getting your refund to your bank account quicker. A few recommended places you to consider filing your taxes with include the IRS, TurboTax, and TaxAct.