Tax Tips for First Time Filers
Filing your taxes for the first time is a major personal milestone. It’s also a task that may seem overwhelming, if you’re not properly prepared. Fortunately for most tax rookies, the process is fairly straightforward and doesn’t require much more than research, effort and patience.
Here are some smart tax tips for first-time filers.
Collect your Information and documentation
>Before you get started, it’s important to have all the materials you’ll need at your disposal. Your social security number, bank information and all relevant W-2 forms are the basics. Your employer is required by law to send your W-2 by the end of January. Freelancers may receive a different form, the 1099-MISC. Along with these statements, you may also have to fill out forms for things such as unemployment benefits or investment income.
Focus on the form
Once you have your personal information in hand, it’s time to determine which tax filing form works best for you. For many first-time filers, the 1040EZ is the obvious choice. The 1040EZ lives up to its name — it’s streamlined, easy to navigate and designed for people with uncomplicated tax returns. There is a drawback, however — only single people or those married with no dependants can use it. If you qualify, start with the 1040EZ and go from there.
Know where to file
Filing your federal taxes correctly is usually only half the battle. Most of us will have to file state taxes as well, so it’s important to determine your eligibility. While that means work, it also may mean a larger refund.
Master the basics
If you don’t know exactly what a deduction is or how to get one, don’t feel like preparing your taxes is a hopeless task. Everyone is entitled to a standard deduction, and it’s simple to calculate — in fact, it shows you how right on your tax form. Other deductions, for things like business expenses or childcare, can be a bit trickier — so it’s usually a good idea to have an experienced tax preparer take a look at your return if you’re going to claim significant deductions.
Filing choices
Many people don’t realize that professional tax preparers will sometimes offer to take a look at your prepared return for free. First-time filers may want to avail themselves of this opportunity. There are also a plethora of free resources online for tax filers. The IRS also partners with other tax entities for free or discounted professional filing assistance, depending on income eligibility. You may also wish to use one of the popular tax preparation software programs. These are usually quick, easy and accurate, but they will usually cost you money.
Watch the date!
Getting your taxes in before April 15 is important — otherwise the clock will begin running on interest and penalties. If you’re going to owe and don’t have the money to cover your debt, you may choose to file a six-month extension. This will provide you with breathing time to get your finances in better shape.
Filing your taxes isn’t exactly fun, but it doesn’t have to cause you undue stress. Follow these quick steps and your first tax filing experience will be a successful one.
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