The Ultimate Guide to Doing Taxes for the First Time

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First time filing your taxes? It doesn’t have to be a disaster! With a basic understanding of the system and some general knowledge on the details and implications, you can get through filing your taxes without losing sleep. Take the time to familiarize yourself with the process now, and you’ll find it easier and easier with every tax season. 

Who has to file? 

Before you start feeling anxious about doing your taxes, make sure you are definitely required to! As a first-timer, you might not have actually fulfilled the income threshold that obliges you to complete a report, or you may be exempt due to your age or filing status. If your gross income was under $12,200, for example, you might not be required to complete an income tax report, so it’s a good idea to make sure. However, even if you’re convinced you don’t have to file, you might want to consider doing so nonetheless, as you may be eligible for a refund. 

How to file? 

The three main ways of filing your tax return for the first time are: manually completing IRS Form 1040 or Form 1040-SR, electronically filing using tax software or hiring the services of a tax preparer. 

Getting started 

No matter how you plan to file your taxes, the first step you must take is gathering the necessary information. The three main things you need to get out are proof of income, deductible expenses, and evidence of taxes already paid during the year. 

This looks like: 

  • Social Security number 
  • W-2 form(s) from your employer 
  • Any 1099 form(s) 
  • Evidence of retirement payments 
  • Bills and receipts 
  • Evidence of other taxes paid such as state and local taxes or property tax 

 

Form 1040 

Form 1040 is the main form you have to be concerned with. It is the form used to report income, set out claims for deductions and credits, and calculate your annual tax refund or bill. Depending on your individual situation, you may have to add up to 6 schedules or sheets onto the standard 1040 Form, which is often where things get complicated. 

Should you seek advice? 

Perhaps you’re feeling confident about filing for the first time, in which case, congratulations! Perhaps you’re pretty confident but want to consult a professional just to make 100% sure. Or, perhaps you’re feeling completely lost and are in serious need of some clarification. Around 80% of people make errors in their tax returns.  

You can find a lot of information online, but if you want to be certain that your first time filing taxes goes well, it might be a good idea to hire a tax preparer. As well as guiding you through the process, soliciting the services of a tax preparer now can assure you are confident and informed for next year’s tax season. Click here to learn more. 

However you decide to file your taxes for the first time, it’s always a good idea to be well organized, get informed about your own situation and if necessary, enlist the help of a professional to help your first time go smoothly. 

  

Disclaimer: This content does not necessarily represent the views of IWB.

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