Essential tips for all you first-time filers out there ⬇️
Figure Out If You Have to File a Tax Return
To determine if you need to file a tax return, there are a few key factors to consider.
In general, if your gross income in 2023 was at least $13,850, you’ll likely need to file a tax return in 2024.
Keep in mind that different rules apply to married individuals, older Americans, and heads of household.
It’s important to note that even if you can be claimed as a dependent on someone else’s tax return, the $13,850 threshold still applies to you.
If you are considered a dependent, you must file a return if you have accumulated at least $1,250 in “unearned” income, such as interest from investments.
Get Your Documents Together Early
Once you’ve determined that you need to file a tax return, it’s time to gather the necessary documents to complete it.
Here’s a list of essential documents to gather:
W-2:If you have a job, your employer is required to send you this form by the end of January. It provides details on your earnings for the previous year and the amount of tax withheld.
1099s:These forms report income that doesn’t come directly from a traditional employer. They include earnings from freelance work, “gig” pay, interest and dividend income, as well as income from third-party platforms like Venmo and PayPal.
Receipts: As a first-time taxpayer, it’s important to start keeping records of transactions that may need to be reported on your tax form. This includes income, expenses, and potential deductions. For example, keep track of any charitable donations you make or significant medical bills you incur.
By gathering these essential documents, you’ll be well-prepared to complete your tax return accurately and efficiently.
Gather Important Personal information
You’ll need the following personal information on hand to file taxes:
- Social Security Number (SSN) or Taxpayer Identification Number
- (TIN)for yourself and any dependents
- Full name and date of birthfor all individuals on your return.
- Proof of identitywith a valid photo ID
- Bank accountinformation,including yourrouting and account numbers, if you want to receive your tax refund via direct deposit.
Figure Out If Someone Can Claim You as a Dependent
It’s important to determine whether someone can claim you as a dependent, especially if you’re living with your parents or receiving any financial support from them.
According toTurboTax, parents can claim you as a dependent if you’re under 19 years of age, or under 24 and a full-time student, and they provide more than half of your financial support.
While parents can receive tax benefits by claiming you as a dependent, it’s also crucial for you to report this dependent status on your own tax return.
Be sure to check with your parents and discuss whether they plan to claim you as a dependent and how it may affect your taxes. Always stay informed to ensure that you’re taking all the necessary steps towards financial success.
Figure Out If Someone Can Claim You as a Dependent
It’s important to determine whether someone can claim you as a dependent, especially if you’re living with your parents or receiving any financial support from them.
According toTurboTax, parents can claim you as a dependent if you’re under 19 years of age, or under 24 and a full-time student, and they provide more than half of your financial support.
While parents can receive tax benefits by claiming you as a dependent, it’s also crucial for you to report this dependent status on your own tax return.
Be sure to check with your parents and discuss whether they plan to claim you as a dependent and how it may affect your taxes. Always stay informed to ensure that you’re taking all the necessary steps towards financial success.
Determine Your Tax Filing Status:
Here are the five primary filing statuses:
- Single:If you’re unmarried.
- Married (filing jointly):For married couples who want to combine their income on one return.
- Married (filing separately):For married couples filing separately.
- Head of household:For unmarried individuals who support dependents.
- Qualifying widow/widower with dependent child:If you’re a surviving spouse with a dependent child.
Include the appropriate filing status on your forms, when filing your taxes for the first time.
Find Out If You Qualify for Deductions or Credits
When it comes to taxes, deductions and credits can both help decrease your overall tax liability. Tax deductions work by reducing the amount of your income that is taxable while tax credits decrease the amount of tax you owe.
For first-time taxpayers, there are afew common deductions and creditsthat may apply:
- The student loan interest deductionis one example of a deduction and can possibly result in a maximum deduction of $2,500 for the interest paid on student loans.
- The American Opportunity Tax Creditis a credit that can be claimed by those individuals for whom no one can claim as a dependent, allowing for up to $2,500 credit for college expenses.
- The Earned Income Tax Credit may be an option for individuals who earned a low income in 2023. It is essential to consult the IRS tables for information on how to qualify for this credit based on your income level.
- Lifetime Learning Credit:A credit that helps cover the costs of post-secondary education, including tuition and related expenses, for eligible students.
- Educational expenses deduction:This deduction covers certain educational expenses.
- Home Energy Tax Credits:A credit for homeowners who make qualifying energy-efficient home upgrades.
- Energy Efficient Home Improvement Credit:A credit for homeowners investing in energy-efficient home improvements.
Deductions and credits can be a valuable tool when it comes to claiming your taxes.
Getting your taxable amount to the lowest possible is important if you want to pay less in taxes. It’s crucial to research which ones may apply to your situation and take advantage of them while preparing your tax return.
Decide if You Need Help
If you’re a first-time taxpayer, you have the option of either doing your own taxes or hiring a professional.
Many Gen-Z individuals choose to do their own taxes, which is generally fine if your tax situation is straightforward.
By taking the DIY approach, you can potentially save money and complete your tax return quickly using tax software or theofficial IRS Free File program.
Calculate your estimated Tax Return using Turbo Tax.
Completing Your Tax Filing
Once you’re prepared to file your taxes, it’s important to ensure the accuracy of your tax return. Take the time to review your personal information, income, deductions, and credits for any errors or omissions.
Online Filing: If you choose to file online, the platform you use will typically guide you through the process. Before proceeding from one page to the next, carefully verify the information provided for an easier filing experience.
Tax Professional Assistance: When working with a tax professional, they are responsible for reviewing their work. However, it’s crucial to provide them with accurate information from the start. If needed, ask for a walkthrough of your return to gain additional peace of mind.
Nonprofit Organization Assistance: If you’re seeking help from a nonprofit organization, you might be required to attend in-person sessions and bring all necessary documents. The organization will then assist you in submitting your tax return.
Paper Filing: If you opt for paper filing, complete all mandatory forms accurately, attach supporting documents, and send the package to the appropriate IRS address. Take the time to double-check everything before mailing your return, and remember to include a signed and dated copy.
It’s crucial to file your return by the tax deadline to avoid any late penalties. For the 2024 tax year, the deadline is April 15, 2024.
Pay the IRS if you owe taxes
After filing your taxes, you’ll either receive a tax refund or a notice of the amount you owe to the IRS. If you end up owing money, you’ll need to know how to pay what you owe.
You have a few options:
- UseIRS Direct Pay:This online service lets you pay your tax bill directly from your bank account. It’s a secure and convenient way to pay the IRS without any fees.
- Pay with a credit or debit card:You canpay your taxes using a credit or debit cardthrough authorized payment processors, but this method includes fees.
- Pay in installments:If you can’t pay your tax bill in full, you may be eligible for an installmentpayment plan with the IRS. This allows you to pay your tax debt over time in manageable installments.
Whichever method you choose, pay what you owe on time to avoid any penalties.
Common Tax Mistakes to Avoid For First-Time Filers
- Misreporting any earned income
- Not claiming qualified deductions or credits
- Forgetting to sign and date your Tax return
- Missing the date to file
- Not keeping organized and accurate records.
- Inaccurate Filing Status
