The process of filing your own taxes can seem daunting, especially if you are doing it for the first time. But assuming that your financial situation is fairly straightforward and you have the necessary documents already in order, it can actually be a cinch. Plus, many of the tax filing programs available today will help walk you through the whole thing, step by step, so you are never truly on your own.
Still, you can save yourself some stress — and time — by doing a little legwork now. Here’s how to set yourself up for a successful first time filing.
Determine whether you actually need to file
Before you start worrying about the specifics of filing, make sure you definitely need to file. Whether or not you need to file your taxes depends on a few factors, including your income, your age and your tax filing status.
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“If you can be claimed as a dependent on another taxpayer’s return and you’ve had a job — even a part-time one — and earned more than $15,750 in the tax year — you’ll need to file,” said H&R Block. The same goes for if you brought in more than a certain amount in unearned income, such as interest from investments. However, “if you don’t fall into either category and are a dependent, you are likely not required to file a federal tax return.”
Be clear on your tax filing status, including whether you qualify as a dependent
Knowing your tax filing status is relevant for figuring out whether or not you need to file, and it also affects your tax rate, as well as deductions and credits. Your selection here will be fairly straightforward if you are unmarried and do not have any dependents.
Another consideration to ensure you do not overlook: whether you are claimed as a dependent on someone else’s tax return. “If you fail to indicate that you can be claimed as a dependent by someone else, and they do claim you on their taxes, the IRS may reject your return,” said TaxAct. Generally, the IRS considers you claimable as a dependent if a parent or another person paid “more than half of your expenses in the past year.”
Taking the time to figure out what documents you will need when you go to file, and where those documents are located, can make all the difference in how painstaking or pain-free the tax-filing process is. Broadly speaking, these documents will include any income tax forms, such as “W-2s, 1099s and other forms reporting any kind of income,” plus supporting documentation for tax deductions and credits, like a Form 1098-T if you are a student and qualify for the American Opportunity Tax Credit, said Bankrate.
To avoid backtracking later, consider collecting these forms in one place as they arrive. And before you file, it is worth taking a minute to “think about anything you did in the past year that might impact your taxes,” like “changing jobs” or “paying college tuition or student loan interest,” said Intuit TurboTax.
Be conscious of the deadline
This applies to any tax filer, but it is especially true for a first-timer: Make sure to give yourself plenty of time to file ahead of the April 15 deadline, ideally with a buffer built in, just in case anything unexpected crops up (such as a crucial document gone missing).
The earlier you file, the “better your chances of avoiding tax-related identity theft” will be, not to mention that “if you’re owed a tax refund, you may receive it sooner,” said Better Money Habits, Bank of America’s financial education platform.
