Filing taxes for the first time is a huge milestone for most new adults, but it can be an intimidating task. Knowing what documents you need and getting everything finished and filed before the deadline could be overwhelming the first time you do it.
The more you know about the whole tax system, the more relaxed you will feel when filing your taxes. It is time you take charge of your finances and start filing your own returns. Here are a few things you should know when filing taxes for the first time.
Know if you need to file a tax return
Before you start stressing over the whole process of filing your taxes, first, determine if you need to file. To file a tax return, you need to meet a few income requirements during the year. For 2021, if you are single and under 65, your gross income for the year needs to be higher than $12,400.
If you think you don’t meet the income requirements, you don’t have to file anything. You might be free of this tax filing headache for another year!
To make sure you are required to file for taxes this year, the IRS has a helpful tool to determine if you meet the income requirements or not.
Gather your documents throughout the year
To make your life easier during tax season, save and gather up all your tax-related documents and paperwork throughout the year. Keep all your receipts of medical bills, donations, and work or business expenses. Having all these documents on hand lets you get a sense of what tax credits or deductibles you can apply for when it is time to file for your returns.
Figure out how you want to file your taxes
You can choose to file taxes in person, by mail, or online. You should start receiving tax forms from your employers and the IRS. Some common income tax forms include IRS Form 1040, Form W-2s, or Form 1099 MISCs. Be sure to fill out all the forms required through the IRS website or get in touch with a tax preparer. If you miss out on any forms that are required, you will have to amend your tax return at a later date.
The easiest way to figure out how much you need to pay and what forms are required is by using tax preparation software. There are lots of tax filing software available online, like TurboTax. These programs require you to answer questions about your income and financial habits, and it then fills out the appropriate forms depending on the answers you have given. Using online programs is the fastest and simplest way to file your taxes for the first time.
Taxes are never fun and are huge stress on most people, especially when filing for the first time. But, don’t fret! Learn about the tax system as much as possible, or get in touch with a tax professional to help you along the way. It is just another step into adulthood!