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Tips for Filing Taxes for the First Time

Tips for Filing Taxes for the First Time - TaxACT Blog

You can’t fully understand many important things in life until you do them for the first time: riding a bike, getting your first job, and doing your taxes.

Filing your income tax return is one of those adult rites of passage that can seem shrouded in mystery until you sit down to file for the first time.

The good news is that filing taxes for the first time is usually pretty painless. Uncle Sam might even end up paying you!

The income tax process actually begins on your first day of work, when you fill out a W-4 form.

The form includes a worksheet where you can tally basic information, like whether you’re married or have any dependents, and figure out how may allowances to claim.

Based on this number, your employer will withhold money from each of your paychecks, which goes toward your income taxes.

You can ask for additional money to be withheld from each check if you’re anticipating a larger-than-normal tax bill you’ll need to cover.

Yes, income taxes are collected all year ’round, not just on April 15.

Filing a tax return is a way of “settling up” with Uncle Sam. If you didn’t withhold enough tax from your paychecks during the year, you might have to pay the balance – but if the opposite happens, you get a refund.

First things first; do you even need to file a tax return?

The IRS only requires tax returns from people making the minimum amount of money for their filing status.

Here are the minimum filing requirements for the 2014 tax year for people under 65 as of Dec. 31, 2014.

  • Single people: $10,150
  • Heads of household: $13,050
  • Married couples filing jointly: $20,300
  • Widowers and widowers with dependent children: $16,350

Married couples filing separately have a threshold of $3,950, regardless of age.

If someone else claims you as a dependent on his or her tax return, the filing requirements are lower:

  • Single (under the age of 65): $6,200
  • Single (over 65): $7,750
  • Married (under 65): $6,200
  • Married (over 65): $7,750

Most of the information you need to file your taxes will be included on a form called a W-2 that your employer will send you in January or February.

The form shows exactly how much you were paid during the tax year and how much was withheld as federal and state income tax (if your state has income tax).

What if you’re self-employed? Do you also pay income taxes year round?

For most self-employed people, the answer is yes.

Whether you are an independent contractor or a sole proprietor of a small business, you need to pay estimated taxes quarterly.

Instead of receiving a W-2, self-employed people receive Form 1099-MISC from any business clients who provide “nonemployee compensation.”

With your W-2 or 1099-MISC in hand, you’re ready to fill out your first income tax return. But which IRS Form 1040 do you need to file?

It depends on the complexity of your tax situation:

  • 1040EZ is for single filers with no dependents and no mortgage who wish to claim the standard deduction.
  • 1040A is for single or married people who own a home, have dependents and want to claim certain tax credits or deductions, but also do not want to itemize all their deductions.
  • 1040 is for people who own their own businesses, have rental property income or want to itemize deductions.

Rather than navigate which 1040 form you need to file and tax law, let TaxACT Free Federal Edition guide you.

TaxAct makes preparing and filing your taxes quick, easy and affordable so you get your maximum refund. It’s the best deal in tax. Start free now or sign into your TaxAct Account.

Comments

  1. I just have a question. Hoping someone out there can help. Me and my dad are partners in a business. But, I don’t get any money from it, my name is just on there because I take care of everything. So in the past we always just split the taxes and file that way. So basically I’m paying for nothing. So my question is how much do you have to make to have to file or being a business does that even apply? Thanks

  2. Daisie Carroll says:

    I’m nervous about filing my first time so how difficult is it to do it yourself? I’m afraid that I will miss something or mess up and screw up my tax return. any pointers for being a first timer????

  3. I am totally agree with this post. Very nice post and helpful to us. Thanks.

  4. Hi There,

    This is my two cents. Though I welcome all reasonable taxpayers as a tax professional in the business of preparing tax returns, I sometime appreciate a person who prepared their taxes at one time in their life as they may appreciate and/or respect what I’m doing for them more if they have done it themselves in the past. Their life and income tax returns may have become more complicated but this person has an idea of what I need and why I need iit and is

    I am an Enrolled Agent tax professional and degreed accountant with well over 10 years experience and have been using TaxACT for over 10 years. Even though the tax code is larger and more complicated than ever the software keeps getting better and better. Second Story Software which I believe still makes “TaxACT” was like “the little engine that could”. They offered and continue to offer a great product at a very reasonable price and I have used at least a few years of their some personal do-it yourself products as well as professional products / tax software editions.

    **Per the article above, it is kind of a “rite of passage” if you are both young and don’t have a complicated return such as maybe a W-2 and or another income form such as a 1099 to enter (other than a 1099-MISC Box 7 for self-employed people) or 10.

    **However, it is also a “rite of passage” to know when you need your taxes done by a professional and not let ego friends with little tax knowledge cloud your judgment. You will often still be involved in the process but could save hundreds if not thousands of dollars and statistically are less likely to be audited by the IRS if your income tax returns are prepared by a third-party tax professional. It is important to realize when you need to make the switch. My Father use to do my tax returns by hand when I was in college studying accounting at UC Santa Barbara. Even though he was a business professional, his tax own tax returns had some of the major Schedules and thus both my Mom and Dad had their individual tax returns and my Dad’s corporate tax returns were both prepared done by a tax firm while my Dad completed my simple taxes by hand. Later, after gaining some expereince at CPA & Tax Firms tax professional I took over my parents taxes.

    I’ve prepared tax returns for business professionals, CFPs, Financial Invesment Advisers, stock brokers, accountants, and CPAs (who may have never worked in income taxaction and/or haven’t kept up with changes in tax code/rules) who know they need help.

    My last note of advice is that Business entity income tax returns such as Corporations, Partnerships, LLCs, and even Schedule C. of the 1040 are probably best handled by a tax professional with an accounting background as well as they understand the income tax verision of an Income Statement, Balance Sheet, as well as issues like depreciation, accounting journal entries and adjustments, etc.

    I hope this is of help to someone out there.

    Sincerely,

    Stephen W. Anderson, EA

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