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Filing your taxes for the first time can be intimidating. There’s a good chance you’ve heard people complain about having to file their taxes in the past, so it’s normal to be feeling a little apprehensive.
But don’t stress! Filing taxes for the first time isn’t nearly as complicated as you might think.
Most first-time tax filers don’t have overly complicated finances, which means you just need to learn a few tax filing basics to get started.
To help you out, we’ve come up with six useful tips for first-time tax filers to help you crush your first tax season.
1. Start collecting tax information early
One of the biggest frustrations of filing your taxes is locating the necessary documents and receipts you received throughout the year. When you suddenly can’t remember where you put the receipt for those medical expenses you had last summer, preparing your taxes quickly becomes a stressful task.
Taking a little extra time to plan ahead can make your life a lot easier!
You don’t need an elaborate filing system to keep good track of your tax information — a simple file or box will do. The important thing is to make sure everything is in one place where you can easily find it later. Don’t put any other documents in this file or box. You’ll save yourself a lot of sorting later on.
Start by saving receipts for expenses related to tax deductions and credits in a safe place throughout the year. If you’re self-employed, be sure to keep receipts for all your business expenses, both big and small.
Business expenses reduce your self-employment tax, as well as your income tax, so you don’t want to miss any of them!
Be careful not to overlook items such as printer ink, parking and tolls related to your business, and other expenses. Keep a notebook or consider tracking your business mileage electronically.
As your tax forms start arriving in January, drop them in your tax file or box immediately. Try not to let them land on the countertop or any other area where they might be misplaced.
2. Organize your tax documents
Organizing your tax information can be as simple as putting your W-2 forms in one pile, your other income in the next pile, and possible deductible expenses in a third.
If you have a small business or other self-employment income, do yourself a favor and make a list or spreadsheet of business income and expenses. Don’t forget to organize information for possible credits, such as the Child Tax Credit.
To help you stay organized, we have a handy tax preparation checklist you can use to ensure you have all the tax documents you need before you start filing.
Once your information is organized, the rest is easy. When choosing to use TaxAct® as your tax preparation solution, you can easily prepare and file your federal and state returns by simply answering a few questions as you go.
3. Figure out if you are a dependent of someone else
One of the most important details you need to know before filing your tax return for the first time is whether you are classified as a dependent on someone else’s tax return.
Ask yourself: Did your parents or another person pay more than half your expenses this past year? If so, the IRS generally considers you to be their dependent for tax purposes. As a result, your parents can claim a tax credit or other tax benefit for having you as a dependent. In that case, simply indicate that you can be claimed as a dependent on someone else’s return when you e-file with TaxAct.
If you do not indicate that you can be claimed as a dependent by someone else and they claim you on their taxes, the IRS may reject your return. So, make sure to talk to your parents or another relative and see if they plan to claim you as a dependent.
You can view the IRS’s current rules about who can be claimed as a dependent on someone else’s tax return here.
4. Determine your tax filing status
The IRS uses your tax filing status to determine what they need from you to file your return. Your filing status can also determine the standard deduction amount you qualify for and your eligibility for certain tax credits.
The different filing statuses are:
- Single: If you are unmarried and do not qualify for another filing status (for instance, you have no children or other dependent relatives), you should file as single.
- Married filing jointly: If you are married and you and your partner both agree to file a joint return, you can use the married filing jointly tax status. Typically, couples will pay less tax by filing jointly.
- Married filing separately: If you are married and want to file a separate return from your spouse, you can choose to file as married filing separately. This filing status may benefit you if you don’t want to take on your spouse’s tax liability. Some couples also prefer to file separately if they keep their finances separate.
- Head of household: If you are considered unmarried on Dec. 31 (or your spouse didn’t live with you during the last six months of the year), you paid more than half the household costs, and a qualifying person (such as a dependent) lived with you for more than half the year, you qualify to file as head of household. This filing status will save you more money than if you filed as single.
5. Read your return
DIY tax filing makes tax preparation much easier than it was back in the day for your parents or grandparents. Gone are the days of having to fill out forms by hand. Now, you can simply input your financial data into online tax software (like one of TaxAct’s digital or download solutions) and follow the steps to file your own taxes quickly and efficiently.
However, that doesn’t mean you should just plug in the numbers and file — be sure to read your entire return! If you don’t understand something, check out our help topics to learn more.
Reading your return not only helps you feel confident in its accuracy but also helps you understand how taxes work. TaxAct customers can use Refund Snapshot to get a clear picture of how specific deductions and credits can affect your tax refund or amount of taxes owed.
Building your knowledge about taxes and your financial situation can help you plan better for years to come.
6. Give yourself enough time
Your first return shouldn’t take too much time, but you don’t want to rush it. Starting early in the year gives you a chance to work on your return without the stress of a close deadline.
For tax year 2021, the IRS will start accepting and processing returns on Jan. 24, and you have until the due date on April 18, 2022, to file your 2021 federal return.
Filing deadlines for state income tax returns vary by state. Be sure to mark your calendar to give yourself enough time to meet the deadlines!
If you find yourself trying to beat the clock, you can file an extension to give yourself more time. It’s far better to get a filing extension than to hurry through your return and possibly miss tax deductions or credits that could have left you with more money in your bank account.