Filing taxes for the first time can be confusing, especially if you were included on your parents’ tax returns before this year. Here are some tips to make the process easier for you:
- Clarify your dependency status. If you made very little money or are a full-time student receiving financial support from your parents, they can still claim you as a dependent on their return. In that case, you won’t need to file your own return. Check with your parents before you file your first return.
- Get organized. If you’ll be filing your own return this year, you’ll need either your W2 form from your employer, or your 1099 if you’re an independent contractor. Your clients will issue you a 1099 form if you earned over $600.00 from them.
- Gather all of your forms. In addition to your W2 or 1099 forms, you’ll also need you student loan interest statement, receipts for any medical/dental expenses, copies of utility bills and business-related expense receipts (if you work from home), and the 1098-I form issued by your bank for any account interest that may have accrued during the tax year.
- Know your deductions. If this is your first time filing independently of your parents, you can still qualify for tax deductions such as the standardized deduction or the Earned Income Tax Credit (EITC) deduction, for example.
- Choose how you wish to file. Many first-timers have their tax returns prepared and filed by a tax pro the first time out. You can either use the same tax professional as your parents, or you can locate a reputable tax filing company right in your local community. You may also file the forms by snail mail; many essential tax forms and instruction booklets are available at the local library or online. If you elect to file your returns online, there are many reputable online tax sites.
- File on time. The IRS starts accepting tax returns beginning the second or third week of January, all the way until April 15th. Returns filed after April 15th will be considered past due, so it’s in your interest to file on time. If you file past the April 15th deadline, you could end up paying a late penalty.
Filing your returns the first time out can be confusing if you’re not prepared in advance. Gather all the needed records and form, and decide which tax filing method works best for you. No one really looks forward to filing their taxes, but it can be much less of a hassle once you understand the basic process and keep accurate records.
Regardless of how you choose to file, be sure to file on time to avoid late filing penalties and fees.