Doing Taxes for the First Time
Doing Taxes For the First Time? Do Them Like a Pro
I can recall doing taxes for the first time. I was 23, fresh out of college, and looking for work, just like a lot of other recent graduates. I had a chance to do some background work as an actress and couldn’t pass it up. It lasted about 6 months and was a fun job.
It was fun until I received a handful of 1099 forms, and the fun was over. The forms were intimidating and I had no clue what to do with them. Back then, filing a tax return had never entered my mind.
It’s now eight years later, and I have to admit, I’m a lot more confident doing my taxes. I don’t enjoy it (who does?), but I learned a lot over the years. If you’re reading this article, then you’re probably researching this scary topic on the internet. If so, sit back and relax, and we can talk about filing your taxes for the first time.
Do you have to file your taxes this year?
First thing, let’s make sure you even have to file a tax return. It depends on how much income you have, your filing status, and even your age. As an example, if you’re single and under age 65, your income has to be at least $12,400 before you’re required to file. They have a “gotcha” here though.
Your income may be below $12,400, but if at least $400 or more is self employment earnings, you have to file a return to pay self employment taxes. WOW! If you’re not sure you have to file a return, the IRS has a handy tool to help you figure it out. Just answer a few questions and they will let you know.
What all do you need to file your taxes?
If you have to file a return, you’ll have to get all of your tax forms together. Some of the following may apply to you:
The basic tax forms are W-2’s for any employers you worked for, 1099’sfor any side gigs you had, and bank interest. I opened a high yield savings account at one bank because they gave me a bonus, and the bonus was taxable. Go figure!
A few deductions when doing taxes for the first time
These kinds of things can lower what you may owe the IRS. As an example, if you’re a college student and you’re eligible for certain deductions, the school will sent you a form 1098-T. If you have a student loan (and who doesn’t these days?), you may be able to deduct the interest paid on your loans. Maybe you do freelance work from your home, and if so, you may qualify for the home office deduction.
For most people, though, you usually have a hard time getting enough deductions that total up higher that the IRS standard deduction. This deduction is a flat amount you can deduct from your total income instead of adding up all of your expenses. For the 2021 tax year, the amount has gone up to $12,550 for single people.
Your main goal should be making sure you’re deducting as much as you can as long as you have receipts to back them up. If you can’t get enough deductions that are higher than the standard deduction, then you probably don’t want to itemize. When you’re doing taxes for the first time, and any time for that matter, you don’t want a letter from the IRS questioning some item.
If Congress approves another stimulus check for 2021, I expect that they will have something similar to 2020 for those who didn’t get a check. It will probably be like a Recovery Rebate Credit that will add to your refund, or lower the amount you may owe.
See if your parents are still claiming you as a dependent
Check with your parents to see if they are planning to claim you as a dependent, especially if you are living at home. Parents usually claim a student while they are in college, but after graduation, many are having a hard time getting a job.
If, for whatever reason, they are, you’ll still have to file a tax return if your income is high enough. When doing taxes yourself for the first time, it’s common for your parents to claim you, and you file your return and check the box saying that you may be claimed as a dependent on someone else’s return.
Where to file taxes for the first time
When you file taxes for the first time, your return shouldn’t be very complicated. Don’t do what some others have done and downloaded blank forms from the IRS website and then struggled and hoped they’re correct. It’s important to file an accurate return so you don’t have to amend it, or worse, get a notice from the IRS.
You have a couple of options available when filing your taxes. You can go to a tax professional and pay a hefty fee, even for a simple return. I don’t recommend doing that though, besides the high fee, you really aren’t learning anything about filing taxes. You need to understand how the whole process works, and doing them yourself is a good way to learn.
The way I started was by doing my first return at one of the popular online tax filing websites. They didn’t charge me for filing my federal return, but I had to pay to file my state return. (Not really free as they advertised)
If you’re filing your own taxes as a college student or you already are working, I recommend doing your taxes that way. Don’t fall for that so called free filing as I did though. I found one that has a $25 flat fee and it includes your federal and state returns too. They don’t care how complicated your return is either, the fee’s the same.
It was really easy, even for a newbie like me. After I created an account, their program asked me a series of interview questions. I answered them and the program asked me to enter my information from my tax forms. After I did, it prepared my return and I was able to review it. Talk about awesome! After I put in my direct deposit info, I e-filed and it was all done. Not a bit scary.
I’ve never heard anyone say that doing taxes is fun, and I sure agree. Mine can be headache sometimes, but they have to be done. No need to stress out if you’re doing taxes for the first time, just use the online method and you’ll see how easy it is.