10 Tips for Filing Your Taxes for the First Time

For many people, tax season is a time of dread and anxiety. But it doesn’t have to be!

If this tax season is the first time you’ll be filing your federal tax return, there are a few things you can do to make the process as smooth and stress-free as possible.

These ten tips will help you nail your first federal tax return:

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1. Determine if You’re a Dependent

Figuring out if your parent(s) are claiming you as a dependent is very important. The IRS has a few criteria that you must meet for someone to claim you as a Dependent.

 Qualifying child:

If you’re under the age of 19 (or under age 24 and a full-time student) and your parents provide more than half of your financial support, your parents can likely claim you as a qualifying child.

Qualifying relative:

If you’re not a qualifying child, your parents might be able to claim you as a qualifying relative if you earned less than $4,300 in 2022, lived with your parents all year, and your parents paid more than half of your total support for the year. 

If your parents claim you as a dependent, you’ll still have to file a tax return if you have enough income, but when you prepare your return, you’ll have to indicate that you can be claimed as dependent on someone else’s return.

Before you file, we suggest that you talk to your parent(s) to find out whether they intend to claim you as a dependent so that everyone is on the same page.

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2. Know Your Filing Status

Filing your federal tax return can be a complex and confusing process, but one of the most important things to understand before you begin is your filing status. As a taxpayer, your filing status may determine what tax forms you need to use, how much money you may owe, and whether you are eligible for certain tax credits or deductions. There are five possible filing statuses:

• single
• married filing jointly
• married filing separately
• head of household
• qualifying widow(er) with a dependent child

Each status has different requirements and benefits, so choosing the one that applies to your situation is important. If you’re unsure which status to choose, the IRS provides an article explaining the difference in each status and how it can help you . The IRS also provides an online tool to help determine your eligibility.

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3. Organize Your Tax Information

There’s a lot of information to know about filing your taxes. Start planning ahead to save yourself frustration and hassle as the deadline gets closer. Some of the personal and financial information you should gather together includes:

• Social Security Number, legal name, and birthdays for you, a spouse, or any dependents whom you plan to claim on your tax return.
• Bank routing number and account number. If you qualify for a refund, you can have your check electronically deposited instead of waiting for it to be mailed. This is optional but may allow you to receive your refund faster.

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4. Gather all Your Tax Documents

If you’re expecting a refund, you might be eager to file your tax return as soon as possible. However, you can still receive important tax documents in your mailbox and email throughout January, February, and even March.

So, it’s best to ensure that you have all the required tax documentation needed for your taxes before you begin, such as your:

W-2 Form

A W-2 form shows your income in the past year and how much you’ve paid for your taxes on those earnings (be sure to get these forms from all your employers for that tax year). Your employer is required to send them out by January 31st.

1099 Form

A 1099 form is a record of any money you received or were paid by anyone else besides your employer. This might be the interest that you earned from a savings account, income that you earned while you were self-employed or an independent contractor, a distribution from a retirement account, or social security payments.

1098-E Form

The 1098-E form reports the amount of interest you paid on student loans in a calendar year. If you made federal student loan payments in 2022, you might be eligible to deduct a portion of the interest you paid. This form is provided by your student loan servicer (to whom you make payments) via email or postal mail.

If you’re unsure what paperwork you need, the IRS has a helpful checklist to walk you through the process . It’s important to note that you should never throw away your tax documents, even after you’ve filed your return. The IRS recommends keeping records for at least three years in case you need to go back and reference them later.

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5. Consider Relevant Tax Deductions and Credits

To get the best return, you’ll need to know what tax deductions and credits you may qualify for. Deductions can lower the amount of taxes you owe  by decreasing your taxable income and credits can reduce the amount of taxes you owe. There are many different types of deductions and credits that you may be able to take advantage of.

Here are some common deductions and credits for first-time filers to research:

• Education credits (e.g., the American Opportunity Credit )
• Child Tax Credit
• Student loan interest deduction
• Mortgage loan interest deduction
• Home office deduction, if you are self-employed
• Charitable contributions
• State and local tax deductions
• Qualified health care expenses such as those spent on the diagnosis, treatment, or prevention of a disease

If you are unsure for which deduction(s) you may qualify, the IRS website provides an online tool to help you determine which deductions might apply to you.

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6. Organize Your Tax Documents

Once you have everything in one place, take a few minutes to sort through your stack of documents and discard any irrelevant items. Then, create a simple filing system for your tax records. You can use file folders, labeled envelopes, or even a digital folder on your computer and simply label everything appropriately to find what you need when filing your taxes.

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7. Give Yourself Enough Time

Tax season is always busy and getting your tax return filed as quickly as possible can be tempting. However, rushing through the process can lead to mistakes, costing you money in the long run. Typically, April 15th is the tax deadline every year, but the deadlines can shift in certain national emergencies, like in 2020 with the COVID-19 pandemic. For 2023, the tax deadline is April 15th. However, you should check with the IRS website to stay in the loop on this year’s tax deadline.

You can file for a tax extension if you need more time to prepare your taxes. However, before you file for an extension, decide if it’s worth it. Remember that you’re still responsible for paying taxes owed by the deadline. Extra time to prepare your taxes doesn’t delay the time to pay what you owe, but it keeps you from paying the penalty.

If you do not pay your taxes for 2022 by April 15th, you may be subject to late payment penalties. The IRS can hit you with penalties and interest for not paying by the deadline. You may be eligible for a payment plan, also called an installment agreement.

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8. Read Your Return

Tax preparation companies have made doing your own taxes much easier than it was back in the day. You can simply input your financial data into tax software like TaxAct or Free File offered by the IRS. You will then follow the software’s step-by-step guide to get your maximum refund.

However, that doesn’t mean you should just plug in the numbers and file. Simple mistakes on your tax return could cause delays or, in some cases, fines, so it is best always to double-check your return. This may seem tedious, but it can save you a lot of money and headache in the long run.

The IRS is very meticulous when it comes to returns. By double-checking your return, you can be sure that all of the information is correct and that you are claiming all the deductions and credits to which you are entitled. This can help ensure that you get the maximum refund possible.

It’s also important to remember that tax laws often change, and what may have been deductible last year may not be this year, so it’s always good to double-check before filing your return. This way, you can be sure that you are up-to-date on the latest tax laws and take advantage of all the deductions and credits available.

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9. File Electronically

Once you have all the necessary information, it’s time to file your taxes. You have two options: file them yourself or work with a professional.

Nowadays, filing your tax return on your own is a simple way to get any refund you qualify for as quickly as possible. The IRS processes electronic returns much faster than paper returns, so you can expect to receive your refund in less than three weeks. Tax software like IRS Free File, Turbo Tax, and TaxAct walks you through a series of questions, fills out the correct forms, and helps ensure you claim all the proper credits and deductions.

Its important to note that Free File is only available to taxpayers with an Adjusted Gross Income (AGI) of $73,000 or less. 

You can work with a tax preparation professional if you don’t want to file by yourself. This option is beneficial if you have a complex tax situation.

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10. Setup How You Receive Your Tax Refund

When you file your taxes, you will need to decide how you want to receive your refund, if any. The most popular option is to have it deposited directly into your bank account. Having your tax refund direct deposited is the quickest and most secure way to get your refund, and it can be done by simply providing your bank account information on your tax return.

Another option is to receive a paper check in the mail. This option can take longer, as the IRS will need to print and mail your check.

No matter how you choose to receive your refund, be sure to keep track of it. The IRS issues most refunds within eight to ten weeks, but you can also check the status of your refund online or by calling the IRS directly.

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This blog is not intended to provide any tax, legal, financial planning, insurance, accounting, investment, or any other kind of professional advice or services. To make sure that any information or suggestions in this blog fit your particular circumstances, you should consult with an appropriate tax or legal professional before taking action based on any suggestions or information that we provide.