First time filing taxes? Don’t let the horror stories of others scare you. For most people, the process is fairly straight forward, especially for young earners.
However, there are a few ways to make serious mistakes on your tax return. If this is your first experience with taxes, you’ll want to understand the process before you dive in so you can avoid making expensive errors.
Here are six things every first-time filer should know so you can set the right expectations:
1. Know If You Have to File Taxes
Your legal obligation to file taxes depends on many factors.
If your income for the year does not meet or exceed the standard deduction, then you will not have to file a tax return. These thresholds will depend on your marital status, your age, and the type of income you receive (e.g. SSI vs a regular paycheck).
For the 2018 tax year, the standard deduction for a single taxpayer was $12,000 and $24,000 for married couples filing jointly. Earners whose income do not meet these thresholds do not have to file a tax return.
There are different filing requirements for individuals age 65 or older and for dependents filing a tax return. It’s important to do your homework before you go through the hassle of filing.
2. Gather All Documents Before You File
Before you file taxes, you will need to collect all the required documentation, including W2s or 1099s from all of your income sources. You will also need a government-issued ID, social security card, and any receipts you plan on using to itemize.
You can also use a paystub that displays your earnings and tax withholdings. If you don’t get paystubs, you can create one using paystubcreator.net.
3. See If You Can Itemize
If your deductible expenses are greater than the standard deduction, you can itemize them on your taxes to reduce your tax liability.
However, since the standard deduction has nearly doubled, fewer people find they are eligible to itemize. This is actually a good thing, as a higher standard deduction reduces your tax liability without having to track receipts.
4. Skip the Advanced Loan
You can get an advance on your tax return, which is essentially an advanced loan. You will have to pay back that money when your check arrives, along with any interest or fees.
But most refunds arrive within 21 days after filing. It’s more profitable to wait a few weeks rather than paying to get your money sooner.
5. Use a Professional Tax Preparation Service
Skip the online software and hand your tax information to a professional. Being your first time, your tax preparer will ensure that your taxes are done correctly and can answer any questions you have.
Take advantage of this valuable resource — it’s worth the price!
Conquer Your First Time Filing Taxes!
If this is your first time filing taxes, don’t forget to celebrate when you’re done! Though it might not seem like it, this is a major milestone.
You’re officially making your own way in the world and should take pride in the moment.
Want more life tips? Head back to our Lifestyle section for inspiration.