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.
It’s easy! Don’t stress. Filing your taxes for the first time may seem complicated at first, but it doesn’t have to be. With simple tax filing basics, you can start benefiting from the thousands of dollars in tax credits and deductions available to you.
To help you out, we’ve come up with six useful tips to help you crush your first tax season.
- 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!
If you haven’t created one yet, make your own simple filing system so that you can keep track of all the important paperwork. If it’s in one place, it will be much easier to find down the road when you need it. Don’t put any other documents in this file or box. You’ll save yourself a lot of sorting later on.
Starting early, save important receipts for expenses related to tax deductions and credits. If you’re self-employed, be sure to keep all your receipts (both large and small) close during the year.
Misreporting your business expenses can have a serious impact on your taxes, so it’s important to carefully report every single one of them. Things you may think of as insignificant, such as printer ink and parking meters can have a big impact when you file your tax return! 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.
- Organize your tax documents
Organizing your tax documents can be done by separating W-2 forms from other income and deductible expenses.
If you’re self-employed or running your own business, make a list of the income and expenses in your company. It’s also worth noting any 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.
- Figure out if you are a dependent of someone else
One of the most important things to consider when filing your taxes is whether you are considered a dependent by someone else.
Ask yourself: Do your parents or another person pay at least half of your expenses? If so, the IRS generally considers you to be their dependent. This means that they can claim a tax credit or other tax benefit for you. In that case, simply indicate that you can be claimed as a dependent on someone else’s return when you e-file with us.
It’s important to let the IRS know that you are not being claimed by anyone else on their taxes. If they don’t, your return may be rejected or you may owe them additional taxes. Discuss this with parents or relatives before the tax season begins if possible.