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Filing Guide for First-Time Taxpayers

filing guide for first-time taxpayers

Filing taxes is one of life’s responsibilities that we simply cannot avoid. At some point, we all file taxes on our own. Filing a tax return for the first time can be intimidating. Here is a guide for first-time taxpayers with filing tips and common mistakes to avoid.  

Determine if You Need to File

It may have been your first year being employed, but you might not be required to file a tax return. Calculate all gross income you earned this past year, even if the job was nontraditional like gig work or freelancing. Remember gross income is the amount you earned before taxes or deductions were taken out. There are a lot of rules surrounding filing requirements, but in 2024, you must file if you meet one of the following scenarios:  

Filing Status Age at the end of 2023 Must file if gross income is at least: 
Single Under 65 $13,850 
Single 65 or Older $15,700 
Head of Household Under 65 $20,800 
Head of Household 65 or Older $22,650 
Married Filing Jointly Under 65 (Both Spouses) $27,700 
Married Filing Jointly 65 or Older (One Spouse) $29,200 
Married Filing Jointly 65 or Older (Both Spouses) $30,700 
Married Filing Separate Any Age $5 
Qualified Widow(er) Under 65 $27,700 
Qualified Widow(er) 65 or Older $29,200 

The rules are different if your parents provide financial assistance, either through living expenses, education, or a monthly allowance. If this is the case, your parents might be able to claim you as a dependent. If you can be claimed on someone else’s tax return as a dependent, you still might have to file a tax return of your own. Single dependents must do so if any of the following applied to them in 2023: 

  • Unearned income was more than $1,250 
  • Earned income was more than $13,850 
  • Gross income was more than the larger of: 
    • $1,250, or 
    • Earned income (up to $13,450) plus $400 

These same criteria apply to married dependents as well. Furthermore, they have an additional criterion that applies: 

  • Gross income was at least $5, and spouse filed separately and itemized their deductions 

Remember, unearned income includes any money earned by doing nothing. Examples include investment income or rental property income. Earned income is the money you earn from work like salaries, tips, and self-employment income.  

Decide How to File  

The easiest and fastest way to file a tax return is electronically. You can use a tax software to prepare and file a return for you if your tax situation is simple. The IRS offers free tax preparation through IRS Free File, a program ideal for young and first-time filers. There is also online tax preparation software that is free for simple federal tax filings.  

Collect All Your Tax Documents  

If you’re a first-time filer you might need the following items to file:  

  • Income forms, including W-2s and 1099s  
  • Education expense forms, including Form 1098-T, receipts, scholarship records  
  • Social security number  
  • Routing and account numbers for direct deposit  
  • Dependent information (if applicable), including names, date of birth, SSNs, etc.   

Find Credits and Deductions 

Even first-time filers are eligible for credits and deductions. A tax credit is a dollar-for-dollar reduction of your income. Some credits you may be eligible for are:  

American Opportunity Tax Credit 

Worth up to $2,500 per student, the AOTC allows you to claim a credit for tuition, fees and course materials. You can use Form 1098-T to determine your credit amount. Your school will either mail this form or make it available to you by January 31 each year. You cannot claim this credit if you are listed as a dependent on another tax return or earn above certain income limits. Just be sure you are eligible for this credit before claiming it. If you wrongly claim it, the IRS can make you pay back the amount you received, plus interest.  

Lifetime Learning Credit 

This credit is worth up to $2,000 per tax return and is for qualified tuition and related expenses paid for education, excluding course materials. You cannot claim this credit if you are listed as a dependent on another tax return or earn above certain income limits.  

Tax Deductions 

A tax deduction is a reduction of taxable income to lower your tax bill. You can claim the standard deduction of $13,850 for single filers in tax year 2023, as it will likely result in a lower tax bill than if you were to itemize deductions. Additionally, you can deduct student loan interest payments you make even if you do not itemize deductions. If you use your car for business purposes, you can deduct your mileage. The 2023 standard mileage rate is 65.5 cents per mile.  

File By the Deadline  

Now that you’re ready to file, you should be sure to submit your return by the tax deadline. In 2024, the deadline is April 15th. If you are getting a refund, you can have it sent by paper check or direct deposit. Direct deposit is the fastest way to receive your federal refund and you can track its status on the IRS website. You can also track your state refund online.   

Tax Help for First-Time Taxpayers  

First-time filers should note that filling your tax return by the tax deadline is critical. If you prepare your return and find that you owe taxes, don’t panic. You will need to pay your tax bill by the April deadline or request an extension to file. If approved, you have until October 16, 2024. Do not ignore your tax bill as this can lead to greater financial stress later. You should also figure out why you owe so you can avoid this problem again next tax season. Common reasons for owing are not withholding enough taxes during the year or not making quarterly estimated payments if you do not withhold any taxes from your income. When in doubt, ask for help. Optima Tax Relief is the nation’s leading tax resolution firm with over $1 billion in resolved tax liabilities.  

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