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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. 

Find out 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. Be sure to include any income you earned, even if the job was nontraditional like gig work or freelancing. There are a lot of rules surrounding filing requirements, but in general, you must file if you meet one of the following scenarios: 

  • You are filing single and earned at least $12,950 in 2022 
  • You are married filing jointly and earned at least $25,900 in 2022 if both you and your spouse are under age 65 
  • You are married filing jointly and earned at least $27,300 in 2022 if one spouse is under age 65 and the other is 65 or older 
  • You are filing head of household and earned at least $19,400 in 2022 

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 parent might be able to claim you as a dependent. Before you file your own tax return, you should confirm if your parents intend to claim you as a dependent on their tax return.  

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 idea for young and first-time filers.  

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 out which credits and deductions you are eligible for 

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: 

  • Saver’s Credit: If you contributed to a retirement plan and earned less than $36,501 in 2022, you may be eligible for this credit. Dependents claimed on another tax return and full-time students are not eligible.  
  • American Opportunity Tax Credit: Worth up to $2,500 the AOTC allows you to claim a credit for tuition, fees and courser materials. You can use Form 1098-T to determine your credit amount. You cannot claim this credit if you are listed as a dependent on another tax return. 
  • 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. 
  • Earned Income Tax Credit: This credit for low- to moderate-income workers is worth up to nearly $7,000 for 2022.  

A tax deduction is a reduction of taxable income to lower your tax bill. You can either claim the standard deduction of $12,950 for single filers in 2022, or you can itemize your deductions by adding up your eligible expenses. This might include vehicle expenses if you use it for work or student loan interest. Generally speaking, it is more beneficial to take the standard deduction instead of itemizing.  

File by the deadline 

Now that you’re ready to file, you should be sure to submit your return by the tax deadline. In 2023, the deadline is April 18th. 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 will 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 will have until October 16, 2023. 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. If you need tax help, contact us at 800-536-0734 for a free consultation.