Filing Your Taxes for the First Time – Our Guide Will Get You on Track
The following scenario, although not too common, does surface for many who need to file their first tax return. Did any of you give any thought about filing your taxes for the first time when you landed that dream job with a great salary?
The year seems to go by quickly until you receive an envelope from your employer in January. Inside is a Form W-2 showing your earnings and various withholdings for the past year. At this point, many wonder if a tax return has to be filed.
For all first-time filers, our guide will assist you in the necessary steps to take after receiving your W-2 form. Just read on and we’ll lay everything out for you.
The first step you need to take is to make sure that you actually need to file a tax return. Depending on when you started your job will be one of the determining factors. If you only had a couple of months of earnings, you might not have to file.
If you will be filing as a single individual and your total income is below $12,200, there is no requirement to file. For a married couple, this cutoff amount increases to $24,400. There are some exceptions though, that we’ll explain.
The one primary exception is, even though your gross income is below the filing threshold, filing a tax return is necessary. If your employer withheld federal and/or state income taxes, you must file to get your withholding money back. The IRS will not send you a letter to ask you if you want your money back.
Filing your taxes is also necessary if you qualify for the Earned Income Tax credit. Again, if you have low earnings, and meet several other requirements, this credit can be substantial. Often, the total refund on one of these types of tax returns, exceeds the total withholding amount.
A third exception applies to self-employment income. Many individuals today are involved in the gig economy. What this means is that you pay income taxes and also self-employment tax on the net earnings from your gig.
Assuming that you will be required to file a tax return, you will need to gather all of the information needed before you decide how you will be filing. Make sure that all forms sent to you have your correct name, address, and social security number.
Get your Form W-2, any 1099 forms sent to you by your bank or investment company for interest and dividends. For a first-time filer, the number of forms usually is not many.
Quite a few first-time filers have income from a gig and need to report it. Keep your receipts for all expenses and use an auto mileage book if your auto is used for your gig.
You may receive a 1099-MISC from one or more payers, and from this total amount, you can deduct various types of expenses that were incurred in earning that income. If your net earnings from your gig is $400 or more, a tax return must be filed to report the self-employment tax and income tax, if applicable.
This is quite easy to do, and is reported on a Schedule C and a Schedule SE. The best way to see if filing your taxes is required, is to use a very good tool, furnished by the IRS. This link will take you to their tool.
Remember also, that you are still required to file a tax return for your gig even though you may not have received any 1099-MISC forms. You are required to maintain accurate books and records of all income and expenses, and to file a tax return if required.
After you have gathered all of the information that you will need, it’s a simple matter to file your taxes with us. Our simple interview system will ask you a few questions, and based on your answers, will know the type of return needed.
Most other online tax filing sites charge you based on the number and types of forms needed. With us, we don’t make it that complicated. Our low fee of $25 is a flat fee no matter how many forms you need, or if it even has business and/or real estate rental schedules.
Filing your taxes with us is a stress-free and easy process. The low fee includes your federal and state return too, plus free e-filing and direct deposit.