If you've never filed income taxes before, it can be hard to know what you're doing. As the end of tax season approaches, time is running out to get this task done. But don't worry, it's not as hard as it might sound. Here's an easy guide to how you can file your taxes and what to expect.
What You'll Need
Sometime in January or early February, you should receive a Form W-2 from each employer you worked for in the prior year. If you don't receive one, contact the employer's payroll department to request it. This form documents how much you earned, how much was withheld for income taxes and certain benefits you received. You will use this to file your income tax forms.
Additionally, you may receive a Form 1095. This new form states who provided your health insurance coverage if you had any. While it's not currently mandatory to enter information from forms received for government- or employer-provided insurance, you must include information from Form 1095-A if you had coverage through your state's insurance marketplace.
Other forms that many first-time filers need to look for include:
- Form 1098-T (Tuition Statement) to claim education credits for tuition and books paid
- Form 1098-E (Student Loan Interest Statement) to deduct interest paid
- Form 1099-MISC (Miscellaneous Income) if you worked as a non-employee
On a final note, before you file your own taxes, talk with your parents to find out if they will be claiming you as a dependent. You will need to know this in order to file, claim education credits, and know how much to have withheld.
Where to File
You have many options when it comes to actually completing Form 1040 and sending it. If you only need to file Form 1040-EZ, you can do it easily on a paper form printed from the IRS website. This one-page form comes with simple-to-follow instructions and is available to anyone who only has W-2 wages and no dependents. The downside to the simplicity of sending a paper return is a delay in receiving any refunds due and the possibility of math errors.
If your return is a little more complex (such as including education expenses you can claim as a credit) or you want to speed up your refund, the IRS offers a number of electronic options including free options for lower income taxpayers. You can follow links from its website to authorized providers whose software can walk you through the steps of filing.
If you're reticent to tackle filing on your own, you may also be able to get fee in-person help through the VITA (Volunteer Income Tax Assistance) program. Locate a local provider by using the IRS website.
When to Get Help
Most young workers have simple taxes that don't require much (if any) help. However, if you are in certain more complicated situations, it's best not to go it alone. These circumstances include things like having investment income (such as on Forms 1099-DIV, 1099-INT, 1099-B or 1099-S), self-employment income, or your own dependents.
Filing taxes the first time is a daunting act of adulthood, but it doesn't have to be too painful. By knowing what you're looking for, and how you can file on your own and when to seek out professional help, you can take the first step toward understanding and controlling your financial future.
For tax services, contact a company such as Balkcom Pearsall & Parrish CPA's PA.