How to do your Tax Return for the first time

How to do your Tax Return for the first time

How to do your Tax Return for the first time- The filing of taxes can be a challenging endeavor, particularly for newbies who are not familiar with the procedure. Your federal income tax return filing may seem like a daunting task. To perform their civic responsibility and stay out of trouble with the law, everyone must understand how to file taxes. However, you may approach tax season step-by-step and steer clear of beginner errors while taking advantage of possibilities to save money.

This thorough update will take you through how to do your taxes for the first time. Grab your popcorn and read through the step-by-step process to do your Federal Income Tax Return.

How to do your federal income tax return

  1. Pay attention to your revenue.

    If you earn more than a specific amount during the year, you must file a tax return. If you have a job, check your pay stub for the “year to date” earnings; if you have many jobs, make sure to tally your earnings from each employer. Keep in mind to include additional revenue as well, such as profits from a rental property, anything you sell, investments, or interest.

  2. Keep the necessary documents on hand all year.

    Keep up with tax-related documents all year long; it will make tax season less stressful. Keep receipts for things like charitable contributions, costs associated with your job, medical bills, and other expenses from step 4.

    Additionally, you might wish to save any statements for grants, fellowships, investments, or student loans. You can decide whether to itemize and streamline the process by having these close at hand. After you file, you should continue to maintain your documents. Keeping records for at least three years is advised by the IRS.

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  3. Keep an eye out for your income paperwork to arrive.

In January or February, you should receive documents detailing your income from employers and other sources. If you work full-time, you will get a Form W-2 that lists your earnings and the taxes that were deducted. If you freelance or are employed under a contract, you can get a Form 1099-NEC that lists your earnings.

Additionally, you might receive records of dividends or interest paid on student loans (Form 1098-E), as well as records of interest or dividends earned on investments (Forms 1099-DIV or 1099-INT, respectively). You will receive a Form 1098-T if you are a college student (or you have a dependant who is) to help you determine deductions and credits for educational costs. This form will show how much tuition you paid as well as any money you received from grants or fellowships.

If you haven’t had a Form W-2 or Form 1099 from each employer you worked for throughout the year, you can’t file your tax return. You will need those records to complete Form 1040, the IRS form for individual income taxes, when the time comes to file.

  1. Learn which credits and deductions you can take

You can compile the necessary documentation by getting a feel of the credits and deductions you might be qualified for. Here are a few to consider:

a. Saver’s credit. If you make contributions to a retirement plan while not enrolled full-time and are not identified as a dependent, you might be qualified for a tax credit. Your filing status and adjusted gross income determine how much of the credit you receive. If you have a single filing status for the 2023 tax year, you might qualify if your adjusted gross income is $36,500 or less. If your adjusted gross income is $73,000 or less and you are married and filing jointly, you might qualify. However, these figures could alter.

b. Interest on student loans. Depending on your modified AGI, you may be able to deduct up to $2,500 in interest payments.

c. Deductions for charitable contributions. If you are providing a contribution to your alma institution or a preferred cause, and you itemize your taxes, you can write off eligible charitable donations.

d. Freelance expenses. If you work by yourself, you might be able to deduct costs connected to your job, such as office supplies and industry subscriptions.

Check the IRS website if you believe you may be eligible for additional credits or deductions.

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  1. To do your Federal Income Tax Return, mind your deadlines

You have nearly two months to complete your tax return before the regular April 15 due date if your tax documents come in January or February. Plan your start date for your return and make sure it’s far enough in advance so that you have time to schedule an additional session or two in case you need more time to find documents or seek assistance.

Experts generally advise filing tax taxes sooner rather than later. Your chances of preventing identity theft related to taxes, a crime that is on the rise, are better the earlier you file. Additionally, you will receive a refund sooner if you are due one.

If you believe you need more time to file, you can request an extension, which will give you an additional six months to do so, usually in October. But if you owe the government money, you still need to pay your tax liability in full by the due date, typically April 15, to avoid penalties and interest. And if you can’t afford to pay what you owe all at once, the IRS offers payment plans.

  1. Decide how to file your Federal Income Tax Return

For preparing and submitting your tax return, you have a number of options. Find out more about each so you can decide which is best for you:

a. Free File: The IRS offers free tax preparation software that can help you prepare your tax return more easily by providing features that can help you determine any deductions or credits you might be able to claim if your adjusted gross income (this is a specific tax term that basically means your income minus specific tax deductions) is less than a certain limit.

b. Online IRS forms: If your taxable income exceeds that amount, the IRS provides electronic versions of the paper forms that will calculate your taxes for you, but they only provide basic instructions and won’t provide you with the same level of assistance to help to figure out which deductions or credits you might be able to take.

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c. Tax preparation software: These online tools, which are offered by a number of suppliers, can be used for a fee if you want a little more advice. They will lead you through the process of filing your tax return and assist you in determining any deductions or credits you may be entitled to.

d. Tax preparer: If you decide that you require individualized assistance from a professional, you can consult an accountant or a tax preparation company. Make sure the person you are working with is trustworthy. Choose a tax expert wisely because you’ll be providing them access to a lot of sensitive personal data.

You might identify a verified tax preparer in your area using the IRS’s list of verified tax preparers. Even while this does not ensure their reliability, it’s a decent place to start.

Remember that in addition to your federal return, you may also need to prepare and file state or local tax forms.