5 Tips For Doing Your Taxes For The First Time
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The snow is melting. The birds are signing. This means
spring tax season is upon us. Every year I tell myself I’m going to be more organized with my taxes, but I still have a lot of room for improvement. I know I’m not alone. Even though I’m a financial writer and somewhat organized with money, doing my taxes is always a little confusing. However, I’ve learned a lot about the process over the years, especially since becoming a business owner, so I thought it would be helpful for me to offer some tips on doing taxes for the first time this year.
I remember asking my dad how to file my taxes the first time I got a W-2. He was exactly zero help and told me just to “send it in to the IRS.” I had no idea what that meant, but I eventually figured it out by reading about it online.
I have a feeling there are a lot of people out there who are in a similar situation. They know they need to file their taxes but aren’t sure where to start. So, below are some tips to help you get through this tax season without too much stress, even if you’re doing taxes for the first time.
1. Start Preparing Early
Our good friends at the IRS don’t like it when you file your taxes late. So, right now is a really good time to start getting organized. You should receive most of your paperwork in January, whether you are a salaried or contract worker. Put those W-2s and 1099s in one place; a simple manilla folder with your tax year written on the lip can be a great place to start. It doesn’t have to be fancy; just somewhere you can collect all your tax documents.
If you bought a house last year, moved or donated to a cause, be sure to put those receipts and paperwork in that folder. The earlier you get everything organized, the faster your tax filing will go.
2. Choose Whether or Not to DIY
As I mentioned, I filed my taxes myself during my first few years of working. My father-in-law helped me with my taxes when I got married and started my business, but this year will be the third year I’ve used an accountant to prepare my taxes.
These days, I feel more comfortable using an accountant because I like someone else to double check my work and be responsible if something is wrong. If my business gets audited, I want someone on my side to help me and represent me.
However, if you don’t have a business or significant assets, doing taxes for the first time on your own should be pretty straightforward and painless. You can purchase tax filing software like TurboTax, which can help with the process.
You can also get help doing your taxes online from a variety of reputable companies, all of which offer a user-friendly experience and trained help on-hand for you to go to with questions as you fill out the information fields. A few of the companies offering this service include:
Regardless of whether you go solo or enlist professional aid from those companies for a minimal fee, either will be cheaper than paying an accountant’s fee. Just make sure that no matter what route you choose, you start early. Then, if you run into trouble or don’t understand one part of the process, you can always consult an expert.
3. Know The Lingo
Now that you have organized your documents and you know whether or not you’re going to DIY your taxes, it is time to make sure you understand the lingo.
For example, it’s important to know the difference between deductions and credits. It’s important to know how state taxes differ from federal taxes. All of this is important when calculating how much you have to pay or how much you’ll get in a refund.
Oh, and if you’re pretty sure you’re getting a refund, here are some responsible ways to use it (you know, #adulting and all that).
4. Pace Yourself
Don’t make the common mistake that many make when doing taxes for the first time; don’t start too late and don’t rush yourself through the process. If you take too long to file your taxes, you could be liable for paying penalties and fees. However, if you rush, you may make a few mistakes when filing. Go at a reasonable pace and ask an expert questions if you get stuck.
Remember, no one likes dealing with the IRS, so save yourself the headache and do things right the first time.
5. Follow Up & Check In
Once you’ve successfully filed your taxes, all that’s left to do is wait! Print off all of your information that you’ve filed, and keep it in a safe place since you may need it in the future.
If you know you’re getting a refund, remember how you asked to receive it. Some people get their refund as a direct deposit in a matter of days while others get theirs as a check in the mail after a few weeks.
Conversely, if you owe money to the IRS, pay it as soon as possible and make sure to keep receipts and documentation.
Ultimately, doing your taxes for the first time can seem daunting, but it doesn’t have to be. There’s probably not a person on Earth who actually enjoys tax season (okay except for accountants maybe) but the truth is, if you’re prepared and organized, you can get through it without much of a headache.
What was it like when you did your taxes for the first time? Are you planning on filing your taxes for the first time this year? Do you have any advice not mentioned above for a newbie? What are you planning on doing with your tax refund?