7 Tips for First-Time Tax Filers

There’s a good chance you’ve heard people complain about having to file their taxes. And perhaps you’re a bit intimidated as a result.

But filing your taxes for the first time probably isn’t as bad as you think. Most first-time tax filers just need to learn a few tax filing basics.

Here are a few tips to help you get through your first tax season, stress-free.

How to know if you need to file taxes

If you work in the U.S. and are a citizen or permanent resident, you likely need to file a federal tax return if:¹

• Your income is over the filing requirement set by the Internal Revenue Service (IRS)
• You've made more than $400 in net income from side jobs or self-employment
• You’ve had other situations that require you to file, according to the IRS

If you need to file federal taxes, odds are that you may need to file state taxes, too. State filing requirements vary, so check with your state tax agency if you aren't sure.

How to file taxes for the first time

Filing your taxes for the first time might seem like a lot, but when you break the process down into simple steps, it’s very manageable.

1. Start collecting tax information early

You’ll typically receive your W-2 or 1099 forms by January 31 of the year after the tax year you’re filing taxes for, but collecting additional information may be a little tricky. When you suddenly can’t remember where you put the receipt for those medical expenses you had last summer, preparing your taxes quickly becomes a stressful task.

One of the best ways to reduce stress is to collect tax documents and receipts throughout the year — not just at tax time. Any time you receive an important document, pay for something that could be tax- deductible or have tax implications, set it aside in a dedicated folder. You don’t need a fancy filing system to keep track of your tax information. The important thing is to make sure all your paperwork lands where you can easily find it later — whether it’s a digital file, paper folder or box — so when tax season arrives, you’ll already have everything you need, organized and ready to go.

Types of documents to collect

Some of the most common tax-related documents to collect include:

Income Documents

• W-2s from jobs — Employers are required to send these by January 31
• 1099s for freelance or contract work — Clients and companies must send these by January 31
• Documents related to a forgiven debt, like a personal loan
• Other income-related forms

Documents for possible tax deductions

• Donation receipts
• Childcare costs
• Proof of home loan interest
• Property tax bills
• Medical bills

If you’re self-employed or own a business, you will also need other documents, such as:

• Business expenses
• Travel expenses
• Business loan interest records
• Profit-and-loss paperwork

If you aren't sure about other documents you might need, you can consult a tax professional or check with the IRS.²

You'll also need Social Security number(s) for you and any dependents (people you financially support and can claim as dependents on your tax return). If you qualify for a tax refund and want to receive the money through direct deposit, you’ll need to have your bank account information handy when you fill out your income tax return.

2. Organize your information

Organizing your tax information can be as simple as putting your W-2 forms in one pile, your other income-related documents in the next pile and possible deductible expenses in a third. If you have a small business or other self-employment income, regularly maintain a list or spreadsheet of that income and expenses.

Once your information is organized, the rest is easy to follow.

Whether you choose to do your taxes online or on paper, you can easily prepare and file your federal and state returns by simply answering a few questions as you go.

3. Figure out if you're someone else’s dependent

One of the most important details you need to know before you file your tax return is whether you’re someone else’s dependent.

If your parents paid more than half your expenses during the tax year (January 1 to December 31), you’re generally considered their dependent for tax purposes. If your parents claim you on their return, they get a tax benefit called a “dependency exemption,” which lowers their taxable income. In this case, you may not take the exemption on your return for yourself.

Talk to your parents and see if they are taking the exemption. The IRS will notice if both you and your parents take an exemption for you.

4. Determine your filing status

Your filing status helps you know which tax return form to use and can also affect:

• Whether you must file a return
• How much money you may owe
• Which tax credits you can claim
• Your standard deduction versus filing a return with itemized deductions
• Whether you can get a refund³

How to choose your filing status

Your filing status depends on what your marital status is by the last day of the year you’re filing your tax return for. The five filing statuses include:⁴

Single

If you’re divorced, legally separated, under a divorce or separate maintenance decree governed by state law or not married.

Married Filing Jointly

If you’re married or your spouse passed away during the year. Generally, couples save more by filing jointly.

Married Filing Separately

You’re married but want to keep your finances separate or if filing separately lowers your tax bill.

Head of Household

If you’re single and pay more than half of your living expenses for you and a qualifying dependent.

Qualifying surviving spouse

If your spouse passed away in the last two years and you have a dependent child.

These are brief descriptions of each filing status. For more details — or if you aren’t sure which filing status to use — it’s a good idea to ask a tax professional.

5. Review your tax return

While you can still fill out paper forms by hand if you prefer, you now have the option of filing online. You may input your financial data into an online tax preparation service and use step-by-step guidance to get your maximum refund. There are many paid tax preparation options available, but you may qualify to use free services like IRS Free File or IRS Direct File.

While online tax preparation services may streamline the tax filing process, that doesn’t mean you should just plug in the numbers and file.

Be sure to read your entire return before submitting it. If you don’t understand something, you can reach out to the IRS or the tax preparation service you used to learn more.

6. Know the tax filing deadlines

Your first tax return shouldn’t take too long to complete and file, but you don’t want to rush it. Filing early in the year gives you a chance to work on your return without the stress of a closing deadline.

The filing deadline for federal income tax returns is typically April 15 but may be a few days later if April 15 falls on a weekend or legal holiday.⁵

Filing deadlines for state income tax returns vary by state. Be sure to mark your calendar to give yourself enough time to meet deadlines.

If you find yourself trying to beat the clock, you can file an extension — but remember that any taxes you owe are still due by the original deadline. Filing federal or state taxes late without paying could lead to interest charges and late payment penalties.

7. Be prepared to pay taxes, if required

You could have one of a few outcomes from filing your taxes. You might receive a tax refund if you overpaid your taxes. Consider using this windfall to pay down debt or build your savings.

However, if you didn’t pay enough taxes throughout the year, you could owe the IRS (and maybe your state) a balance, plus penalties and interest. People may owe taxes for many reasons. If you go through a major life change, like getting married, having a child or buying a home, it may change how much tax is withheld from your paycheck during the year. In that case, you may want to update your W-4 (Employee’s Withholding Certificate), which tells your employer your filing status and the number of dependents or allowances you’re claiming. This helps the payroll department calculate how much to withhold throughout the year. If you owe money at tax time, you might consider updating your withholdings for the next year.

You can pay any money you owe to the IRS or your state tax agency directly with a debit or credit card, check, electronic payment or wire transfer, depending on how you file your tax return.

Having your card or bank information handy when filing could help you make your payment faster and help you avoid paying late, which could lead to penalties if you miss federal or state deadlines.

If you owe more money in federal taxes than you can afford to pay at once, you may be eligible for a payment plan.⁶ Some states may allow you to pay over time, as well. If you meet the qualifications, you may be able to settle your tax debt for less than what you owe or ask to temporarily delay collections.⁷

If you end up owing taxes when you file your tax return this time, it may be a good idea to start saving what you can now just in case you owe it again for the next tax year.

For advice specific to your situation, check with a tax professional.

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Deduct the stress from your first tax filing experience

Filing taxes for the first time doesn't have to be scary. When you’re well prepared, you can enter tax season feeling confident and organized. Despite the negativity that comes with it, tax time can be a great opportunity to take control of your finances and potentially get a refund you can use to grow toward your goals.

This article has been updated from a previous posting in 2022.

Sources

1 https://www.irs.gov/individuals/check-if-you-need-to-file-a-tax-return
2 https://www.irs.gov/filing/gather-your-documents
3,4 https://www.irs.gov/filing/filing-status
5 https://www.irs.gov/filing/individuals/when-to-file
6,7 https://www.irs.gov/payments/get-help-with-tax-debt