Filing taxes for the first time doesn’t have to be intimidating. Doing it right does require a certain amount of focus and organization, however. Taking these steps will help you to ensure that your first tax return is accurate and complete.
Create folders for all of your tax documents – both electronic and paper, if you receive forms in both formats. It’s critical that you submit all earnings statements that you receive, whether they are W-2 or 1099s; the IRS also receives copies of these documents and will compare them with what you submit. You’ll also want to make sure to keep track of forms that report expenses that may be deductible or qualify you for tax credits. Forms to look out for include
To prepare your return, you will also need
If you’re under 19 and live at least half of the year with your parents, or if you’re a full-time student who is under the age of 24, then your parents may be eligible to claim you as a dependent on their own tax return. If they do, then you will not be able to claim a personal exemption (a standard amount that is deducted from income for tax purposes) on your return, since your parents will claim a dependent exemption for you. You will also need to know whether they will be claiming your education expenses in order to take advantage of related tax breaks; if so, you won’t be able to claim them yourself. The best way to address any questions you and your parents have about what should appear on your tax return is to sit down with a tax professional who can advise you on the most advantageous way to file.
Don’t leave money on the table for the IRS to keep! If you neglect to claim any deductions or credits to which you’re entitled, this is exactly what you’re doing. The following tax breaks are often overlooked by new filers:
Working with a reputable tax professional can help you to ensure that you don’t miss out on valuable tax breaks.
Starting your tax preparation well before April 18 gives you time to make sure you have all of the documentation you need, get answers to any questions you encounter during the process, and address any issues that may arise. Rushing your return can lead to costly mistakes. If you find yourself rushing at the last minute, pay the amount you think you will owe, and apply for an extension. This will give you 6 more months to prepare your return right, making sure it’s complete and error-free.
You never know when you’ll need these documents. Keep all of them, whether in print, digital form, or both, for a minimum of seven years.
Inexperienced filers can be easy targets for unscrupulous tax preparers. Avoid any tax professional who bases fees on the size of the refund they can obtain for you. For tips on why you should use a tax professional, see this previous blog about when to use a tax professional in Des Moines.
Boelman Shaw Tax & Financial Planning provides tax preparation as well as tax and financial planning services for our clients.
Tax and accounting services provided through Boelman Shaw & Company, LLC. Advisory services provided through BSC Capital Partners, LLC a state of Iowa registered investment advisor.
Sources
Bell. "6 tips on filing taxes for the first time." Bankrate.com. Bankrate, Inc., n.d. Web. 30 Dec 2015.
Salt. "5 Questions First-Time Tax Filers Need to Answer." HuffingtonPost.com. TheHuffingtonPost.com, Inc., 5 March 2015. Web. 30 Dec 2015.
"What Is IRS Form 5498: IRA Contributions Information?" TurboTax. Intuit, Inc., n.d. Web. 30 March 2015.