You might know a lot about geometry or grammar. But most of us weren’t taught how to file taxes in high school. Since taxes are an unavoidable part of life, you’ll have to learn how to do this at some point. Let’s walk through how to file your taxes for the first time. When you have enough income, a financial advisor can offer specialized tax planning services to help minimize your tax liability.
How to File Taxes for the First Time
Tax time is here! The filing deadline for your 2022 tax return is April 18, 2023. Here are steps before you file taxes for the first time.
Find out if you need to file. Before you start worrying about filing your taxes, find out if you need to file at all. That’s right! In certain situations, you might not have to file taxes.
For example, let’s say that you are an unmarried 25-year-old who earned less than $12,500 in 2022. In that case, you wouldn’t have to file taxes.
For tax year 2022, individuals who earned over $12,950 ($14,700 for those age 65 and older), heads of household who made more than $19,400 ($21,150 for those 65 and older) and joint filers with income above $25,900 ($28,700 with one spouse 65 and older, and $27,300 with both spouses 65 and older) must file an income tax return. Married taxpayers filing separately must file when income is above $5, and widowers file if they earned over $25,900 ($27,300 for those 65 and older).
You can use this helpful tool from the IRS to confirm your status.
Gather your information. Before you can file your taxes, you’ll need to gather some documents. The exact documents you need will depend on your financial situation. But here’s a look at what you should try to collect:
- Dependent status. In some cases, you might still be claimed by your parents. But in other cases, you might be claiming your own children as dependents. Determine where you fall to make sure everyone is on the same page. Explore these rules to find out more about your dependent options.
- Gather income information. Depending on your employment status, you may receive a W-2 or 1099 to report your income. Don’t forget to include any information about side income or bank bonuses. Every bit of income that came into your life will need to be reported to the IRS.
- Consider your deductions. A deduction can help you lower your tax bill. Most taxpayers will take the standard deduction of up to $12,950 for single filers in 2022 and $13,850 in 2023. But if you have lots of deductions, such as a home office deduction or student educational deduction, itemizing might make sense. Here’s a closer look at your deduction options.
File online or with professional help. Once you have all of the information you need, it’s time to move on to actually filing your taxes. You have two options: file them yourself or work with a professional.
If you want to file taxes yourself, there are plenty of free online tools to help you. For example, you could work with the IRS e-file tool. But the free tool is only available if you have an Adjusted Gross Income of $73,000 or less. Other options include TurboTax or H&R Block.
If you don’t want to file by yourself, you can work with a tax professional. This option is especially helpful if you have a complicated tax situation.
Pay your taxes. If you owe money to the IRS, then it’s time to pay up. If you, or a professional on your behalf, filed electronically, you can pay your taxes with a bank account, credit card or debit card. The bank account option could allow you to avoid fees.
If you can’t afford to make a payment at once, then you have the option to apply for a payment plan. Although there are interest charges and penalties, the IRS will work with you to make a payment plan that works.
Filing taxes might not be the most enjoyable task. But learning how to file taxes for the first time doesn’t have to be scary. If you run into any questions about your unique tax situation, it is never a bad idea to enlist the help of a tax professional. With their help, tax time can be a breeze.
Tax Planning Tips
- A financial advisor could help you develop a tax strategy to minimize your tax liability. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- SmartAsset’s free income tax calculator can help you figure out how much you will have to pay in taxes.
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