Among the many rites of passage that come with adulthood is filing your taxes. In some cases, the responsibility of filing taxes could fall on your shoulders even if you haven’t quite attained the magical age of 18. The reality is that if you earned a paycheck during the last 12 months, you might still need to file taxes. Not sure if you are required to file taxes or even how to go about it? Read on for more tips for first-time tax filers.
Are You Required to File Taxes?
In 2020, if you are single and under the age of 65, you are only legally obligated to file a return if you earned at least $12,200. Married couples are only required to file taxes if they have a combined income of $24,400. Keep in mind that the only way to obtain a refund if you worked and taxes were withheld is to file that return. So, even if you’re not technically required to file, it’s still a good idea to do so. You might also be eligible for a refundable tax credit, such as Earned Income Tax Credit or the Child Tax Credit. You should also be aware that even if you are not required to file a federal return, you may be required by your state to file a tax return regardless of how much you earned.
Get Started Early
One of the biggest mistakes that many people make is waiting until the last minute. The tax deadline for 2020 is Wednesday; April 15. During some years, you might get a slight reprieve if the 15th of the month happens to fall on a weekend. Not so in 2020. So, unless you plan to file an extension, you will need to make plans to file your taxes by the 15th. The sooner you get started on the process, the easier it will be and the sooner you can expect your refund, if you are entitled to a refund. Even if you will owe taxes, getting started early will give you more time to determine how you will pay the amount owed. This will also give you necessary time for gathering documents and speaking to a tax professional.
Gather Necessary Documents
In order to file your taxes, you will need a W-2 form from each company you worked for in the preceding year. If you were a contractor, you will need a 1099 form for each company or individual you performed work for in 2019. These forms summarize the funds paid to you as well as the taxes withheld. Your employer is required to issue W-2 forms no later than January 31st. In addition, you will need any documents pertaining to allowable expenses that could be counted as tax deductions. Such expenses include charitable donations, expenses related to education, etc.
Get Organized
When it comes to dealing with the federal government, it’s best to be as organized as possible. Choose a secure location for storing all documents related to your taxes. This will save you a lot of hassle in the long-run. In the event you lose a W-2 or some other pertinent form, you will need to request a new document, which will prolong your ability to file. It’s best to make sure you’re organized from the beginning.
Don’t Be Afraid to Consult a Professional
Filing taxes can be complicated, so don’t feel embarrassed if the mountain of tax codes, rules, and regulations leave you feeling confused. There’s no shame in consulting a trusted friend or family member with experience or even going to a tax professional to ensure you are doing everything right. Consulting a tax professional is also a good idea if you need to file anything other than a straight EZ form. For instance, if you were self-employed, you plan to itemize your deductions, or you are claiming expenses like a work at home deduction. In such instances, it’s really best to consult with someone who knows the ins and outs of tax filing to make sure you don’t overlook something that might incur an audit or penalty.
Bear in mind that if you opt to file electronically, you will likely receive your refund faster than if you file by mail. After all, who couldn’t use a little extra money as quickly as possible?
Filing taxes is an adult responsibility that we all need to handle at some point. Whether you’re getting started as a go-getter teen or a young adult navigating the world of finance for the first time, knowing the lay of the land can help you to make it through the process. The good news is that once you have knocked the tax filing bat out of the ball park the first time, you’ll be a pro next year, right?
