Five Tips on How to File First-Time Taxes

For every young adult, the first time tax filing is a major milestone. Your parents might have processed your tax filing in the past, but now it is your turn to take responsibility for your finances and file your return. Here are some quick tips on how to file your taxes for the first time to help you get around the whole process.

1. Collect all your tax documents

You might want to submit your tax claim as early as possible if you plan a refund. You will also receive important tax information in your mailbox, e-mail, or online during January, February, and even March.

Collect all your tax documentation before you start, including your

• Official Wage and Tax Statement ie., W-2 form
• IRS Tax Form – 1099
• Other types of tax income forms
• Tax exemptions
• Receipts

You may be required to amend your tax return later if you file without one of these forms.

1. Decide if your parents can make your claim as a dependent

Many young adults get their parents’ financial support, even after they earn money. You may still live with your parents, receive money from them, or they can pay for your education. If this is the case, your parents may also report your tax return as a dependent. Guide by DollarOverFlow.

You could be considered a dependent by your parents in two ways: namely Qualifying Child, and Qualifying Relative. They could benefit from certain tax benefits if your parents claim you to be a dependent, such as education tax credits and the Other Dependents Credit. If your income is adequate, you still need to file a tax return, but when you prepare your return, you need to indicate that you can be claimed on a return of somebody else.

Speak to your parents before filing to see whether they want to claim you as a dependent that everyone is on the same page.

1. Take account of tax deductions and credits available

Tax exemptions and credits will reduce the net tax bill and even increasing the refund, and you want to ensure that you take advantage of all the claims you are entitled to.

Some common tax deductions and first-time filer credits include:

• American Opportunity Credit and Lifetime learning credit
• Interest deduction for student loan
• Standard deduction or detailed allowances
• Earned Income Tax Credit (EITC)
• Deduction for a home office because you are Self-employed

1. Don’t forget your huge revenue

Millions of young people act as drivers in the gig economy, as packaging or grocery distribution, full or part-time free traders, or as consultants in projects. Don’t forget to report your gig work income on your tax statement when you have earned your revenue from freelancing.

1. File Online

There is no need to wait in the line to file your tax, just take a print and send it to the IRS. The IRS estimates that taxpayers filing their tax returns electronically will often receive their refunds within three weeks. If you decide to have your tax refund deposited directly into your checking or saving account, you often receive your refund even faster.