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3 Important Things to Know for First Time Tax Payers

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Paying taxes is an important responsibility as a citizen of the United States. Tax dollars go towards a variety of public programs and services, fund our military, government, and more. Filing taxes for the first time might seem daunting, but in truth, the process is much simpler than it’s made out to be. Some tax services will make the tax process sound overly-complex, but this is nothing more than a marketing ploy. With the right knowledge and a little patience, you can easily file your taxes for the first time and be well on your way to passing one of adulthood’s rites of passage.

Whether you’re on your own for the first time and getting your first return, or you owe money from back payments or not filing in previous years, this guide is for you. We’ll cover some important things for taxpayer filing for the first time, so you don’t have to tackle this important milestone alone. Let’s begin!

1. You Can File Online (E-File), And It’s Often Quicker

When you think of taxes and accountants, you probably imagine a huge stack of papers sitting there waiting to be filled out and sifted through. While you can certainly still file on paper, it’s a better idea to file electronically, or E-file your taxes. Why? Because it’s quicker, more straightforward, and often easier to do so.

We’ve come to depend on computers to handle just about every function you can think of—from monitoring our personal health to storing and sharing information to securing our very homes. Everything is moving toward a digitalized platform, and your taxes are no different. It’s far easier to process e-docs than it is to sift through billions of pages of paperwork for every taxpayer. 

E-filing is easy if you know where to look. The IRS accepts e-filing for businesses, individuals, and couples. In most cases, your return can be deposited directly into your bank account, which usually takes only a few weeks to complete. Waiting on a paper check can often take twice as long, and it’s more difficult to track the status of a refund sent through the mail.

For more information on the IRS and e-filing, go here.

2. You Don’t Need An Accountant/Tax Service—But Consider One

While it’s certainly true that you can file taxes by yourself by filling out the forms, it’s often a better idea to get some help. When you file things by yourself, you might be missing important information, which can leave you with a smaller refund or owing more than you think in taxes. The bottom line? Using an accountant or tax service helps you cover all of your bases. The last thing you want is to get hit with an audit and realize you owe thousands in unpaid tax.

Those with relatively simple tax situations, such as single, childless adults with one source of income, can usually get away with filing their own taxes. When you get married, have children, start a business, or start bringing in multiple streams of income, you need someone to take a closer look at your information to ensure you’re covering everything. Not to mention, you might not fully understand which things you can write off of your taxes! You could be missing out on huge tax breaks that only a tax professional would know about.

The more complex your situation becomes, the more dire the need is to hire a professional. Spending the money now prevents you from having to spend hundreds or even thousands later on. 

Tax Forms

Another important aspect of filing taxes, especially if you want to file on your own, is knowing your tax forms. Which one do you need? 

Form 1040

This is your annual income tax filing form for individuals and married couples.

Form W-4

This is your employer’s withholding form. You’ll fill this out when you first start your job. It tells your employer how much to withhold from your income for taxes.

Form 1040-ES

This is for individuals who are not subject to tax withholding. 

Form W-9

The form you use to request a TIN, or taxpayer-identification number. 

Form 4506-T

This is the formal request for a transcript of your tax return.

Form 941

If you’re running a business, this is your quarterly federal tax return form.

Form W-2

This is your annual wage and tax statement from your employer. 

Form 9645

This form is used to request a payment plan for your taxes if you can’t afford the full amount you owe.

Form SS-4

This is the application for an EIN, or employer identification number. 

Form W-7

This is the form you use to request an ITIN, or an individual taxpayer identification number. 

You can get organized all year long with the right tax service, and you won’t have to sift through endless forms. 

3. You Need To File

For many new taxpayers, filing taxes can be confusing or even intimidating. Some don’t file because they don’t know how, or because they don’t think they need to file because they didn’t make enough money. You need to file, but there are specific rules that apply to tax situations and age.

If you’re under 65 and you’ve made at least $12,200, you need to file federal income tax. Alternatively, if you’re over 65, the minimum is $13,850.

If you’re married and filing jointly, you need to have made at least $24,400 if you’re under 65. If you’re over 65, that number comes out to $27,000. 

For more information on specific tax situations, you can visit the IRS website or go here.

Penalties

Incorrect filing can often lead to tax penalties, and that’s the last thing you want when you’re expecting a return. If you owe nothing, there are no penalties. Not filing by the tax cut-off date, not paying your owed taxes, or a dishonored check can all incur penalties with the IRS. This is just one more reason it’s so important to use a tax service or accountant to file.

The Bottom Line

Filing taxes for the first time doesn’t have to be confusing, intimidating, or difficult. It’s best to use a tax service or accountant to ensure accuracy. If you think you don’t have to file, double-check your income and check with a professional. It’s better to be certain than to guess wrong. Happy filing!