When you’re preparing to file your first tax return, it’s easy to feel overpowered and a little intimidated. But the fact that you’re reading this article at this very moment shows that you have the desire and the drive to tackle tax time.
To help motivate and educate you on your journey to the reward of filing your taxes, I’ve laid out some strategic tips and tactics that will take you from overwhelmed to empowered.
Never Give Up, Never Surrender
The best advice to offer you is this: Taxes can sound scary, but persevere and give it a shot. Reading this article proves that you want to learn, so great job!
If you fall into the category of a “new tax filer”, chances are good that you have a simple tax situation (1040EZ/A), which just so happens to be easy and free! If you’re not sure which tax form you quality for, you can start out in TurboTax Free Edition. Answer a few initial questions and in a few seconds TurboTax will tell you if you’re in the right place, or if you need a different product.
Help Along the Way
If you hit a speed bump along the tax highway, don’t pull over and give up on your trek. One of the benefits to using TurboTax is the abundance of assistance offered to each and every customer. If you do happen to get stuck, you can talk to an experienced TurboTax tax expert either by chatting on the website (directly on the screen where you’re stuck) or on the phone, free. All TurboTax tax experts are CPAs, Enrolled Agents and Tax Attorneys, so you know you are getting quality answers.
Although you should be very careful to organize all of the tax information and documentation you receive leading up to April 15, good organization starts early, even at the beginning of the new year.
Make sure you keep all of your important documents related to income and expenses.
Keep them in a safe and secure place. Once you begin filing your taxes, continue to keep everything tax-related and income-related together for safe and easy access.
How Much of My Income Gets Taxed?
Now that you’ve found about your tax situation, you need to know what and how much of your income is taxable.
Here’s just a sampling of what the IRS can tax:
- Pay from your job, whether you earn a salary or hourly rate, including any tips you receive.
- Sick pay from your job, company bonuses, or severance pay.
- Unemployment benefits.
- Interest from bank accounts and dividends from investments.
- Gambling and lottery winnings.
- Withdrawals from IRAs and annuities.
Deductions: Should You Itemize or Take the Standard Deduction
When you start filing your taxes, you’ll soon come to realize that your new best friend is the deduction. A deduction is basically an expense that you’ve had in the past year to which the IRS has given permission to be subtracted from your overall income total.
In other words, the cost of something you had to pay for can be subtracted (or deducted) from your taxable income. Since the expense was subtracted from your income, you’ll likely owe a little less. See, I told you – new best friend.
There are two basic categories of deductions: standard and itemized.
The standard deduction is exactly that – its standard, the same for everyone across the board, depending of course on your marital status and how you’re filing.
And guess what, TurboTax walks you through this entire process with simple questions to answer and will tell which one will help you keep more of your money.
US tax law is exhaustive. But you don’t necessarily have to be a tax professional to file your own taxes. Follow these tips, continue to educate yourself, and you’ll soon be on your way to tax filing success.