FTB2_Blog_1440x600
FTB2_Blog_411x600

Podcast: First Time Filing Taxes? Start Here!

Read the Article

Welcome to Friends With Tax Benefits. In the fifth episode of season two, hosts Daniel Thrall and Lauren Thomas chat with Edgar Gatsinzi, a 22-year-old in the entertainment industry who just landed his dream job. The friends discuss careers, goals and filing taxes for the first time — something Edgar just experienced this year.

In the second part of the episode, Daniel and Lauren are joined by tax expert Maria Gomez. Together, they cover some key questions Edgar and other first-time taxpayers might have. From tax return basics to big filing questions, you’ll learn everything you need to know to make tax day a breeze.

Listen to the podcast and come back here for some additional tips and tricks on filing your income tax return for the first time!

Start Filing Your Tax Return in 6 Easy Steps

If you’ve never completed a tax return, you probably have questions about the documents you received, the steps you need to take and where to start. Luckily, you’re not the only person who feels this way — the tax process can be a little intimidating to everyone. (Even Daniel and Lauren still remember how nervous they were when they first saw all those tax forms!)

The best thing to do is break your tax return into simple steps and tackle them one at a time. Here’s how to get started:

#1: Consider Your Filing Status

Filing status might not seem like the most important detail when there are exemptions and refunds to think about — but this is actually a crucial first step. Filing status determines your standard deduction amount, the forms you need to use, the amount of tax you pay overall and more.

The United States Internal Revenue Service (IRS) identifies five tax filing statuses:

  • Single: You’re unmarried, divorced or legally separated on the last day of the year.
  • Married Filing Jointly: You’re married and filing a tax return together by combining income and expenses with your spouse.
  • Married Filing Separately: You’re legally married, but you and your spouse each file your own tax return.
  • Head of Household: You’re unmarried, have a qualifying person living with you for more than half the year and pay more than half the cost of keeping up a home for the year.
  • Qualifying Widow(er) with Dependent Child: Your spouse died during one of the previous two years, you have a dependent child and you meet other certain qualifications.

Not sure which status applies to you? Try the What’s My Filing Status? tool from the IRS.

#2: Gather and Read Your Documents

Next, it’s time to gather all your tax documents. For most people, that includes forms you get in the mail or electronically, such as a W-2 if you were a traditional employee. Depending on your financial situation, you may receive other forms. 

For example, say you receive interest from a savings account. Most interest is considered “earned income” and must be reported on your tax return, even if it’s exempt or otherwise non-taxable. If you make more than $10, your bank will send a Form 1099-INT, which may arrive in your mail, email or in your banking app.

If you worked a side gig during the year, you may also receive forms such as the 1099-NEC or 1099-K, which cover certain self-employment situations.

When you have all your documents, you’ll be able to find key information. This includes your taxpayer identification number, gross income, adjusted gross income and more.

#3: Prepare To File

Now you can choose how you’ll actually do your tax return. You have two basic options:

  • The old-fashioned way: Some people still prefer to file taxes on paper. Just be aware that it takes longer to process your tax return by mail.
  • The modern way: Tax preparation software can automatically import tax information, identify the best deductions for your situation and simplify the filing process using e-file

Remember, most digital tax prep solutions come with support, live chats and other options that connect you to a tax professional for support along the way. 

#4: Learn About Deductions, Credits and More

There’s more to taxes than just income. Here are a few more things to consider: 

Deductions

A tax deduction is an amount of money that can be subtracted from your taxable income to reduce the amount you owe in taxes. You can choose between two options:

  • Standard deduction: An amount determined based on your filing status.
  • Itemized deduction: An amount determined by calculating and adding individual costs.

The best decision depends on your individual financial situation. Luckily, a good tax preparation solution can help you determine which is the smartest choice for you.

Tax Credits

A tax credit is similar to a deduction, but instead of being based on costs, it’s determined by behaviors and decisions. For example, you might be eligible for the Earned Income Tax Credit if you earn low to moderate income, either from a job or from self-employment. 

Tax Relief

Tax relief is any government-provided solution that helps lower your tax bill, including many programs introduced during the COVID-19 pandemic. You have to be eligible before you can utilize different kinds of tax relief, so it’s important to know what’s available — and digital tax solutions can help with that, too.

#5: Get Your Questions Answered

Before finalizing your income tax return, make sure you’ve got all the information you want. Check out these common questions:

“When is tax day?”

Tax day is the “due date” for your federal tax return. Federal income taxes are due on Tuesday, April 18, 2023, because April 15 falls on the weekend and the Emancipation Day holiday in Washington, D.C. falls on Monday, April 17. If you live in a state that experienced a federally declared disaster, you may be eligible for an extended tax deadline. 

If you need more time to file your taxes you can file for an extension to get an additional 6 months, but you have to file for an extension by April 18. Keep in mind this is an extension to file but not an extension to pay if you owe taxes. 

No matter what your tax due date looks like, it’s important to get things done before then. Otherwise, you may be charged a “failure to file” penalty, which is 5% on any outstanding taxes for each month you fail to pay (plus interest).

“How do I know if I need to file taxes?”

Not everyone needs to file an income tax return. In fact, you might be able to skip tax day if your income is less than your standard deduction. 

Say you’re single and earn less than $12,950. No need to worry about this tax year — you don’t have to touch those forms.

However, it may be smart to file taxes even if you’re not required to do so. If your employer withholds pay for tax purposes, you may be entitled to a refund for those taxes withheld — but you’ll never know unless you file!

“Do tax rules change?”

To keep up with a fast-changing economic environment, the IRS makes changes to tax law. Some of these changes impact you while others don’t — which is one more reason it’s smart to get help.

#6: File Away

Now that you have all the information you need, it’s time to file. Digital tax preparation solutions do the heavy lifting for you, calculating your income tax and preparing your tax return. You can even get email or text notifications when your return is accepted and any refund is sent.

First-Time Tax Filing: What Happens If You Make Mistakes?

If it’s your first time filing taxes, you’re probably not feeling like an expert — so what happens if you type the wrong number, do your math incorrectly or otherwise make a mistake on your tax return?

Don’t panic. Tax issues and mistakes can happen to everyone. Sure, failing to comply with the IRS code makes you subject to civil penalties, including fines — but you have a chance to fix most issues before that penalty kicks in.

Let’s take a look at a few situations, what happens and why errors aren’t the end of the world:

Some Mistakes Are OK

Maybe you pressed the wrong button on your calculator, or maybe you’re just not a math whiz. Either way, issues like these won’t have the tax authorities showing up at your doorstep. In fact, the IRS says they can correct math errors on your return.

The IRS will also give you a helping hand if you forgot to include certain forms or documents. They’ll send a notification requesting these forms and you won’t be penalized.

Hint: Tax prep software does the math for you and even imports tax documents, which means you can avoid errors and get your potential return that much faster.

You Can Amend Your Return

Let’s say you made a different kind of mistake. Maybe you reported certain items incorrectly, including:

  • Filing status.
  • Dependents.
  • Total or adjusted gross income.
  • Deductions.
  • Credits.

These issues could throw off your income tax bill, so it’s important to make corrections. Luckily, the IRS allows you to file an amended return using Form 1040-X. If you need to amend your 2020, 2021 or 2022 tax return you can now file the Form 1040-X electronically using available tax software products.

Help Is Always Available

Remember, you can get support, resources and live help from TurboTax.

The IRS also has customer service numbers available to help you navigate those tough tax problems and concerns. Here are a few options:

  • Main number: 800-829-1040
  • Check status of an amended tax return: 866-464-2050
  • Schedule an appointment with the local IRS office: 844-545-5640

Special Tax Situations: Self-Employed and Small Business Taxes

Wondering what taxes look like for different employment and financial situations? Let’s find out:

Self-Employment Taxes

When you have an average 9-5 job, your employer takes money out of your paycheck to cover Medicare and Social Security taxes. If you’re a contractor, part of the gig economy, own a business or are otherwise self-employed, however, you’ll need to take care of those taxes yourself.

The self-employment tax rate is 15.3%, broken down as follows:

  • 12.4%: Social Security.
  • 2.9% Medicare.

You have to pay this tax if you’re considered self-employed and make $400 or more. You may also have to pay Estimated Taxes every quarter depending on your financial situation.

Of course, being self-employed doesn’t just mean you pay different taxes. You may also be eligible for different deductions and credits, too. 

Small Business Taxes

If you own a small business, you’re considered self-employed for tax purposes and must pay self-employment taxes. However, there are additional considerations, including:

  • Expenses: Parts of your home office, car fuel bill and even your day-to-day expenses may all be small business deductions in some cases if they are used in the nature of your business.
  • Forms: You’ll get different forms as a small business owner — for example, Form 1099-K, which covers payments received from credit cards and platforms or apps.
  • Taxes: If you pay employees, you may need to withhold taxes from their paychecks and report this appropriately.

Make Filing Fun (and Simple) With TurboTax

That’s right: Tax filing can be fun.

As Daniel, Lauren and Edgar discuss, first-time tax filing may be a little intimidating, but the right solutions and information go a long way. 

The views, information or opinions expressed during the Friends with Tax Benefits podcast series are solely those of the individuals involved and do not represent those of Intuit, TurboTax or any of its brands. The primary purpose of this podcast series is to educate and inform. This podcast series does not constitute financial, legal or other professional advice or services.

Leave a Reply