Filing Taxes For The First Time

Filing taxes for the first time is mostly an exercise in gathering documents and answering questions honestly. The software handles the arithmetic. What follows describes the general United States process; rules change annually, so verify specifics against current IRS guidance.

Do you have to file?

Filing is required once your income passes a threshold that depends on your filing status, age, and income type. Even below the threshold, filing is often worth it: if an employer withheld tax from your paychecks, filing is how you get that money back, and some credits are refundable.

Documents to collect

• W-2 from each employer, showing wages and tax withheld
• 1099 forms for freelance income, interest, or other payments
• 1098-T if you paid tuition
• 1098-E if you paid student loan interest
• Your Social Security number and bank account details for direct deposit

Employers generally must send W-2s by the end of January. If one does not arrive, contact the employer before the filing deadline rather than guessing.

Standard versus itemized deductions

A deduction lowers the income you are taxed on. The standard deduction is a flat amount available to everyone; itemizing means listing individual deductible expenses instead. You take whichever is larger. For most first-time filers, the standard deduction wins easily and itemizing is not worth the effort.

Deductions and credits are not the same

A deduction reduces taxable income. A credit reduces the tax you owe, dollar for dollar, which makes credits considerably more valuable. Education credits and the Earned Income Tax Credit are among the ones students and early-career workers most often qualify for and most often miss.

Free ways to file

• IRS Free File, for taxpayers under an income threshold
• VITA — Volunteer Income Tax Assistance — offering free in-person preparation, often on college campuses
• Free versions of commercial software, though watch for upsells partway through

A note on refunds

A large refund is not a bonus. It means you had too much withheld during the year and lent the government money at no interest. Adjusting your W-4 with your employer puts that money in your paychecks instead. Filing electronically with direct deposit is the fastest way to receive whatever you are owed.

This article is educational information, not personalized financial advice. For guidance specific to your situation, book a free consultation with our team.