By Angela Epley
Becoming an adult can bring on some amazing feelings: blazing a trail on your own terms, landing the career of your dreams, the rush of pride from your first real paycheck. It’s an amazing feeling to get financial recognition for hard work!
… And then, boom: it’s time to file your taxes for the first time. Suddenly, adulthood feels a lot less fun and more like a never-ending parade of forms full of legalese. So what’s a first-time tax filer to do?
Before you freak out — don’t worry. You can do this! Learning how to file your taxes for the first time is kind of like learning how to cook or do laundry. OK, you won’t be doing your taxes as often as your daily chores, but it’s still the kind of task that gets easier the more you do it – plus, it’s essential to keep you out of trouble.
Doing your taxes can be a helpful way to “take the temperature” of your financial progress each year. After all, knowing (not guessing) the reality of your financial situation determines how much you need to earn and save to help build financial stability.
Collect the right paperwork. No matter how you earned your income, the IRS wants to hear about it. If you’re earning a salary with benefits, your company will issue a W-2 form. If you’re self-employed or do any freelancing or independent contracting (like with ride-share services), you’ll need a 1099 form. Remember to report all income on your return, otherwise the IRS could saddle you with a number of penalties specified in the tax code.
Dig in to deductions, exemptions and credits. It’s true: America’s tax code is known for being really complicated. But you can take advantage of some of these complications! The new Tax Cuts and Jobs Act (TCJA) contains many changes to tax brackets, deductions, exemptions, and credits. To familiarize yourself with some of these changes, visit the IRS site for more information.
Ask for help. You’ve heard time and time again that “money can’t buy happiness,” but these days, psychologists are noting that money can help free up your most precious resource — time — and that can bring a big boost of peace, calm and even happiness. If you’re feeling stuck or overwhelmed as you file taxes for the first time, bringing in professional help to answer questions or do your taxes for you could be worth the expense.
Finally, take notes on the steps you took to complete your return, so you can refer to them next year!
The contents of this document are not intended to be, and are not, legal or tax advice. The applicable tax law is complex, the penalties for non-compliance are severe, and the applicable tax law of your state may differ from federal tax law. Therefore, you should consult your tax and legal advisors regarding your specific situation.
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