Taxes are tricky, and even those of us who have been filing our taxes correctly for over 20 years still have trouble with many tax-related items, especially when our taxes get to be complicated. So, we know taxes can be especially troubling for first-time filers. Here are 5 things you should know before you file your taxes.
Know How Much You Earned
This may seem like an easy step, but it’s so important to know exactly how much you earned in the previous tax year before filling out your taxes. The amount you make greatly affects your taxes and if you are unsure, you could be underpaying or overpaying by a large amount. Check your mailbox once the new year comes for tax forms, such as W-2’s, and make sure you receive them all—if you worked at a restaurant for 6 months and made a certain income, you will need to include that in your taxes, or if you were in college for part of the year, there are certain forms you will need as well.
Know Your Deductions
If you don’t familiarize yourself with tax breaks, you could end up paying way more than you need to in taxes—and in this case, it’s money you won’t get back in the form of a refund. If you have a student loan or any education credits, you can deduct that and greatly impact the amount you owe. If you are a teacher, you can deduct for classroom expenses, and if you own property or have a child, you can deduct childcare and mortgage interest.
Do it Early
You will start receiving your tax forms in the mail starting January 1st, and for many, the April tax deadline will still seem far away. As a first-time filer, you probably feel you have plenty of time to get your taxes done and end up putting your forms away until March comes around. The problem with this is that if there is a problem with your form or you are missing a document, and you file your taxes too close to deadline, it will be too late to fix anything without accruing a penalty. At the very least, always make sure you file by the deadline to avoid penalties or added interest.
Know your Filing Status
Filing status is often the first step when filing your taxes. You may be familiar with this when you filled out your first W-2, as it is there where you are asked about your status. Many first timers don’t realize that they are someone else’s dependent (i.e. you still live at home and your parents claim you on their taxes), and this can lead to a lot of problems for you. For one, you won’t be able to claim most deductions and you won’t receive your exemption, as the person who claims you as a dependent will.
If you are filing for the first time, or are filing for the first time with a new complicated tax situation, consider contacting and experienced tax attorney like Levy, Tax & Associates. Contact us at 1-800-TAX-LEVY or visit our website to learn more.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.