Filing taxes for the first time? Don’t let all the experts and jargons overwhelm you. At the end of the day, if you understand some very basic points clearly, you shall pass this test as well. If you are out of the college or just took your first job, it is eminent that you take this step with a lot of seriousness. But not to a level that it becomes a mental block for you. We have outlined some simple tips for you to get through this.
Should You File?
Though this might sound a bit odd, it is essential that find out whether or not you need to file taxes. If a tax payer has mentioned your name as dependent on their tax filing and you had a job which fetched you more than $6300 in a financial year, you will have to file for taxes. If you did not have a job yet managed to earn more than $1050 (could be money from investments, interests etc.) you will need to file your taxes. If you do not belong to either of the categories, you technically need not file taxes. But getting into that habit early on will help you for a smoother transition later on.
Get To It Quickly
We all know that April 18th is the last day for filing your taxes. But why even wait for the last day? The earlier you file your taxes, the earlier you receive refunds, if any. Even if you do not finish it immediately, getting started with the process will ensure you are a step closer to it. Because the moment you start the process, you will come to know the different documents needed for the process. One might need to do a bit of research for a few sections. Starting early gives you that time freedom to do these things.
Gather All The Documents Required
Yes, the previous step will help you find out and eventually gather all the documents that are needed for the filing of taxes. But there are certain other documents that you will need. For an instance, if you are an employee W-2 Form from your employer or Form 1099 if you are a contractor is a must. These forms contain the total amount paid to you for a financial year. While both the forms are expected to be with necessary tax payers by 31st December, for contractors that’s the deadline. Keep a tab on other bigger expenses as well such as charity or education as well.
Being Organized Is The Key
Being organized is more of a life skill that will serve you in different aspects and stages of life. However, it becomes that much more important while dealing with stuff like taxation. Keep a track and copy of all the documents and paperwork related to your job, contracts or money in general. Make it a habit to keep these documents in a single place, which is of course secure. This will ensure you do not run around in the search of documents towards the filing season.
Know What You Are Doing With Your Money
There are three simple scenarios. First is the happy situation where you have paid the government exactly what you owe. The second scenario is that you have underpaid your taxes and the third is you have overpaid your taxes. You can find all of these out with the help of some tools. So, do not shy away from using these tools to make you’re a little bit easier. This also helps you keep better control over your money.
Have a question? Contact Nanda Kumar.
Your comments are always welcome!