How to DO Taxes: 5 Steps for First-Time Filers

Content provided courtesy of USAA.

It’s natural for first-time income tax filers to feel anxious, but it’s best to relax and take a deep breath as you prepare for the April deadline.

“Think of it as a financial recap of the year and realize many people get money back,” says Bob Meighan, vice president of customer advocacy for TurboTax®.

Meighan offers these tips:

  • Get organized. Depending on your employment status, investments and loans — there are different documents and IRS forms you will need.
    • If you have a full-time job: Filers should receive a year-end W-2 statement from their employers no later than Feb. 1.
    • If you have a part-time or contracting job: Expect to receive a Form 1099-MISC in the same time frame.
    • If you are self-employed: Track your business income and expenses throughout the year because you will need this information when you file your return (Form 1040).
    • If you have investments: Bank statements and investment reports (in the form of a 1099-INT) also may be needed to show total interest and dividends earned in 2015.
    • If you have loans: You also need a 1998-INT to show what interest you paid, such as on a mortgage or student loans.
  • Pick a form. A popular form among first-time filers is the Form 1040EZ, the shortest and simplest of the three individual income tax forms. Use the 1040EZ if your taxable income is less than $100,000 and comes from wages, interest or unemployment compensation. Also, you can’t claim any dependents, and you must file as a single individual or jointly with a spouse to use the EZ form. If you do not meet those requirements, consider Form 1040A or Form 1040 (the long form).
  • Investigate deductions. New filers may think they could not accumulate $6,300 in itemized deductions as a single taxpayer, but that’s not always the case. Certain deductions — such as ones involving student loan interest, education expenses and retirement contributions — may be claimed without itemizing and can reduce your taxes.
  • Use e-file. TurboTax® and other electronic tax preparation services make it easy to organize and file taxes online.
  • Set up direct deposit. Getting a refund? Get it faster by filing your return online and directing the Treasury Department to put the dough right in your bank account. “E-filing with direct deposit of your refund can be the quickest and most secure way of getting your tax refund,” Meighan says.

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