First time filing your taxes? Here are 5 tips for tax season newbies-LoTradeCoin Wealth Hub

First time filing your taxes? Here are 5 tips for tax season newbies

2024-12-25 12:22:34 source：lotradecoin tools Category：Contact

You’ve never filed a tax return. You just found out that you need to file one in 2024. You're wondering where to start.

Here are five tips for first-time filers, starting with perhaps the most important one: deciding if the IRS needs to hear from you.

Figure out if you have to file a return

Generally speaking, anyone who earned at least $13,850 in gross income in 2023 must file a tax return in 2024. (We’re linking to a NerdWallet synopsis because IRS draft Publication 501 is a little hard to read.) Different rules apply for married people, older Americans and heads of household, but if you’ve never filed taxes, you may well not fall into those categories.

The $13,850 threshold applies even if a parent can claim you as a dependent on their tax return. If you are a dependent, you also must file a return if you have amassed at least $1,250 in “unearned” income, such as interest from investments.

Gather your tax documents

If you determine that you need to file a return, start pulling together the documents you’ll need to complete it:

W-2: If you have a job, this is the form the employer must send you by the end of January. It says how much money you earned last year, and how much tax was withheld.

1099s: These forms report income that didn’t come directly from a traditional employer. They show earnings from freelance or “gig” pay; interest and dividend income; and income from third-party platforms such as Venmo and PayPal.

Receipts: If you’re a first-time taxpayer, you will need to start keeping records of transactions that you might have to report on a tax form, including income, expenses and potential deductions. Examples might include donations to charity or a whopping medical bill.

Figure out if someone can claim you as a dependent

If you’re living with your parents or getting their help with tuition or living expenses, they may be claiming you as a dependent, or perhaps they should be.

Parents can claim you as a dependent if you’re under 19, or under 24 and studying full-time, and your parents kick in more than half of your financial support, TurboTax reports.

Your parents may reap tax benefits by claiming you as a dependent. And you’ll need to report your dependent status on your own return.

Tax season can be terrifying.Here's everything to know before filing your taxes in 2024.

Find out if you qualify for deductions or credits

Tax deductions reduce the amount of your income that is taxable, while tax credits reduce the amount of tax you owe.

Here are a few common tax deductions and credits for first-time taxpayers, according to Experian:

The Student Loan Interest Deduction: You can potentially deduct interest you paid on student loans, up to a maximum of $2,500.

The American Opportunity Tax Credit: If no one can claim you as a dependent, you may be able to reap up to $2,500 in credit for college expenses.

The Earned Income Tax Credit: You may qualify for this credit if you didn’t earn very much in 2023. Consult the IRS tables for details.

Decide if you need help

As a first-time taxpayer, you’ll need to choose whether to do your own taxes or hire a professional.

Most Gen Zers do their own taxes. And experts say that’s probably OK if you have a relatively simple return.

If you go the DIY route, you may be able to save money and complete the return quickly using tax software or the IRS Free File program.