Taxes are a necessary evil.
You may not want to file taxes, but you’ve got to do it. You may be wondering, “Is it mandatory to file my income tax returns?” Take it from us, it is.
Nonetheless, filing taxes can be stressful, especially if this is your first time filing your taxes. Here are 7 tips to help you file your taxes.
1. Gather your tax forms
If you are an employee, you’ll need your W-2. If you’re an independent contractor, you’ll need your 1099 forms. Also, gather other pertinent information like your health insurance paperwork, tuition statements (if you’re in college), mortgage and bank statements, and any other tax-related documents.
Lastly, if you want to itemize business expenses, make sure you have this information on hand as well. This includes receipts and even statements that show you’ve collected payments for renting out part of your home. This way, you’ll be ready to file your taxes.
2. Know what tax deductions you qualify for
Did you pay interest on any student loans last year? Did you have a baby? Did you move out of state for a job?
Regardless of how your life changes, it’s important to know which tax breaks may be available to you. Now is the time to do your research and learn about the different tax credits and deductions that you may be eligible for when filing your taxes.
3. Don’t wait until the last day to file taxes
The official deadline for filing taxes is April 15th every year, unless the 15th falls on a weekend or holiday. This may or may not be extended, like in 2018 when people were given two extra days to file.
Even if you have to mark this date on multiple calendars, don’t forget it! Why? If you file your taxes late, you may incur penalties for not filing on time. Additionally, if you owe the IRS money, you’ll want plenty of time to prepare.
To prepare, try to have all of your documents ready to go at least a month in advance.
4. File an extension with the IRS
Need more time? If so, you may need to file an extension and the deadline to do this is the same date taxes are due – April 15. The IRS allows you to file a free extension using one of their endorsed websites. These websites walk you through the steps you need to follow when filing for an extension. If you still aren’t sure what to do, it’s important to seek help from a tax professional.
5. Use an online tax software
Online tax programs like these offer automatic importing of your W-2 and are very easy to use. They also offer self-employment filing options for business owners who need industry-specific deductions or need to track self-employment expenses.
If you’re using a software program and need a little extra hand-holding, you can call the online company to speak to a professional. Just make sure you are aware of any possible fees involved.
6. Hire a tax advisor or accountant
If using an online software program isn’t your cup of tea, it’s a good idea to work with a tax professional. When you hire a tax advisor or accountant, this person will prepare your taxes for you and even help you find deductions to help reduce your tax bill. Better yet, a tax professional may help you get a bigger refund. While you’ll have to pay your tax preparer, you’ll likely worry less.
7. Prepare for next year’s tax season
Once you’re done filling your taxes for the first time, make sure you start preparing ahead for next year. For starters, keep your tax information from the previous year on hand for future reference and make sure that you’re claiming the right deductions on your W-4 form. You can always change this by calling your employer’s human resources department.
If you’re self-employed, remember to keep records for all of your expenses. This way, filing your 2019 taxes will be much easier. Just think: you’ve made it through your first tax return! Now you know what to expect and you’ll be able to approach next year’s taxes with a bit more peace of mind.
This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.