5 Quick Tips for First-Time Tax Filers

Tips For First Time Filers
Tips For First Time Filers

Taxes may be one of the only certain things in life, but that doesn’t mean that filing them is easy. This is especially true if you are a young adult filing your first tax return. If you are single and earned an income greater than $10,000 in 2014, you are required to file a federal return. If it’s your first time filing taxes, you might be a little overwhelmed, but never fear. Here are 5 quick tips to help you file your taxes for the first time.

Create a Folder to Collect Your Tax Documentation

Every employer you worked for in 2014 should have sent you a W-2 wage statement, postmarked no later than January 31, 2015. This includes part-time, full-time, and temporary jobs, no matter how few hours you worked for the company. If you didn’t receive a W-2 by early February, contact your employer to make sure it wasn’t sent to the wrong address. For any work you completed as an independent contractor, you should have received a 1099 miscellaneous income statement. Make a habit of collecting all your pay stubs, earnings statements and other financial paperwork in one folder so that you’ll have everything you need come tax time.

Special Rules for Dependent College Students

Things can get slightly complicated when you earn enough money to file a return while still receiving more than half of your financial support from your parents. If they plan to claim you as a dependent, IRS rules don’t allow you to claim a personal exemption on your own tax return. In most cases, it makes financial sense for your parents to take the tax exemption, since they likely owe more in taxes than you do. However, you or they can speak to a tax accountant if you’re uncertain.

Make it Easier on Yourself; File Electronically With Direct Deposit

The IRS & most states currently require that you file your tax return electronically.  However, many tax filers still elect to receive their refunds by being sent a check as opposed to depositing it directly into their bank account.  Choosing a direct deposit shaves weeks off the time it takes to receive your refund.  In order to file electronically, you will need to use tax software or hire a tax professional.  The benefit of using software/tax professionals is that they find math errors and deductions you may have missed. Common deductions that new taxpayers overlook include charitable donations, job search expenses, and state and local sales tax paid. If you have children yourself or you’re filing as head of household, you qualify for even more tax credits.

Choose the Simplest Form Possible

If you are single, don’t own a home, have no dependents, and earn less than $100,000 a year, filing your return on the 1040EZ form makes your life a whole lot easier. If you choose to use tax software, the program should suggest this after completing its initial interview with you. You’re more likely to find free tax preparation programs when you file using the 1040EZ form.

Get Your Taxes Done on Time

Your federal and state tax forms for 2014 must be postmarked by Wednesday, April 15, 2015 to avoid paying a late penalty. If you have legitimate reasons for not getting your returns in by that date, you may be able to request an extension. It’s also important not to be in such a hurry to get this chore done that you speed through it and make costly mistakes. This is a common mistake for first-time filers, especially those who are expecting a refund.

If it’s your first time filing taxes, take your time, plan ahead, and consider using tax software to make your life easier. Remember: it’s always a good idea to ask a tax professional if you’re not sure about something. Good luck!

What Do I Do If I Haven’t Received My Tax Refund?

Follow These Steps To Track Your Refund
Follow These Steps To Track Your Refund

Filing your tax return was stressful, but now that it’s done you know the amount you’ve got coming and you can’t wait to get your hands on it. This is understandable; we all usually have that refund earmarked for something. That’s why it can be so frustrating when your tax refund doesn’t arrive on time. Read on to learn what to do if you’ve been waiting an exceptionally long time for your tax refund.

Gather Some Information

The first thing you should do when you have yet to receive your federal tax refund is to gather your social security number, filing status and the exact amount that you expect to get so you can check your return status online or over the phone. Having this information close at hand is necessary to start the process.

Check the Status of Your Return

It’s important to first check your return status before you check your refund status. You can do so over the phone or by logging in securely to your account on the IRS website. If you used an e-filing service to process your return, inquire about your status with that company. Many such services offer online log-ins where you can easily check your account. If you didn’t use an e-file service, you can call the IRS toll-free at 1-800-829-1040. If you are lucky to speak to an agent during your first call, hopefully they will be able to tell you if there was a delay, and what the cause was. Often, the return simply hasn’t been processed yet.

Once you’ve confirmed that your tax return has been processed, you can check your federal tax refund status. If you opted for a direct deposit into your bank account, call the bank and see if the check has been deposited. If it hasn’t, a quick way to check on your status is to use the Where’s My Refund? tool provided by the IRS and you can track where your refund is at any time. The site is updated every 24 hours in the evening, so you can start checking it the day after you e-file your return (or a month after you’ve mailed it in).  You can also call the IRS at 1-800-829-1954 to determine where your check is and why it’s taking so long.

Reasons for Delay

Tax season is a notoriously busy time for the IRS: people are filing taxes, refunds are being processed and issues are being sorted. If you wait to file close to the deadline of April 15th, you could wait longer than if you filed a month or two earlier. In some cases, refunds and identities can be stolen. If you suspect suspicious activity as the reason for your refund delay, contact the IRS immediately at 1-800-829-1040.

Often times, there are good reasons why your refund has been delayed. If you opted for a paper check from the IRS, expect to wait at least twice as long as if you did direct deposit. In order to minimize wait time in the future, plan on e-filing with a direct deposit option next year.

Tax Refunds and Savings Bond Options

With large refund averages and an increase in the release of refunds the IRS has begun reminding taxpayers of their refund options.  They offer several options for depositing your refund, including a Saving Bond Option.

By March 4, the IRS had issued more than 52 million refunds worth $161 billion for an average refund of $3,070.

This year taxpayers can choose to split up their refund and purchase savings bonds in their or other individuals names.  In addition to this taxpayers may choose to direct funds from their refunds into many different types if savings accounts.

Refunds can be directed into bank accounts and other financial institutions where their mutual funds or retirement accounts are managed and to purchase U.S. Series I Savings Bonds. Taxpayers can choose to use a portion of the refund to buy up to $5,000 in low-risk savings bonds, which earn interest and protect owners against inflation.  The bonds must be purchased in $50 increments

Form 8888, Allocation of Refund must be filed along with your 1040 to choose one of these options.  Any excess funds that are not specifically allocated can be issued to the taxpayer by check.  It is important to weigh your options when receiving tax refunds because some of these options may be more lucrative for you than putting the money in a savings and may assist in long term financial growth.

Source:  IRS.gov