Your First Income Tax Preparation: A Step By Step Guide
Filing for the first time is a major right of passage. It represents getting your first major source of independent income, and for many people, it represents the first year of substantial independence. But inexperience with filing can often lead to mistakes, which in turn can lead to penalties and trouble. Before you file, make sure you know how to ensure that you file what's necessary, so that everything is done right and you're always on the up and up with the IRS.
Understand Your Tax Preparation Options
You shouldn't try to complete your income tax preparation on your own, especially not the first time. The IRS code is notoriously complex and gets more convoluted every year. Sorting through it is a task that lawyers and other professionals who are immersed in the IRS find difficult. It's not something that you should be trying to tackle during your first filing season.
Instead, look at the various income tax preparation services. There are two basic possibilities: either you can have someone do them for you in person, or you can complete them by yourself online. If your return is very simplistic, you may actually be able to file for free. But if you've got substantial self-employment income or own your own business, you'll need to do a little bit more legwork in order to file properly.
Estimated Taxes And You
If you are self-employed, you'll need to start worrying about filing well before the April 15th deadline. As soon as you start making money, look into the current requirements for estimated payments. If you are not having funds withheld from your usual payment and sent to the government, you are required to submit that money on your own. It can be quite a hassle, but it's a necessary step. A lot of young people start their own ventures without knowing about the possible need to file quarterly estimations. Researching it and knowing how it impacts you is vital.
What Should You Choose?
If your return is simple (i.e. you've just got income from wages with normal withholding) you should be able to file online or work with someone in person. It just depends on what you're most comfortable with. For your first time, many people recommend working with someone simply because it allows you to ask questions and have them answered directly. Even the best computer program or online utility can't be that dynamic yet.
Understand Your Tax Preparation Options
You shouldn't try to complete your income tax preparation on your own, especially not the first time. The IRS code is notoriously complex and gets more convoluted every year. Sorting through it is a task that lawyers and other professionals who are immersed in the IRS find difficult. It's not something that you should be trying to tackle during your first filing season.
Instead, look at the various income tax preparation services. There are two basic possibilities: either you can have someone do them for you in person, or you can complete them by yourself online. If your return is very simplistic, you may actually be able to file for free. But if you've got substantial self-employment income or own your own business, you'll need to do a little bit more legwork in order to file properly.
Estimated Taxes And You
If you are self-employed, you'll need to start worrying about filing well before the April 15th deadline. As soon as you start making money, look into the current requirements for estimated payments. If you are not having funds withheld from your usual payment and sent to the government, you are required to submit that money on your own. It can be quite a hassle, but it's a necessary step. A lot of young people start their own ventures without knowing about the possible need to file quarterly estimations. Researching it and knowing how it impacts you is vital.
What Should You Choose?
If your return is simple (i.e. you've just got income from wages with normal withholding) you should be able to file online or work with someone in person. It just depends on what you're most comfortable with. For your first time, many people recommend working with someone simply because it allows you to ask questions and have them answered directly. Even the best computer program or online utility can't be that dynamic yet.
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