How to File Taxes for the First Time

A calculator and instruction book will be useful if doing your taxes by hand.
A calculator and instruction book will be useful if doing your taxes by hand.
Julie Thurston Photography/Getty Images

Forget about getting a driver's license, growing hair in strange places or moving out of your parents' home. The first real sign that you're well on your way to becoming a full-fledged "adult" is filing a tax return. That's right, with the ability to earn great, modest or even mediocre sums of money comes the equal responsibility of making sure that Uncle Sam gets his piece of the pie. Sure, the American Dream is all about building a little nest egg for you and your family. Just be certain that you put a little bit to the side each year for when the tax man comes calling.

Fret not, first-time tax-filers. The good news is that, if you work in a traditional employment setting, your employer has probably done some of the heavy lifting for you. Businesses and other employers typically withhold a certain portion of their workers' paychecks to cover estimated taxes. If you filled out a W-4 when you started working, then you've probably been getting taxes withheld over the course of the year. The best way to find out is by looking at a recent pay stub, which will indicate the amount of money taken out for tax purposes.

At the end of the year, your employer will send you a W-2 detailing how much you made in wages and tips and how much was withheld. All you have to do is fill out some basic paperwork using this information and explaining whether you're entitled to a variety of credits and deductions. That should give you an idea of how much you still owe the government or – if you're lucky – how much the authorities owe you [source: IRS].

Do I Have to File a Tax Return?

Before you figure out how to file a tax return, first consider whether you need to file one at all. Generally, a person who makes at least $10,150 in 2014 is required to file a return. That includes income from wages, self-employment earnings, dividends, interest, disability benefits and unemployment compensation.

The threshold rises to $13,050 for a person who files as a "head of household." This category applies to an unmarried person who pays more than half of the costs (rent, mortgage, utilities) to maintain a home for him- or herself and one qualifying dependent, like a child or another family member who shares the home [sources: IRS].

The 2014 income minimums for filing purposes are as follows [source: IRS]:

  • A married couple filing jointly: $20,300
  • Married persons filing separately: $3,950
  • Individuals 65 and older: $11,700
  • Joint filers for which one person is 65 or older: $21,500
  • Joint filers who are both 65 and older: $22,700
  • A widow or widower with a dependent child: $16,350
  • A widow or widower who is 65 or older: $17,550

These threshold figures apply to anyone who can't be claimed as a "dependent" on another person's tax return. There are two types of dependents: children and relatives. A tax filer can claim his or her child as a dependent if the child is under 19 at the time (or 24 for children who are students), lives with the parent at least half of the year and depends on the parent for at least half of his or her financial support during the year.

Certain relatives who also depend largely on the tax filer may also be able to be claimed. But that doesn't mean these dependents don't have to file their own tax returns. They just can't take a personal exemption on their W-4s. The 2014 minimum income levels for filing purposes for dependents are as follows [source: IRS]:

  • Single (under the age of 65): $6,200
  • Single (over 65): $7,750
  • Married (under 65): $6,200
  • Married (over 65): $7,750

Selecting a Tax Return Form

Should you use 1040 or 1040EZ? Most first-timers will have a simple enough tax situation that they can use 1040EZ.
Should you use 1040 or 1040EZ? Most first-timers will have a simple enough tax situation that they can use 1040EZ.
Jill Fromer/Getty Images

Even if you don't have to file a tax return, there may be a good reason to do it. Mainly cold hard cash. If you qualify for a refundable tax credit, such as the earned income or child tax credit, you may be able to get some money from the U.S. government at the end of the year [source: Erb].

For those that don't have a choice in the matter, you must file a return with the Internal Revenue Service by April 15 or face a penalty. Fortunately, the days of standing in long lines at the post office to ensure that your paperwork is postmarked by the 15th should be over for most folks. The IRS allows filers to submit their tax returns and make payments electronically [source: USA.gov].

There are a number of tax forms from which to choose, but first-time filers are likely best off with the 1040EZ. As its names suggests, this form is designed to simplify the process for filers whose tax situation is fairly straightforward: They are single and don't own a home, earn income from one or two sources, had some taxes withheld and have no dependents.

Form 1040A should be used by filers who own a home, have dependents and are eligible for certain credits or deductions; form 1040 should be reserved for those with complicated tax situations or who want to itemize deductions [source: Bell].

To locate the form that's best for you, head over to the IRS website and click on the link for "Forms and Pubs." You can also order a particular form or forms via this IRS link, or call the IRS at 1-800-829-3676.

If you aren't sure which form to use, you may be able to get some free help by visiting a local library. The Volunteer Income Tax Assistance program provides tax assistance to people who make less than $53,000 per year, are elderly or have disabilities or limited English proficiency. Volunteers, certified by the IRS, can not only help you decided which tax return form to use, but also help you complete and file the paperwork. VITA sites are usually located at libraries and other community centers like schools and malls. Visit this IRS website or call 800-906-9887 to find the one nearest to you.

Those who are above this income level, can also seek help by purchasing commercial tax software or hiring a professional to do your taxes for you.

Filing a Tax Return

Most of the information that you need to complete the tax return should come from your W-2 or 1099. Chief among the figures is the total amount of money that you earned from wages, salaries or tips over the year. For those using a 1040EZ, simply add this number to any income from unemployment benefits and earned interest and you get your adjusted gross income.

To calculate your taxable income, the total is further adjusted based on whether you can be claimed as a dependent by another person and whether you are filing an individual or joint return. The amount that remains is used to determine your tax bracket, the percentage of your income that will be taxed. In 2014, tax brackets range from 10 percent for people who make up to $9,705 in the year to more than 40 percent for those who make more than $406,750. Keep in mind that the brackets shift as you make more money. A person who makes $40,000, for example, will have the first $9,705 taxed at 10 percent, amounts $9,076 to $36,900 taxed at 15 percent, and the rest taxed at 25 percent [source: Erb].

The taxable income figure is also used to calculate how much you owe the government at the end of the year or, alternatively, how much Uncle Sam owes you. Use your W-2 to find out how much money has already been withheld from your paychecks. Compare that to the amount that you should have been taxed -- using a table attached to the 1040 -- to determine whether you'll be getting a refund or need to kick up some more dough to the tax man [source: IRS].

Once the form is completed, you have a couple of options for getting the paperwork to the authorities. That includes not only the return form, but also copies of any W-2s or 1099s. To file electronically, go back to the IRS homepage and click on the "IRSe-file" logo under the "Filing & Payment" section. If you made less than $58,000 over the year, you can use free tax software to electronically file. If you made more than that amount, you can still file electronically -- by completing fillable forms online -- but without the assistance provided in the software.

Either online option also gives filers the choice of paying any taxes that they owe electronically from a bank account or by credit or debit card. Just keep in mind that using a card means paying an additional fee [source: IRS].

Still like to do it the old-fashioned way? You can also mail your tax forms to the IRS, along with a check for any money owed, made out to the "United States Treasury." The address and mailing info is listed on the tax return forms.

Author's Note: How to File Taxes for the First Time

Like any child of the 80s, I learned most of life's important lessons from Cliff Huxtable. That includes the short course on money and responsibility that the "Cosby Show" dad gave Theo during one episode in which his son says he doesn't want to go to college – he just wants to live "like regular people." Old Cliff uses Monopoly money to show young Theo where all of the cash he earns is going to go. You know, to things like food, rent and TAXES. Just like Cliff says, "the government comes for the regular people first."

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Sources

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