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You know the IRS is anxiously awaiting your year-end numbers, but you can rest assured knowing you’ve already made a smart decision. You came to the right place - TurboTax is not going to let you fail.
The key to your successful tax-journey is to be prepared. Before trying anything new, you should start by doing a little research, gathering your “essentials” (income, expenses, financial documents), and organizing it all for easy access as needed.
Maybe you didn’t earn very much money, or were told by someone else that you don’t need to file a tax return. In that case, you might be asking yourself if you really even need to file yours. Don’t assume the answer is no - instead make sure that’s the case or you may be subject to late filing or underpayment penalties and interest. The good news is that even the IRS is willing to help you out with that question and provides a handy Do I Need to File a Tax Return? tool.
First, let’s cover the basics.
You’ve probably heard terms such as deductions, write-offs, credits, capital gains/losses, and other tax-friendly words. You’ll learn more about those as you continue on your journey, but here’s some basic terminology to help you get started.
Tax returns are essentially comprised of the following:
- Personal Data - Make sure it’s accurate and up-to-date. These are the usual suspects such as your name, address, birthdate, Social Security Number, dependents, etc.
- Income - Yes, you do have to include all of your income. Some types of income are taxable, some may not be…but it’s essential that all is entered and accounted for on your tax return. It includes income reported on formal tax forms like W-2s and 1099s. It also includes all income that may not be reported on official tax forms such as certain investments (including real estate and crypto), side-gigs, gambling winnings, hobbies, and barter.
- Deductions/Adjustments - These can reduce your taxable income, and your total taxes owed too. They include expenses such as qualifying charitable contributions, personal property taxes, mortgage interest and real estate taxes, and medical expenses. Pro Tip: Save your receipts!
- Credits - These are tax benefits that reduce your total taxes owed dollar-for-dollar! Some of them may even be what’s called “refundable” which means you could get an even higher refund than the amount of taxes you actually paid in (or had withheld from your income). This is a pretty good deal if you qualify for them. TurboTax will automatically calculate them for you, based on your entries. They include credits such as the Child Tax Credit, Earned Income Credit, and Education Credits.
- Refund or Amount You Owe - This is your bottom line! If you paid in (through withholding or estimated payments) more taxes than the total taxes for your income (after all deductions and credits), you’ll get a refund! If you didn’t pay in enough to cover your tax liability, then you’ll have to pay the rest when you file your tax return.
Ready to get started?
Open up your TurboTax software and begin entering your Personal Data first. It’s so easy - just answer the questions and read the links on the screens to learn more! Based on your answers, TurboTax will determine the appropriate Filing Status (Single, Head of Household, Married Filing Jointly/Separately, or Qualifying Surviving Spouse). From there, you just follow the interview questions to enter your income and deductions, and you’re on the way to completing that first-time tax filer journey!
Oh, and don’t worry about starting in a lower priced version of TurboTax - the software will prompt you if a different version is needed for your situation.
Need a little help to make sure you’re on the right path?
You have options and can get Expert advice your way! If you’re still a little shaky and not feeling confident, it’s okay. That’s why we have TurboTax Live Full Service. They can take it all off your hands and complete your taxes for you! It’s good you prepared first though - they’ll need all those “essentials” you gathered together.
Once you’re done with the federal (IRS) side of your taxes, you can move on to your state, if your state requires a tax return. That’s right, not all states have individual income taxes. And, if you moved during the year, you might have to file a tax return for more than one state.
That’s it! Now, check everything over one last time and follow the instructions to file! If you’re getting a refund, you might want to check out Where’s My Refund: How to Get it Fast!.
You have everything you need to complete your tax returns for the first time. Enjoy the adventure!
Pro Tip: Save copies of everything! You need to keep copies of your tax returns (and documentation used to prepare them) for a minimum of three years past the due date. Most often, it’s recommended to save them for 5-7 years. You just never know if, or when, the IRS may need proof of a deduction or taxes paid.
Below are a few more articles designed to help you on your tax filing journey:
Credits and Deductions - Tax breaks for so many facets of life.
Tax Preparation Checklist - Gather all you need to prepare your tax return(s).
Multiple States - Where to File - What to do if you moved or earned income in more than one state.
5 Tips for How to File Your Taxes for the First Time