If you are new, then filing taxes could be overwhelming, especially when we talk about 2022 because so much has changed. But with the right guide and information, you could be one step behind from the perfect tax return. It helps to avoid mistakes and brings so many money-saving opportunities. There are different types of taxes like:
- Federal taxes
- State taxes
- And local taxes
So, filing taxes for the first time is a significant milestone, especially for beginners. Many of us have seen that our parents used to handle tax-related matters in the past. But with time, things have changed and are much more complicated. Thus, let’s read this guide to learn about the things in-depth:
What are the deadlines for filing taxes?
If you are new, know that the IRS is a crucial department dealing with tax-related matters. So, it would help if you look at the official website to know about the deadlines, notices, and newsletters. Moreover, if you didn’t submit the return for 2021, then the last date is 18th April 2022. If you want to make everything seamless, try to stay ahead of schedule. In this way, you will not feel the pressure of workload. There are more than 160 million individuals who will submit tax returns ahead of the deadline. So, due to this, the latecomers will feel pressure and is a chance that you will have to apply for the extension. Thus, the best tip is to stay ahead of schedule.
Why should you file earlier?
If you have all your documents, try to submit the papers as soon as possible. In this way, you might get a refund on time, and the IRS likes this from the planning perspective. Moreover, it would help if you understand that planning is crucial; that’s why ensure you have all forms like W-2 and 1099 forms. But if you miss the tax submission deadlines, you will have to deal with the late fee penalties from the IRS. Here is the following ratio of tax penalties and fines:
|The late fee penalty is 5% of the total amount that is due per month|
|If you don’t pay until two months, then the fee goes up to 25%|
|In another case, you can pay 0.5% of the total amount as a late fee|
However, later the amount can further go up, and it depends on the time you are taking to pay taxes. So, to avoid these issues, it’s best to file taxes earlier and make payments on time.
How to file taxes in 2022? Tips for beginners to make the process seamless:
Earlier, we discussed that on-time tax filing and payment could help you avoid penalties. So, here are the following steps that you should follow to keep everything on time:
Gather all documents:
Documents are crucial when it comes to submitting taxes on time. So, start preparing for the papers from January, February, and March. You can take the help of an email paystub generator to keep a record in order. Here are the following primary documents that you will need for taxes:
- W-2 form
- 1099 pay stub
- Tax forms that show you your income
- Tax deductions
The paystub generator software helps to maintain the tax deductions separately, saving time and energy. But if any of the above documents are missing, you will have to amend the tax returns later. Apart from this, a new job, saving account or selling stocks, etc., can impact your tax return later.
Find out can your parent claim you as a dependent:
Most of the kids take financial help from their parents that is why they consider them as their dependent. So, if parents are paying for tuition fees or living expenses, you can come under a dependent category. Thus, there are two ways that parents can use to claim kids as their dependent:
- If you are 19 years old and your parents take care of your living expenses, you are dependent.
- Furthermore, if you earn less than $4300 and live with your parents
If your parents are claiming you as their dependent, then there are certain benefits they can enjoy.
Don’t forget about the tax deductions & credits:
Before filling out the tax forms, you need to understand the primary terms. For instance, credits and tax deductions help lower the overall tax bill. So, if you are a first-time filler, then here are certain tax deductions & credits that you can enjoy:
- Education credit
- Student loan interest deduction
- Standard deduction
- Earned income tax credit
- Home office deductions
You can use any online invoice maker to keep track of all expenses and deductions. But if you are new and have little knowledge, seek professional advice.
Many individuals make money using mediums like freelancing, food deliveries, or other part-time jobs. If you are earning a reasonable income, don’t forget to report it as GIG INCOME in the tax return. but it depends on certain options like:
- Money you earn
- Report your gig income in schedule C, attached with your 1040 form.
Most importantly, don’t forget to deduct the expenses you incur on your gigs. For instance, the payments could be like advertisement cost, software buying cost, etc.
Once you are done with everything, move on to the next step and file taxes. You can file taxes using MTD for ITSA or online platforms. The websites like turbo tax will ask a few questions, fill out a few forms and claim all deductions. But apart from the online, you can post all documents to the IRS directly. In this way, you can provide your savings or checking account where the IRS can directly deposit the tax return.
Tips to make the process seamless:
Apart from the above guide, many minor points make the process challenging for new filers. So, here are the following tips that can help you during the process:
- Keep track of all your income
- Save tax-related paperwork all year because you may need this anytime
- You can’t file taxes until you receive W-2 and form 1099, so watch for these documents to arrive on time
- Learn about the credits and deductions because it helps to lower the tax bill
- Stay intact with your deadlines
- Decide the method that you will use for filing tax returns (Use tax prepare, online preparation software, free file, or IRS online forms)
Most importantly, it would help if you remain up-to-date with tax legislation and new rules. In this way, you can take advantage to save money and time. But if things are overwhelming, it’s good to seek professional help.