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Filing an IRS Return for the First Time?

If you’re just out of school or college and have begun working for the first time, it’s time to think about preparing for your first IRS tax return. While the process may look intimidating at first, it’s easy when you break it down and take it step-by-step.

Get your act together

Each year, every employer that you’ve worked with over the preceding 12 months should send you a W-2 form by the beginning of February. Each form will give you information about your earnings and how much was withheld by the employer for income tax, and taxes for Medicare and Social Security. If you’ve worked as a contractor, you should have a 1099-MISC form for each project that you took up. On such income, no taxes are withheld. It’s up to you to figure out what income taxes and self-employment taxes are due.

The first thing that you should do with all the forms that you get is to put them safely away in a folder. You should also file away other documents that you will need as you do your taxes — proof of income from investments and jobs on the side, statements for student loan interest paid and other possible deductions.

You should be careful to never ignore your tax statement. The IRS gets a copy and verifies all the information you put in.

Before you file, talk to your parents

If you are a student, your parents may be planning to list you as a dependent on their own tax return. If you file by yourself, your return may clash with that of your parents. For instance, both you and your parents may end up deducting personal exemptions — which is against the rules. There may also issues to do with who should claim education tax breaks — you or your parents? You should discuss with them who gets to claim what.

Grasp the complexities involved

If you’re just starting out, your tax return is likely to be simple enough to do on your own, with tax software. You’re likely to be so unfamiliar with the way filings work, though, that you may make mistakes. You may overlook deductions that lower your tax bill (job search expenses, charitable contributions or expenses for the care of a child) or neglect to claim payments like the EITC, that are rightfully yours.

Find a reputable tax preparer

Finding a tax preparer is the best way to file a return. You should make sure to go to a reputable, licensed preparer, though. You can search online for customer reviews and pick a service that seems good. It can be dangerous to simply step into any tax preparer’s office on the street. Many of these places are run by people who have no PTIN-license by the IRS and no qualifications. Some of them are even crooked.

If you are unable to afford a tax preparer, you should try the IRS FreeFile program. Anyone who makes less than $58,000 a year is eligible.

Don’t put off filing

If you find the tax filing process confusing, you may be tempted to put it off. This is a bad idea for several reasons. To begin, when you do start the process, you may run into complications. If you’re close to the April 15 deadline, the confusion may cause you to miss it. Then, there is also the problem of tax refund fraud. Criminals may try to claim the tax refunds of strangers for themselves. The longer you put off filing, the greater the risk.

Don’t jump the gun

You can’t try to file your return until you line up all the documents that you need. If you try to file without these, you will usually not get your refund. If all the documents you need don’t arrive by the April 15 deadline, you can file a Form 4868 for an extra six months, and pay a ballpark figure to the IRS. If you neglect to take these measures, you’ll pay a penalty for missing your tax deadline.