You have a job, you are making your own money, then January comes, and bam! Your employer sends you a W-2 form, and you are suddenly thrust into the world of taxes. So now what are you supposed to do? Read on, and we’ll lay it all out for you.
First of all, there may be nothing you need to do. If you are single and earn below $12,950, you might not even need to file a return. If you are married filing jointly, the filing threshold is double that amount, $25,900.
But, just because you don’t have to file a tax return doesn’t mean you shouldn’t file. If federal income taxes were withheld from your paycheck, you may be due a refund of federal income taxes. And you may be eligible for the earned income tax credit (EITC) that provides refunds to low-to-moderate-income taxpayers who meet certain requirements. There are a few other situations that would require you to file a tax return, such as being self-employed. To find out whether you should file a return, you can use the IRS tax filing tool.
To file your tax return, you need to gather certain information. Some of it is easy – your name, address and social security number. You will need all the forms that have been provided to you by your employers and any institutions that paid you interest or dividends. The majority are called W-2s and 1099 forms. If you have other types of income, such as from real estate or trusts, gather up the documentation for how much you received during the year. That could include year-end statements or bank statements for earnings.
If you had income from self-employment, and in today’s gig economy lots of first time filers do, you’ll also need to make a list of all the business deductions that you had to ensure you maximize your potential refund. For example, if you drove for a ride-share company, you can claim auto mileage expenses, and if you wore a uniform you can deduct the cost of buying and cleaning your uniforms. The good news is that there are tools like QuickBooks Self-Employed that helps you track your business income, expenses, and mileage year-round in the future. You can then easily export your information to your TurboTax Self-Employed tax return.
Once you’ve gathered everything together, it’s time to file. At Turbotax, as with the IRS, if you meet certain criteria, you can file for free. If your only income is from a W-2, filing is a snap – literally. With the Turbotax mobile app, all you do is snap a photo of your W-2, and Turbotax takes it from there. What could be simpler?