9 Things To Know The First Time You Do Your Own Taxes
If you're getting ready to file your taxes for the first time, it can seem like an overwhelming experience — but it really doesn't have to be. You have to see beyond the jargon and the form names and the numbers and remember that, really, it's just about following a set of steps. And with Tax Day this year falling on Tuesday, April 17, your last chance to file is right around the corner.
So if you're getting ready to file (or you've been putting it off), it's time to take a deep breath. "If filing seems daunting for millennials who don't have much experience with tax forms, they should know they're not alone," Lisa Greene-Lewis, Lead CPA at TurboTax, tells Bustle. But once you get started, unless you have a very complicated job, you'll find that for most people it's very straightforward. I was freaking out the first time I did my taxes as an adult, but after about 20 minutes on TurboTax I was done — and wondering what all of the fuss was about. It was basically just following directions.
So if you're filing your taxes for the first time, here's what you have to keep in mind, according to experts.
1. You May Want To File Even If You Don't *Have* To
Even if you make under the filing threshold — which if you're single and under 65 is $10,400 — it can still be in your best interest to file. "Some Millennials believe they don't need to file since they make under the IRS filing threshold..." Mike D'Avolio, CPA and Senior Tax Analyst, Intuit ProConnect Group, tells Bustle. "But the IRS reports they are holding onto close to $1 billion every year in unclaimed refunds. Some of these refunds belong to millennials, and if they had federal taxes deducted from their paychecks and may be eligible for refundable credits (like the earned income tax credit), this means they should definitely file their taxes. The IRS states that the average unclaimed refund is about $700 — it's possible some Millennials might not even know if they’re owed this money." So make sure you know what you're entitled to.
2. You Don't Necessarily Need An Accountant
When I was a kid, I always thought that taxes required an accountant — but that's really not the case. "We're seeing a huge trend among Millennials filing their taxes themselves, and with a mobile device," Greene-Lewis says. "More than 60 percent of millennials use mobile apps for banking and money management, and now we're seeing explosive growth for taxpayers filing from a mobile device. For instance, downloads of the TurboTax mobile app grew 85 percent last tax season, with nearly six million TurboTax customers doing their taxes on a mobile device." There are a load of websites and apps that help you do your taxes at an affordable rate or you can file them yourself.
3. For Most People, They're Really Not Scary
I was amazed at how simple mine were the first time I filed. They've gotten a little more complicated as I've started doing more freelance work, but they still just don't take as long as I imagined. And many services have people available to reassure you or answer questions, so you can avoid getting your own accountant but still talk to one when you need it. "For example, TurboTax SmartLook allows customers to connect live via one-way video to a credentialed CPA or enrolled agent to get their toughest tax questions answered when they need it," Greene-Lewis says. "A SmartLook expert is able to draw on your screen and walk through the entire process with you."
The other option? You can straight up call the IRS for help at 1-800-829-1040. But for most people, it will be more straightforward than you think.
4. Claim Your Deductibles
Deductions can be a lifesaver — and really affect your tax bill — so make sure you know which ones apply to you. If you're not familiar with the term, deductions are basically ways to you can reduce your taxable income and, ultimately, pay less in taxes. "Millennials tend to miss deductions they’re unaware of," D'Avolio says. There are lots of basic deductions, including the Earned Income Credit or moving expenses for your first job, so make sure you know what you're entitled to.
5. There Are Even More Deductions For Self-Employed People
If you're self-employed, there's a good chance you're entitled to even more deductions. "If you are one of the 55 million self-employed individuals, don't forget you can deduct expenses from your car that are used for business purposes (like mileage from travel time to and from seeing clients), portions of rent used for a home office, and supplies and equipment used for your business," Greene-Lewis says. Just make sure you keep your receipts. If you get audited, you'll want to be able to back up your deductions with proof.
6. You Can Get A 6-Month Extension
If you're feeling overwhelmed and you really don't think you can get your taxes done in time, you can file an extension — that will give you an extra six months to pay. This means that your taxes would not be due until October 15, 2018.
7. But If You're Late, You'll Pay For It
8. State Taxes Can Have A Different Due Date
This doesn't affect a lot of people, but state taxes can be due a different day than federal ones, so make sure you check when your state taxes are due.
9. Don't. Blow. Your. Refund.
Finally, the sweet, sweet refund. If you do get a refund — money you're owed back — try to treat it responsibly. "While we all love treating ourselves to a splurge purchase, it's important to balance this by saving or investing some of your tax refund, too," Fidelity Investments Vice President Onisa Treibs tells Bustle. "Decide up front what your spend/save split will be — whether it's 50/50 or 40/60 — and commit to it so you can have your treat and still stay on track with your financial goals."
Doing your taxes for the first time can seem scary, but once you start it's easier than you think. Just make sure you know your obligations and what you're entitled to — and enjoy a big step toward becoming a real, 100-percent verified adult.