When you reach early adulthood and need to file your own taxes for the first time in your life, the whole process can seem overwhelming and even frightening. However, it does not have to be. Get to know a little bit more about the tax filing process and the factors that you will need to consider when doing so, and you will be able to successfully make it through your first tax season and get the best refund possible.
Know What You Need To Pay Taxes On
Many people wrongly assume that the only thing they need to pay taxes on is the wages they receive from an employer. While it is true that you need to include any wages you earned for which you received a W-4 form for wages earned, there are also other sources of income that will require you to file taxes.
If, for example, you receive money for mowing lawns, shoveling snow, child care, or other services directly rather than through an employer or company, you do need to report that income on your taxes as well. Many people are under the impression that they do not have to report this income if it does not add up to a large amount. However, this is not the case. All income needs to be reported.
On top of your wages and side income, you will also need to report income from sources such as stock dividends, or even from your trust if you have one. Your trust tax return will require you to file a form known as the IRS Form 1041. This is because a trust is considered to be a separate legal entity by the government and therefore requires a separate tax form.
Do Not Be Embarrassed To Consult With A Professional
You should not be embarrassed if you find yourself struggling with your taxes if you have several sources of income, more than one trust, or the like. Even if you have only one source of income and you are worried that you did not fill out your forms correctly, you should not hesitate to consult with a professional in tax return preparation.
Hiring someone to help you fill out your taxes can provide you with numerous benefits. They know all of the methods necessary to get you the biggest tax refund possible. A professional in tax preparation will know all of the deductions that you can use that you may not have realized you qualify for. For example, if you are a full-time college student and receiving financial aid but are also paying interest on your loans while in school, the interest you are paying is a deduction. Additionally, you may be eligible for special tax benefits.
Now that you know a little bit more about filing your taxes for the first time, you can get the process started and make it through your first tax season as successfully as possible.