Overcoming anxiety: Filing Taxes for the first time made easy

Filing taxes can be a daunting task, especially for first-timers hoping to take charge of their finances.

Whether you're preparing to file your taxes for the first time or a new professional looking to get a better handle on your money, follow this guide for some first-time tax filing confidence.^** The views and opinions expressed here may not represent the views and opinions of GO2bank, Green Dot Corporation, or its affiliates. It is presented for general informational purposes only and does not constitute tax, legal, or business advice.

Why filing taxes for the first time can feel intimidating

Here are some reasons why filing taxes for the first time can be majorly intimidating for many newcomers:

• Complex tax laws: Tax laws can be confusing, with lots of forms, deductions, and credits to consider. The sheer amount of information alone can be overwhelming.
• Fear of making mistakes:The thought of making mistakes on your tax return can be nerve-wracking. Many first-time filers worry about the potential consequences of mistakes, like audits or penalties.
• Lack of experience: If you’ve never filed taxes before, it’s hard to know what to expect or how to prepare effectively.
• Time-consuming process: Filing taxes can take a lot of time, especially if you’re gathering documents and learning about the process for the first time.
• Pressure to get it right: As you start taking charge of your finances, there’s added pressure to do everything correctly.

Benefits of understanding the process

Mastering tax filing can turn a stressful experience into a confidence-boosting financial milestone. Here's how to take control:

• Demystify the process: Learn key tax laws and documentation requirements. Breaking down complex steps makes filing feel less intimidating and more manageable.
• Reduce anxiety: Knowing what documents you need and how to organize them turns tax season from a dreaded chore into a strategic financial task.
• Streamline your approach: Get prepared early. When you know the process, you'll save time, reduce stress, and focus on what matters most - building your financial future.

By being proactive, you're not just filing taxes - you're developing important financial literacy skills that will serve you for years to come. Embrace the process, and watch your confidence grow.

Preparing to file

Filing taxes for the first time can be a breeze if you know which forms to look for! With a little organization and the right resources, you'll be well on your way to filing your taxes like a pro and maximizing your deductions and credits along the way!

Gathering necessary documents

Here’s a list to help you collect everything you may need to prep for stress-free filing.

Personal information

• Social Security number (SSN): Your SSN is crucial for filing your taxes. If you’re filing jointly with a partner, you’ll need their SSN, too.
• Bank account information: If you want your refund deposited directly into your bank account, have your account and routing numbers handy. And if you direct deposit your refund to your GO2bank account, you can get it up to 5 days early^** Early tax refund deposit applies to federal tax returns filed directly with the Internal Revenue Service (IRS) and depends on IRS timing, payment instructions and bank fraud prevention measures. The name and Social Security number on file with the IRS must match your GO2bank account to prevent fraud restrictions on the account. and be automatically entered into our sweepstakes^** NO PURCHASE NECESSARY. Sweepstakes starts 12/2/24 & ends 3/31/25, subject to Entry Periods as outlined in the full Official Rules at GO2bank.com/Win10K. Must be a legal permanent resident of the 50 US states or DC (excl. VT, PR & US Territories & Possessions) & age of majority in your state of residence (e.g. 18 or older). Prizes: (75) $500 prizes to be awarded as credit or a check. (1) $10,000 grand prize to be awarded as credit or a check. Void where prohibited. Promotional prizes are reported on form 1099 to IRS.  for a chance to be our grand prize $10,000 winner!

Income documents

W-2 forms

• What it is: If you’ve been employed, your employer will provide a W-2 form detailing your earnings and taxes withheld.
• Where to find it: Your employer(s) should send you a W-2 by January 31. Make sure to collect one from each job you’ve had during the year.

1099 forms

• What it is: If you’ve done freelance work or received other income (like interest or dividends), you’ll need any 1099 forms that report this income. If you collected unemployment, you’ll also need a 1099-G form to report those benefit payments.
• Where to find it: Similar to the W-2, the issuer must send you a 1099 by January 31. Check with your clients or financial institutions if you expect to receive one.

Deductions and credits documentation

Form 1098-E

• What it is: If you’ve paid student loan interest, this form will show how much you can deduct.
• Where to find it: Your loan servicer will send you this form, usually by January 31. If you don’t receive it, check your online account with your loan servicer.

Receipts for deductible expenses

• Keep track of any expenses that may be deductible, like student loan interest, medical expenses, or charitable donations. Organizing these receipts can help you maximize your deductions.
• Keep in mind if you make under a certain income, you also can take a standard deduction. This can change from year to year, so be sure to keep an eye out for that amount on forms when doing your taxes.

Form 1095-A, 1095-B, or 1095-C

• What it is: These forms provide information about your health insurance coverage.
• Where to find it: If you had health insurance through the Marketplace, you’ll receive Form 1095-A. Forms 1095-B and 1095-C are typically sent by your insurance provider or employer.

Other relevant documents

• Last year’s tax return: If you filed taxes last year, having your previous return can help you with this year’s filing.
• Any other income documentation: If you have other sources of income, such as rental income or investments, gather any relevant documents.

Key tax forms for first-time filers and where to find them

Tax forms can be downloaded on the IRS website, at an IRS Taxpayer Assistance Center, or you can request copies be mailed to you from the IRS over the phone (visit their website for the number).

Form 1040

• What it is: This is the main form used for filing your federal income tax return.
• Where to find it: You can download Form 1040 directly from the IRS website. Always check that you are downloading the correct tax year’s form. If you’re filing your taxes online with an e-return, it will automatically be filling out your 1040.

Schedule A (Form 1040)

• What it is: If you plan to itemize your deductions instead of taking the standard deduction, you’ll need this form.
• Where to find it: You can find Schedule A online on the IRS website.

Understanding tax brackets

Tax brackets are the different ranges of income that individuals are taxed for at varying rates. This means that as your income increases, the percentage of tax you pay can also change.

Understanding how tax brackets work can significantly impact your overall tax obligations. You can make informed decisions about your finances and potentially maximize your deductions and credits. Let's learn more about how tax brackets work and how they can affect your personal taxes.

How tax brackets work

Tax brackets are like a tiered system that determines how much tax you pay based on your income. Instead of a flat rate for everyone, the tax system divides income into different ranges, or brackets, each with its own tax rate.

The impact of tax brackets on your tax obligations

As you earn more income, you may find yourself in a higher tax bracket, which means a portion of your income will be taxed at a higher rate. This can be intimidating, but it’s important to remember that only the income that exceeds the threshold of your current bracket is taxed at the higher rate. This tiered system allows you to keep more of your earnings while still contributing to the community.

For example, if you earn $50,000 and the tax rate for your bracket is 12%, you only pay that rate on the income within that bracket. If you earn $60,000, the additional $10,000 may push you into a higher bracket, but you won’t pay the higher rate on your entire income—just the portion that exceeds the previous bracket. This means that even as your income grows, you can still benefit from lower rates on the income you earned before crossing into the next bracket.

Filing methods

When it comes to actually filing your taxes, you have lots of options. Whether you prefer the convenience of online tools or the personalized touch of a tax professional, there’s a method that can help you take charge of your financial journey.

Here are just some of the popular ways to file your taxes:

• Online filing: Use tax software or online platforms to file your taxes electronically.
• Paper filing: Complete your tax forms by hand and mail them to the IRS.
• Tax professional: Hire a certified tax preparer or accountant to assist with your tax filing.

Special considerations

Special considerations for first-time tax filers can make a big difference in your experience. Understanding these can help you avoid surprises at tax time.

Here are some things to keep in mind:

• Your filing status: Your filing status affects your tax rate and the deductions you can claim. Common statuses include single, married filing jointly, and head of household. Choose the one that best fits your situation to maximize your benefits.
• Deductions and credits: As a first-time filer, you might qualify for various deductions and credits that can lower your tax bill. Look into options like the Earned Income Tax Credit (EITC) or education-related credits if you're a student. These can help you save money!
• Tax withholdings and estimated taxes: Tax withholdings refer to the amount of money that is deducted from your paycheck by your employer to cover your estimated tax liability for the year. This helps ensure that you pay your taxes gradually throughout the year rather than in one lump sum at tax time.
  Estimated taxes, on the other hand, are payments made directly to the IRS by individuals who do not have taxes withheld from their income, such as freelancers or self-employed individuals.

Common deductions and credits for new filers

Understanding deductions and credits can greatly reduce your tax bill as a new filer. Here are three common options that you might qualify for, which can help you keep more of your hard-earned money:

• Earned Income Tax Credit (EITC): This credit is designed for low to moderate-income workers and can provide a substantial refund. If you meet the income requirements, you could receive a credit that reduces your tax liability.
• Student Loan Interest Deduction: If you’re paying off student loans, you may be able to deduct up to $2,500 of the interest you paid on your loans during the year.

3 tips for avoiding mistakes

Many new filers worry about missing important deductions or miscalculating their tax obligations, which can lead to unnecessary stress. Let's explore three essential tips to help you file your taxes accurately and efficiently!

Double-checking your information

Double-checking your information before submitting your tax forms helps ensure that all your details are accurate, preventing costly mistakes that might lead to refund delays or penalties. By taking that extra moment to review your forms, you can feel more confident that you're claiming all eligible deductions and credits, ultimately maximizing your refund.

Maintaining organized records

When you keep all your financial documents — like pay stubs, receipts, and tax forms — neatly organized, you can easily access the information you need when it’s time to file your taxes. This saves time and helps make sure you don’t overlook any important deductions or credits that could lower your tax bill. Take the time to set up a system that works for you. You'll be happy you did!

Understanding tax deadlines and extensions

Knowing when your taxes are due hopefully means you’re submitting your forms on time, preventing penalties and interest charges. It also gives you a clear timeline to gather your documents, double-check your information, and file your taxes, making the process smoother.

Sometimes, even the most prepared tax filers may find themselves needing an extension. An extension allows you to postpone your filing deadline, giving you extra time to prepare your taxes. This can lead to more accurate filings and potentially larger refunds, as you won’t be scrambling to meet a deadline. Check the IRS’s website for more information on tax deadlines and how to file for an extension.

Resources for continued learning

As a first-time tax filer, equipping yourself with the right resources to navigate the tax landscape confidently is always a good idea. Here’s a list of helpful links that offer important information on when and how to file your taxes, tips to protect yourself, and how to get the most from your refund!

• Tax filing checklist: Stay organized and ensure you have everything you need before filing your taxes with this comprehensive checklist.
• Protect yourself from tax fraud: Learn how to safeguard your personal information and avoid common tax scams.
• Understanding your tax refund: Get insights into how tax refunds work and tips on what to do with your refund once you receive it.
• IRS tax information for individuals: The IRS website offers a wealth of information on tax filing, like forms, deadlines, and frequently asked questions.
• Find a professional tax preparer: If you prefer to have expert assistance with your tax filing, consider using this resource to find qualified tax professionals in your area.