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8 tips for first-time tax return filers

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Welcome to your first tax return filing. Yes, it can be frustrating, but these tips should help make your initiation into the taxpaying club a bit easier. (Photo by Andrea Piacquadio from Pexels )

Lucky you. You're filing your first tax return in 2022, a tax season that's still dealing with the coronavirus pandemic.

Even in more normal tax times, filing your very first Form 1040 can be scary. But it doesn't have to be if you follow these eight steps a novice taxpayer can take to successfully make it through their first filing season.

1. Get organized. This is something you'll need for all the future tax filing years you have before you. You'll be glad you established a good organizational habit from the get-go. By now, you should have received all the tax documents you need to file. This checklist can help you see what you might be missing (and what to do about it) or if you are indeed ready to get to work on your Form 1040. 

2. Talk with your parents. If you are a student looking to file your first tax return, don't touch a 1040 until you talk with parents first. Even if you recently graduated, check with mom and dad, if they are still helping out while you're looking to totally establish your independence. You and the folks need to sort out dependency issues, as well as who would benefit more from claiming education tax breaks for school costs they helped pay.

3. Decide how to file. Electronic filing is the way to go, regardless of whether you're a tax filing newbie or have been sending returns to the Internal Revenue Service for decades. But do you do your taxes yourself using tax software or let a tax pro prepare and e-file them? Many first-time filers don't have very complicated returns, so the software do-it-yourself route is worth checking into, including Free File options. This IRS-tax software industry partnership offers 8 software programs to taxpayers, regardless of filing status, whose adjusted gross income is $73,000 or less.

If, however, you want personal help on filling out your first-ever return, then of course turn to a tax professional. Just make sure you choose a tax professional who best meets your tax needs. And be sure to thoroughly check out that person before turning over your tax details.

4. Don't leave money on the table. This is something even veteran taxpayers need to heed. But for 1040 newbies, making sure you don't overlook any tax breaks is especially important if you're income isn't that much. You don't want to hand Uncle Sam more of it than you absolutely have to pay.

This year, take a good look at the Earned Income Tax Credit (EITC). COVID-19 relief legislation expanded this tax break for lower- and middle-income filers. Single taxpayers without any children get a special deal for 2021 taxes. Thanks to the American Rescue Plan Act, their available EITC amount could be as much as $1,502. That's almost triple the previous $543 EITC amount for these individuals.

And since the EITC is a tax credit, it can reduce any tax you owe dollar-for-dollar. Even better, it's a refundable credit, meaning that if the EITC erases your tax bill, you get the excess credit as a refund.

Also consider adding to or opening a traditional IRA. Yeah, I know, Roth accounts usually are the recommended retirement account for younger individuals, since the earnings eventually are tax-free. But if you're looking for an immediate tax break, you might be able to deduct what you contribute to a traditional IRA. And you have until the April 18 deadline to open and/or put money into it for the 2021 tax year.

5. Don't forget about state taxes. That's the case for most taxpayers, newbies and long-time filers. Only eight states — Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming — don't impose any individual income tax. If you use a tax pro or software, they'll remind you of this added responsibility. You can get a preview by checking with your state's tax department.

6. Don't procrastinate. I know, we're already well into the current tax-filing season. And putting off potentially difficult tasks like taxes is normal, especially if you're dealing with them for the very first time. But delaying your filing until the last minute, which is April 18 this year, can make thing worse if you run into problems when you do start filling out your 1040. You want to make sure you have ample time before the deadline to find answers to your tax questions or have trouble getting an appointment with a tax preparer.

7. Don't be in such a hurry. On the other hand, if you get in too big a hurry to finish your taxes, you could make costly mistakes. The key, like much of life, is balance. Give yourself enough time to do your taxes accurately, but don't feel rushed. It's OK to start your return, then step back for a bit. Coming to your taxes with fresh eyes can be a good move.

8. Get more time if you need it. Finally, don't freak out. Yes, taxes are confusing and important and the thought of having to answer an IRS auditor's questions is scary. So make sure you get your filing right. If you need more time to do that, take it. You can push the April 18 deadline to Oct. 17 by getting a filing extension. Just submit Form 4868, and yes that can be done electronically, too. However, if owe any tax, be sure you pay that amount, or as much as you can, when you request your extension.

Welcome to the tax filing world. I hope these tips help, or at least eases your mind a bit as you tackle your first Form 1040.

We long-time taxpayers (and Uncle Sam) are thrilled you've joined our club, where the motto is tax misery loves company!

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