Entering the Workforce: Tax Filing Tips for Beginners

As you step into the workforce, understanding how to file and pay taxes becomes essential, unless your income falls below the standard deduction threshold for the year and you are not claimed as a dependent on someone else's tax return.

If you are new to tax filing, various resources are available to assist you, including those from the IRS and online tax preparation services.

Your income and filing status will determine your tax bracket, which in turn affects your tax rate.

It is crucial to utilize the latest tax forms and guidelines due to frequent changes in the tax code, especially in recent years impacted by the pandemic.

Self-employed individuals and independent contractors have different filing requirements from regular employees.

There are various credits and deductions tailored for young individuals, low-income earners, and families.

Essentials for Filing Taxes

When it comes to taxes, paperwork, digital records, and information are key. You should receive necessary documents from your employer or clients early in the year, typically in January, for the tax return you'll file in the following spring. Some common forms you might receive include:

Form W-2 detailing your earnings as an employee.

Form 1099-DIV for investment dividends.

Form 1099-INT for interest income.

Form 1099-MISC for miscellaneous income.

Note that the list above is not exhaustive, and you may not receive all these forms. Ensure these forms provide the necessary information for filing your tax return, such as income received and taxes withheld.

Additionally, keep bank records, credit card statements, and receipts handy if you plan to claim tax credits or deductions like charitable donations or medical expenses.

Filing Status Determination

For first-time filers, determining your filing status is crucial. Options include single, head of household, married filing separately, married filing jointly, and qualifying widow(er). Your filing status affects tax brackets, rates, and standard deduction amounts.

Your standard deduction essentially determines if you need to file a return, which is usually necessary if your income exceeds the standard deduction amount for your filing status. For 2022, the standard deductions are:

$12,950 for single or married filing separately.

$19,400 for head of household.

$25,900 for married couples filing jointly.

Ensure to utilize the IRS online tool to verify if you need to file a return, as failure to file could result in penalties.

Why Filing a Tax Return Is Important

If required to file a tax return, ensure you do so to avoid penalties from the IRS. Filing allows you to claim refunds if you've overpaid in taxes or qualify for refundable tax credits. Additionally, verify if you are claimed as a dependent by someone else, as this can impact your tax situation.

For assistance in tax filing, consider utilizing resources like the IRS Free File program, the Volunteer Income Tax Assistance Program (VITA), or tax preparation software based on your income level and needs.