What First-Time Filers Need To Know About Taxes

Tax season can be intimidating—especially if you've never filed a tax return. If this is the first time you're filing a federal income tax return, here's what you need to know.

You may not need to file.

First-time filers sometimes fall into the trap of believing that only full-time, permanent employees have to file and pay taxes. That's not true. You may be required to file as a part-time or seasonal employee or an independent contractor.

But, not everyone needs to file a tax return.

Whether you need to file a tax return depends on your filing status, age, and gross income. You can figure that out using this chart:

For purposes of the chart, gross income means all income you receive in the form of money, goods, property, and services that isn't otherwise exempt from tax. That includes income from sources outside the U.S. and from the sale of your main home or other assets, as well as losses from your business. When figuring gross income, don't include Social Security benefits unless you are married filing separately and lived with your spouse at any time in 2023, or if one-half of your Social Security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly).

Even if you don't have to file, you may want to file a tax return to get a refund of any federal income tax withheld. You should also file if you are eligible for any of the following credits:

• Earned Income Tax Credit (EITC)
• Additional Child Tax Credit (ACTC)
• American Opportunity Credit
• Credit for Federal Tax on Fuels
• Premium Tax Credit
• Credits for Sick and Family Leave

Income is income.

Despite TikTok videos and old school blogs suggesting that only limited categories of income are taxable, it’s actually quite the opposite—it’s very broad.

Taxable income includes earned income (generally, wages, salary, tips, and net earnings from self-employment) and unearned income (like dividends and interest).

It includes gains from stocks, bonds, and cryptocurrency, as well as money from selling personal effects and concert tickets. And it may also include Social Security benefits (though if your only source of income is your Social Security check, your benefits are generally not taxable, but see above).

A good rule of thumb: When in doubt, assume it's taxable.

Talk to your parents.

College students, in particular, may not know whether they should file as independent or if their parents plan to claim them on their return.

These rules generally apply to dependents:

• A dependent must be a U.S. citizen, resident alien or national, or a resident of Canada or Mexico
• A person can't be claimed as a dependent on more than one tax return (some exceptions exist)
• A dependent can't claim a dependent on their own tax return
• You can't claim your spouse as a dependent if you file jointly
• A dependent must be a qualifying child or a qualifying relative of the taxpayer (your spouse is never your dependent).

That said, while there is a clear definition available, your parents may assume that they are supporting you. I always recommend asking your parents what the plan is before you file your tax return. Keep in mind that you can still file a tax return if your parents claim you as a dependent, but in that case, you cannot claim yourself—no double dipping.

You don't have to haul in your filing cabinet.

While it's true that you'll need certain forms to file your tax return, most filers—especially first-time filers—don't need to assemble lots of paper.

Here's what you'll want to have immediately handy:

• Social Security number
• Bank account and routing number (this is particularly important if you're entitled to a refund)
• Tax forms and information returns

If you work for another person or entity, you should receive a Form W-2 (if you're an employee) or a Form 1099-NEC (if you're an independent contractor).

If you work for yourself, you're responsible for your own records. Hopefully, you've been keeping track of your income and expenses throughout the year (ideally in a separate account), but if not, this is a great time to go back through your bank and credit card statements and organize and annotate your records.

You may also receive Forms 1099-INT (if you received interest) or Forms 1099-DIV (if you received dividends) from your bank or brokerage account. If you sell stocks or bonds through a broker, including an online platform, you'll receive a Form 1099-B.

Other forms you might expect include:

• Form 1095-A (health insurance statement)
• Form 1098-T (tuition statement)
• Form 1098-E (student loan interest)
• Form 1099-G (unemployment compensation)
• Form 1099-K (online sales)

As for those charitable receipts and medical bills? Most taxpayers—nearly 90%—claim the standard deduction, which was $13,850 for single filers and $27,700 for those married filing jointly in 2023. Unless you’ve recently bought a house, given a lot of money to charity, or experienced significant medical costs, as a first-time filer, you can likely leave the receipts at home.

Know your due dates.

Tax Day is April 15, 2024, for most taxpayers. Taxpayers in Maine or Massachusetts have until April 17, 2024, due to the Patriot's Day and Emancipation Day holidays. Taxpayers living in a federally declared disaster area may also have additional time to file.

If you can't file on time, you can request an extension.

Help is available.

I highly recommend using a tax professional. Be smart when you hire—rely on referrals and ask lots of questions. Keep in mind that your tax preparer should have a PTIN (Preparer Tax Identification Number). Ask in advance, or check out PTIN qualifications on your own by using the IRS online PTIN directory.

The IRS also offers free basic tax return preparation to qualified individuals through their Volunteer Income Tax Assistance (VITA) program. VITA sites offer free tax help to people who need assistance preparing their tax returns, including those who generally make $64,000 or less. You can find a VITA center near you here.

You might also consider using tax preparation software. Most programs have an interview-like format that walks you through the basics and then does the calculation for you.

If you qualify, you can use free software through IRS Free File. Typically, taxpayers with an adjusted gross income (AGI) of $79,000 or less in 2023 will qualify—click over to IRS.gov/freefile to see all Free File options. If you know which software partner you want to use, you can click straight through. Otherwise, you can select the "Browse All Trusted Partners" link to use an interview tool to help you find the best product for you (the IRS does not save, record, or share your information). After selecting one of the IRS Free File offers, you will leave the IRS.gov website.

You can also check the IRS website for helpful resources. While you're there, consider signing up for your IRS Individual Online Account. If you have a Social Security Number or an Individual Taxpayer Identification Number (ITIN), you can log in or sign up to securely access information about your federal tax account, view balance and payment options, view and approve authorizations from your tax professional, view digital copies of select IRS notices, and get information on your most recently filed return.

It's okay to make a mistake.

One last thing. While filing your taxes feels like a big deal, it's not the end of the world if you make a mistake. If you spot your mistake before the due date, you can file a superseding return—that replaces the return you filed earlier in the tax season. If the due date has passed, you'll simply file an amended return (Form 1040X).