Filing for your individual income tax return for the first time can be overwhelming. The best way to tackle the tax season is by taking one step at a time while avoiding the chances of rookie mistakes. This way, you can consciously take advantage of the money-saving opportunities. A federal tax return indicates the amount of money you’ve earned against the amount of money you’ve paid in taxes. Its primary purpose is to show that you’ve met your obligation by complying with your responsibility.
Here’s the step-by-step guide for you to assist you in filing your first individual tax return:
Stay informed about your income criteria
It becomes necessary to file a tax return if you meet or surpass a certain income level during the year. It is essential to stay aware of your pay stub for the “year to date” income.
If you work for more than one employer, you should add up your income from all your employers. You can include your income from other sources, including the money earned from your rental property, interests, or investments.
Retain all the relevant paperwork from all year long
To easily sustain the tax season, it is best to stay well-informed about all your tax-related paperwork throughout the year. Retain all kinds of receipts including, charitable donations, medical bills, or work-related expenses.
You can also save your statements from student loans, investments, grants, or fellowships. Keeping all such documents handy and organized will enable you to determine if you should itemize these to make the process easier. The IRS recommends preserving these records for at least three years, even after filing the paperwork.
Stay aware of the arrival of your income documents
Typically, you may start receiving your forms about your earned income from your employers and other sources in January or February. Full-time employees receive a Form W-2 specifying their earnings along with the suppressed taxes, whereas a freelance or a contract-based employee receives a Form 1099-NEC defining their earnings.
You may also receive documents mentioning your dividends, interest earned on investments, or your paid student loan interest.
Learn about your eligibility for credits and deductions
Gaining adequate knowledge about your eligibility for credits and deductions will help you develop better documentation. You should consider:
- Saver’s credit
- Student loan interest
- Charitable deductions
- Freelance expenses
In case you feel that you are eligible for additional deductions or credits, check the IRS website.
Stick to your deadlines
Getting your tax documents in January or February gives you approximately two months to prepare your tax return documentation before the regular due date of 15th April. Therefore, always plan the date you wish to start your return while ensuring that it is early enough to prepare for another session. It is recommended to file returns earlier instead of later to avoid tax-related legal issues.
Determine how to file your tax return
Following are the various options available for you to prepare and file for your tax return:
- Free file
- IRS online forms
- Tax preparation software
- Tax preparer
If you need assistance to file your first ITR, CTR or wish to enjoy various perks apart from managing accounts and ascertaining profit, Florida Global Consultants is your one-stop destination. We are a professional and trustworthy company involved in business taxation, accounting, and consulting services. We are top-rated amongst our clients and hold an excellent reputation and experience in the industry. For more information about us, contact us at (786) 456-5140, connect through email at [email protected] or fill the contact form.