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Tax Season 101: Expert Advice for Young Filers

Don’t Let Tax Season Stress You Out

When it comes to taxes, many of us are in the dark. That’s why we sought the expertise of Evelyn Barber, a seasoned tax professional with over 30 years of experience. She shares her insights on the most common mistakes young people make when filing their taxes and offers valuable advice on what to avoid.

When to File: Don’t Procrastinate!

The IRS requires you to file your taxes or request an extension by April 15th each year. If you file an extension, you’ll have until October 15th to submit your taxes. However, it’s crucial to note that if you owe money and don’t pay by the deadline, you’ll be charged interest and a penalty for late payment. To avoid this, it’s best to tackle your taxes as soon as you receive your W-2 or 1099 form from your employer.

Why File Taxes? It’s Not All Bad News!

While filing taxes might seem like a chore, it’s essential to do so to avoid any potential issues with the IRS. On the bright side, you might even receive a tax refund if you have federal withholdings coming out of your paychecks. The only way to know for sure is to file your taxes and find out.

Gather Your Documents

Before you file, you’ll need pay stubs, a W-2 or 1099-MISC form, and a tax form (usually a 1040EZ). If you use a tax preparer, they may also request additional documents, such as receipts for deductions and mortgage statements.

Filing Options: Online or Professional?

Filing your own taxes using online programs like Tax Act or TurboTax is a relatively simple process. However, if you’re married, have children, or have notable investments, it may be worth consulting a tax professional. They can help you navigate complex tax situations and ensure you’re taking advantage of all eligible deductions.

Understanding Tax Deductions

A tax deduction reduces your taxable income, resulting in a lower tax bill. Many Americans overpay their taxes due to overlooked deductions. For example, you can deduct student loan interest or moving expenses related to your first job. A trained tax preparer can help you identify eligible deductions.

Tax Credits: What You Need to Know

Tax credits can result in a refund if they exceed your tax balance. There are various types of credits, including education, low-income, and child tax credits. However, you must apply for these credits to receive them.

Common Mistakes to Avoid

According to Evelyn, the biggest mistake young people make is not withholding enough taxes throughout the year. Make sure to adjust your W-4 form to hold out at least 10% for federal taxes to avoid owing a large sum come tax season.