5 Tips for Filing Your Taxes for the First Time

We all need some guidelines before we start any work or do anything for the very first time. When it comes to our obligation towards our state, we need some “extra” advice as we don’t want to be careless and create any trouble. So…

Are you filing taxes for the very first time? Are you feeling a bit nervous & overwhelmed about the whole process? Well… You are at right place. Actually, filing a tax return for the very first time can be intimidating. We will be sharing 5 tips with you to help you through the whole tax-paying-process.

1.  Check if you need to file tax or not. 

Filing status, gross income, & age are the three things which must be considered when determining and checking whether or not you’ve to file a federal income tax return. Once you reach a certain income level, law requires you to file tax. Even if you’re not required to file, you should then file to get a refund of your any federal income tax withheld or you should file to take advantage of the tax credits you are eligible for, such as:

• Additional child tax credit
• Earned income credit
• Credit for dependents
• Child & Dependent Care Credit
• American opportunity credit
• Life Time Learning Credit
• Refundable credit for prior year minimum tax
• Premium Tax Credit
• Health coverage tax credit
• Credit for Electric Plug-in-vehicles
• Credit for federal tax on fuels

2.  Organize yourself:

Do not waste your time, save it by getting ready before paying your tax. Use a checklist. It helps in knowing that what info you will need. Furthermore, it makes it easy to call us Anaheim Tax Services ,we will provide a detailed guidance about the Federal & State current requirements. Having this information available makes it a much smoother process.

3.  Get the difference between tax deductions & credits.

 A deduction reduces your taxable income. From this, you have to figure your tax liability. A credit then reduces tax liability. There are nonrefundable & refundable credits. A non refundable credit can reduce your tax liability to zero, however it can’t result in a refund. If your tax liability is “0”, you wouldn’t receive this type of credit at all, even though you’re otherwise eligible and capable. However, a refundable credit increases refund or decrease the amount you owe. One gets qualified for a refundable credit even if one does not have federal income tax withheld.

4.  File your return strictly on time. 

The IRS publishes deadlines each year for filing taxes, for filing income tax service and also for filing corporation income tax. the individual income tax return due date usually  April 15 following  of the tax year. If due to any reason you’re unable to file by this date, you easily can apply for a 6-month extension. You can apply for extension by filing Form 4868 or by paying your estimated tax due. 

5.  Know very well the record keeping requirements. 

Basic records are actually documents that everyone should keep. These are the records that prove anybody’s income & expenses. If you own investments or a home, your basic records should contain documents regarding those items. Such as:

Income:

• Forms – W-2,K-1, 1098, 1099
• Brokerage statements
• Bank statements

Expenses:

• Invoices
• Proof of payments
• Sales slips
• Receipts
• Written communications for qualified charities

Home:

• Insurance records
• Receipts for improvement costs
• Purchase and sales invoices
• Closing statements
• Mortgage Interest Payment Statement 

Investments:

• Receipts for collectibles
• Brokerage statements
• Forms: 1099, 2439
• Mutual funds statements

Kindly note, there can be more detailed record keeping requirements. It depends on the specific items included on tax return, like: the itemized deduction for any charitable contributions