Filing your taxes for the first time may seem like it's daunting at first. But like most things, the anticipation is worse than reality. In fact, filing your taxes yourself has become a seamless process that can be done anytime, anywhere.
To help all those first time filers put their worrywart fears aside, below are eight tips to help you breeze through your taxes and get one step closer to your refund.
Don't Miss Out on Filing and Your Money: Each year, the IRS reports that they have $1 billion in unclaimed refunds due to filers not filing their taxes. A big portion of those refunds belongs to people who think they don't make enough money to file their taxes, but if you had federal taxes taken out of your paycheck or are entitled to credits like Earned Income Tax Credit or Education Tax Credits, you may be missing out on a tax refund by not filing.
Organize your documents: To get yourself prepared, make sure you have all your forms like W-2s and 1099s all together in one place. This Tax Forms Tool will help you narrow in on what you need when you sit down to file your taxes.
File online: Once you have all of your documents in one place you can go online and accurately file your own taxes. When filing online you're reminded of expenses that may be worth valuable tax deductions and credits. You can even file from your mobile device. Talk about convenience. This option also offers the flexibility to file on your time - wherever/whenever is most convenient for you. No appointment necessary.
E-File with Direct Deposit: Like most services in today's digital world, taxes have embraced electronic filing. In fact, last tax season about 84 percent of tax returns were e-filed. E-file with direct deposit is the fastest way to get your tax refund. Like last year, the IRS states that 9 out of 10 tax refunds will be issued within 21 days of receipt.
Take advantage of low pricing: 60 million taxpayers have a relatively straightforward tax return (1040A or 1040EZ). For first-time filers, chances are you fall under this simple return category. This is great for banking in on low-cost tax prep, most of which offer free federal and low fee state return services.
When you start your tax experience, look at the eligibility for each offering to pick the one that makes the most sense for you. If you do not itemize deductions or have mortgages, stocks, etc. - then you will likely fall under the least expensive category, congrats!
Lower your taxable income: Even if you don't have enough tax deductions to itemize your deductions, you may be able to lower your taxable income by taking advantage of a few deductions that are an adjustment to your income. You can make an IRA contribution of $5,500 ($6,500 if you're 50 or older) up until the day you file your taxes this year and be able to deduct the contribution on your 2014 taxes. Did you move for a job? You may also be able to deduct your moving expenses and lower your taxable income.
Take advantage of tax credits: Tax credits are more of a tax savings than tax deductions because they are a direct reduction of your income tax liability. You may be eligible for education tax breaks like the American Opportunity Tax Credit worth up to $2,500 per student or the Retirement Savings Credit worth up to $1,000 ($2,000 married filing jointly) if you contributed to your IRA.
Track your refund: Once you have hit submit, what's next? Time to track the IRS Where's My Refund to continually check the status of your money. The IRS will also let you know they received and accepted your return - so you are not in the dark.
