The 7 Tax Basics For Beginners To Know
Tax season can be complicated, stressful, and even a little scary — especially if you’re new to filing taxes. But the good news is it doesn’t have to be. If you take some time to master some of the ins and outs of taxes, you can file thoroughly and confidently this year and even land a nice refund. Here are seven tax basics for beginners to review before filing their tax returns.
First-Time Filing Taxes? Remember These Tax Basics
1. Find Out Who Files Taxes
It’s not a given that you need to file taxes, but most Americans need to. Every good lesson on tax basics for beginners should begin with finding out who has to file. It depends on a few different factors, including your income, whether you are claimed by someone else as a dependent, and your filing status. If you’re single and not claimed as a dependent, you need to file even if you’re over 65.
The income threshold, if you’re single, is lower if you’re under 65, usually a few thousand dollars. All ages must file if they are married but filing. There are different tax filing thresholds for those who are married and filing jointly. Income thresholds for filing frequently change, so check with the IRS before filing.
2. Pinpoint The Forms You Need To File
One of the key tax basics for beginners involves knowing which forms you must fill out to make sure your tax filing is accurate. A W-2 is the most common form. It’s sent by employers and outlines what you earned in the past year and how much income tax has been withheld. You get a W-2 whether you work part-time or full-time.
A 1099 is another common form, usually used by freelancers, contractors, or those who earn income from rental properties to report income. Other common forms include the 1099-INT if you earned investment dividends or savings account interest and the 1098 that details interest payments made on a mortgage or student loan.
3. Taxable Earned vs. Unearned Income
Your gross income may come from multiple sources, but both earned income and unearned income are taxed. The Internal Revenue Code classifies salaries, bonuses, wages, commissions, tips, sick pay, and unemployment benefits as taxable earned income. Taxable unearned income includes dividends, gambling winnings, royalties, inheritance, and any profits received from selling assets.
4. Consider Any Adjustments
Once you realize how much of your income is taxed, it’s time to look for ways to lower the amount. A big part of tax basics for beginners is to explore adjustments. Adjustments are special allowable tax breaks, including moving expenses, contributions to accounts that are tax-sheltered, or if you’re in the first 60 months of paying back student loans.
5. Outline Deductions
Itemize your expenses through the year, save supporting documents and try your best to reduce your taxable income. Standard deductions are what the government allows all taxpayers to take away from their income to save on the amount owed.
There are different set deduction amounts, for example, if you are single or married. Itemized deductions are more complex and cover all items that can be subtracted from taxable income. Common itemized deductions include types of medical expenses, charitable contributions, and expenses related to your job.
6. Pay Your Taxes On Time
No list of tax basics for beginners would be complete without the vital tip to pay your taxes on time. Even if you can’t afford your taxes, it will cost you more in the long run if you don’t pay them at all. Keep in mind that there are extensions or even payment plans available to help you out. Fees and penalties may be enforced if you file your taxes late.
7. Get A Payday Loan For Financial Trouble
Tax time can sometimes shine a harsh light on your expenses. If you’re dealing with a financial emergency of any kind, a payday loan may help. A payday loan was designed as a small loan amount to help with a short-term financial problem. And when you come to Tennessee Title Loans, Inc. for a payday loan, you can find out if you qualify for up to $400 in as little as 30 minutes.
It all starts online with you filling out a quick form on our website. After filling out the short inquiry form for a quick cash payday loan, one of our loan representatives will give you a call to discuss the required items you need and they will set up an appointment for you at the nearest Tennessee payday loans location.
All you need to bring in is your driver’s license or state-issued ID, your most recent pay stub, and a blank check from a checking account that’s active and in your name. The rest of the process includes some basic paperwork if you are approved. Once you’re approved and finished with the paperwork, you get your payday loan cash the same day or the next day.
Handle Your Taxes With Ease Even As A Beginner
Our tax basics for beginners will help guide you through the tax filing process. With these seven tips, you can make your first time filing taxes simple. And if you need help with a financial emergency that is getting in the way of your tax filing, consider getting a payday loan. Just fill out the online form now or give us a call to get the process started today!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.