Filing taxes for the first time can be overwhelming for a young professional who just got hired. In fact, the whole process can baffle even the most experienced ones. But before getting intimidated by the forms and the rules, new payers should plan and prepare well for their first tax season.
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Before filing for taxes, an employee must have a copy of the W-2 form from their employers. The W-2 reflects their entire income along with federal and state income tax, Social Security, and Medicare deductions that can be considered as pre-tax deductions. On the other hand, independent contractors must file their 1099-MISC that shows their income without withheld taxes as they would need to file for self-employment tax.
Employees must have their tax folders with all these forms along with earning statements and additional income that can come in the form of interest, investment, and earnings. If the employees were hired straight out of college, it is best to reconcile taxes with their parents. Being a dependent of a taxpayer could qualify their parents to receive deductibles on their returns. Other deductibles to be considered are job search expenses, child and dependent care credit, and earned income tax credit.
To avoid being stunned by this important task, first-time employees must avoid procrastinating in order to accurately fill-up the form and avoid hassles during the actual submission.
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