5 Things You Should Know When Filing Taxes for the First Time

Tax

Jan 17

The Gist

Filing taxes for the first time can seem like a daunting task — but it doesn’t have to be! With a little preparation and patience, your first tax season can be a valuable learning experience.
A tax return is a document (or sometimes a series of documents) that you fill out once a year to declare your gross income and certain taxes you’ve already paid to determine if you owe any more taxes to the government.
If you’re a United States citizen or work in the United States and are under the age of 65 and you earned over $12,950 in the prior calendar year (Jan. 1 - Dec. 31), the Internal Revenue Service (IRS) will expect you to file a tax return.
Taxes for the 2023 calendar year are due on April 15, 2024. If you miss this deadline without requesting an extension, you may owe additional fines or fees.
Sometimes, because of deductions, write-offs, and other tax situations, you will have already paid more taxes than you owe. In this case, you would receive a tax refund.
For most Americans, you will also have to file a tax return with your state, and in some cases, you will have to file a return with your city or county.
If you’re an independent contractor, rideshare/delivery driver, or freelancer, you’ll be responsible for tracking your own expenses, including miles. Accurate records of these expenses can mean big savings when filing taxes for the first time. The Stride app can help you track expenses, mileage, and more.
If that sounds like a lot of ground to cover, it is! That’s why we’ve taken the guesswork out of filing taxes for young adults. Keep reading for Stride’s five essential tips for first-time tax filers.

In Short

While taxes might seem like an unnecessary complication, your tax dollars go toward all sorts of essential services, like schools, parks, first responders, and more.. If you’re filing taxes for the first time, it can seem overwhelming.

Doing your taxes right every time is an important step toward financial independence. And the more you know about your finances, the better prepared you’ll be for the future. There’s a lot of confusing and contradictory advice when it comes to filing taxes for young adults. That’s why we’ve put together this easy-to-understand guide filled with tips for first-time tax filers.

Keep scrolling for answers to commonly asked questions about taxes, including documentation, deductions, filing status, online tax status, and more.

Download the Stride App

Tip 1: Have Your Paperwork and Documentation Ready

In this section, we’ll cover the documentation you should have on hand when filing taxes for the first time. Typically, both W-2s and 1099s should be mailed (or sometimes emailed) directly to you, but occasionally, you will be expected to retrieve them from your employee payroll portal. If you’re unsure how you’ll receive your W-2 or 1099, ask your payroll administrator.

For most filers, here is the paperwork you should have handy before filing:

W-2: If you’re on the payroll at your employer’s company (for instance, if you are not an independent contractor or freelancer), you’ll receive a W-2 at the beginning of the year that shows your earnings for the prior tax year. Your W-2 includes essential information for your tax return, including your gross earnings, pre-tax contributions you made (for instance, to health insurance premiums or a transportation spending plan), taxes that were withheld from your paycheck, and other amounts that will impact your tax liability for the year. We’ll cover this a bit more in the next section about deductions.
1099: 1099s are similar to W-2s, but they’re typically given to contractors, freelancers, vendors, or other part-time or seasonal employees who are not directly on the company’s payroll. Because you are not on the company’s payroll, typically, you will not have taxes withheld from your freelance paycheck, which means you have to keep track of your own tax liability throughout the year. This also means you’ll have to pay quarterly estimated taxes.

QUICK TAX TIP: If you’re a 1099 employee and you don’t have taxes withheld from your paychecks, it’s important to remember to pay quarterly estimated taxes to both the federal government and your state (if your state collects income tax).

For instance, for the 2023 tax year, quarterly estimated taxes were due:

Quarter 1: (Jan. 1-Mar. 31) April 15, 2023
Quarter 2: (Apr. 1- May 31) June 15, 2023
Quarter 3: (Jun. 1-Aug 31) September 15, 2023
Quarter 4: (Sep. 1-Dec. 31) January 15, 2024

If you don’t make quarterly payments, then your estimated taxes for the prior tax year are due before filing on April 15.

Spreadsheets and other software: If you don’t receive a 1099 from your clients or employers (for instance, if you’re a graphic designer who directly contracts with small clients), you’re expected to keep track of all your own earnings. Some freelancers will use a spreadsheet (like Microsoft Excel or Google Sheets) or software like Quickbooks. The most important thing is keeping track of every invoice, receipt, and expense. To help independent contractors keep track of expenses, driving mileage, and more, use the free Stride app, which houses all this information in one place.

Tip 2: Understanding Deductions, Tax Credits, and Write-Offs

So, how can you maximize your tax savings and get a big refund at tax time? First, we should explain how taxes work and why you might be owed a tax refund.

The simplest explanation is that whenever you get a paycheck (if you’re a W-2 employee), you see your gross pay, which is calculated by multiplying your days or hours worked by your daily or hourly rate. If you’re salaried, this will be your annual salary divided by your number of pay periods (if you get paid every other week, you get 26 pay periods, so your gross pay will be your annual salary divided by 26).

Your gross pay will then go through a series of deductions. These deductions are typically what’s called pre-tax. The deductions from your paycheck might be contributions to health premiums, taxes paid, or other various fees. At the bottom of your pay stub, you will see your net pay, which is the amount you get to deposit in your bank account.

At the end of the year, when filing your taxes, you’ll add up your gross pay and subtract your deductions to arrive at your taxable income. Here’s the formula:

Gross pay

- taxes paid

- certain pre-tax contributions

- tax credits

- deductions (standard or itemized)

= taxable income

Tax credits are granted to you by the government if you satisfy certain situations. For instance, you may be eligible for the Child Tax Credit if you have dependent children of a certain age, or you might have earned an Electric Vehicle Tax Credit for purchasing a qualifying car in the prior tax year. Tax credits lower your total taxable income (we’ll cover that later).

When filing your taxes, you can use either the standard deduction or itemized deductions. Here’s the difference:

Standard deduction: This is a minimum deduction that’s available to every taxpayer and is intended to help even the playing field for lower-income earners. According to the IRS, for the 2023 tax year, the standard deduction is:

Married filed jointly: $27,700
Single filers or married not filing jointly (not head of household): $13,850
Single filers (head of household): $20,800

Itemized deductions: Sometimes called write-offs, itemized deductions are the sum of all of the expenses, payments you’ve made, and other deductions you might be eligible for that can help lower your tax burden for the year. If your itemized deductions add up to more than the standard deduction amount listed above, you’ll need to have receipts and other proof of those expenses.

QUICK TAX TIP: Some common tax write-offs that independent contractors might be eligible for include:

Mileage
Health insurance premiums
Home office deduction
Work supplies
Travel
Car expenses
Cell phone cost
Business insurance
Commissions or fees
Depreciation of assets

Tip 3: How Filing Status Impacts Your Tax Return

As you may have noticed above, you have three options when it comes to your filing status. Each filing status has different implications on your standard deduction, tax credits available, and your tax bracket.

The three options for filing status are:

Single or married filing separately (not head of household)
Single (head of household)
Married filing jointly

“Head of household” refers to the individual who is the sole income earner for their household, which is comprised of themselves and one or more dependents (like a spouse, child, elderly person, or disabled person). Typically, married couples will find it advantageous to file jointly unless one partner feels the need to shield the other from tax liability or if they have a pending separation or divorce.

The one topic we haven’t covered is tax brackets. Tax brackets are how you calculate how much tax you owe for the year after subtracting your taxes paid, tax credits, and deductions. According to the IRS, for the 2023 tax year, the tax brackets are: insert chart

So, to sum up these last few sections: Let’s say you’re a W-2 (payrolled) employee at your dream job. You’re earning $25 an hour and clocking 40 hours a week for the whole year. Things are going so well that you even bought yourself a brand-new electric car that qualifies for a tax credit.

Your calculation might look like this:

$52,000 (gross earnings)

$13,850 (standard deduction)
$8,320 (taxes withheld)
$2,340 (pre-tax contributions/health care premiums)
$3,750 (electric car tax credit)

= $23,740 (taxable income)

x 0.12 (12% marginal tax rate for $23,740 taxable income)

= $2,849 (your tax liability for 2023)

In this situation, you should receive a federal tax refund of $5,741! But if you don’t want to be on the hook for those calculations, you have some options.

Tip 4: Online Tax Prep Tools and Other Resources

Thanks to the magic of the internet, you have more options than ever when it comes to preparing your taxes. The most common options include:

Filing by mail: This is the old-school option. You’ll print out your 1040 or 1040EZ forms at home and, using pen and paper, list all of the information from your W-2 or 1099, perform the calculations, and then put it in the mail.
Filing online: This is the most common option. There are a lot of websites that offer free or nearly free filing for federal and state. This is preferable if you have a simple tax situation — for instance, if you only have one W-2.
Hiring an expert: This option is more common for high-income earners or people with complicated tax situations, like freelancers or contractors who might have a number of W-2s or 1099s to file, as well as itemized deductions.

Tip 5: Check Your Work (Tax Filing Checklist)

So there you have it: our 5 essential tips for first time tax filers. We understand if you’re feeling overwhelmed—don’t be! As we said, understanding how taxes work is an essential step on your journey to financial independence. Here’s a quick recap of everything you’ll need before you file your taxes.

Collect all your W-2s and 1099s.
Collect all your receipts, expenses, or spreadsheets. (Or use the Stride app to track expenses, mileage, and more.)
Decide if you’ll be doing your taxes yourself, either with paper forms (1040 or 1040 EZ, typically) or an online application, or handing it off to a tax expert to prepare.
Refer to the tax bracket worksheet above so you’re not surprised by the numbers you get.

Download the Stride App

Shauna Gleason