How to file taxes for the first time in 4 steps

What do you need to know to file taxes for the first time?

It's natural for first-time tax filers to feel anxious. As you prepare for the tax filing deadline, think of it as a financial recap of the year. Here’s what you need to know, plus four easy steps that can help make the filing process go a little smoother.

Do I need to file taxes?

Most people with jobs will need to file a tax return.‍ ‍ However, there are income thresholds based on your specific filing status and age, which may change from year-to-year. If you’re a dependent, which means someone else claims you on their taxes, you might have a lower income threshold based on whether your income comes from a job or from investments.

There are some special cases when you might not need to file. For example, if your only income is from a non-taxable source like certain veterans benefits, you might not have to file.

Should I file anyway?

Even if you don’t meet the income threshold that would require a tax filing, or if you’re a dependent or otherwise not required to file taxes, you might want to consider filing anyway. You may still get money back if:

• You qualify for a refundable tax credit
• You had income tax withheld from your paycheck
• You made estimated tax payments

Understanding your filing status

The IRS has several filing statuses, which can affect your tax bracket, the amount of your standard deduction and your eligibility for tax credits, among other things.‍ ‍ Your filing status will depend on your circumstances on the last day of the year:

• Single: Those who are unmarried or divorced, or who are legally separated.
• Married filing jointly: Married couples who want to combine income and deductions on one return. This can help them take advantage of favorable tax brackets and deductions.
• Married filing separately: Married couples who choose to file separate returns. There are situations where this could be favorable; for example, to help one person avoid being held liable for the other’s tax debts.
• Head of household: This designation is for unmarried people who pay more than half the cost of living expenses for a qualified dependent like a child or dependent parent. Filing as head of household could offer lower tax rates than filing under single status.
• Qualifying surviving spouse: This status applies for those who had a spouse pass in the past two years and have a dependent child.

What are the current tax year deadlines?

Tax Day is typically on April 15. However, some years, like when April 15 falls on a weekend, the date will be adjusted to the next business day. That’s also the deadline to file for an extension.‍ ‍ That gives you until Oct. 15 to file your taxes without late penalties. You can file for an extension online or using IRS Form 4868.‍ ‍ Remember, when you file for an extension, you’re only getting more time to for the paperwork. You still have to pay any taxes you owe by the April 15 tax deadline.

If you’re a freelancer, gig worker or self-employed, in addition to filing your annual income tax return, you typically must pay estimated quarterly taxes. These include both income and self-employment taxes, and they’re paid quarterly. The IRS deadlines for these payments are typically:

• April 15
• June 16
• Sept 15
• Jan 15 of the following year

Where’s my refund?

If you’re due a tax refund, the quickest way to get it is to set up direct deposit. The IRS usually has your refund to you in 21 days or less if you file electronically and request direct deposit. A paper check can take longer, possibly up to six weeks.

Step 1: Get organized.

There are different documents and IRS forms you'll need depending on your employment status, investments and loans.

• Employment income: If you have a full-time job, expect to receive a W-2 from your employer by January 31 (or next business day).

• Contractor or freelance income: If you’re an independent contractor or freelancer, you’ll typically receive a Form 1099-NEC by January 31.

• Self-employed or business income: Track your income and expenses throughout the year. You’ll use this information when filing Form 1040 and Schedule C. Pass-through entities (such as sole proprietorships, partnerships, LLCs, and S corporations) may qualify for a deduction of up to 20% of qualified business income, subject to certain limits.

• Investments: Gather forms such as 1099-DIV, 1099-B, and possibly 1099-INT to report dividends, capital gains or losses, and interest income.

• Loans and education: For mortgage interest deductions, see IRS Publication 936.‍ ‍ For education credits and student loan interest deductions, IRS Publication 970.‍ ‍

Step 2: Understand your deductions.

For many, the standard deduction may be higher than itemized deductions. You can see how much your standard deduction may be with the IRS Interactive Tax Assistant tool.‍ ‍ It may still make sense for you to itemize deductions. But keep in mind that the rules for itemized deductions can be complex and the limits can vary, so it's important to check with your tax advisor or read IRS Schedule A – Itemized Deductions.‍ ‍ You can also use the IRS Tax Withholding Calculator.‍ ‍ The calculator can not only help you understand whether to itemize or use the standard deduction but also help you determine how much should be withheld in federal income taxes from each paycheck for the year. 

Important note: You must choose either the standard deduction or itemized deductions, typically whichever results in the lower tax bill.

When does itemizing make sense? Generally speaking, if your total itemized deductions exceed your standard deduction. Itemized expenses may include:

• Out of pocket medical expenses above 7.5% of your adjusted gross income, or AGI
• State and local taxes, or SALT, subject to the annual SALT cap
• Investment interest expenses
• Mortgage interest and points
• Casualty losses, if tied to federally declared disasters
• Charitable contributions
• Other deductions, including gambling losses (to the extent of earnings) and certain unreimbursed expenses

Step 3: Use free tax filing.

If eligible, take advantage of free electronic tax preparation and filing through IRS Free File.‍ ‍ Active-duty service members, reservists and veterans may also be able to file for free using the Department of Defense's MilTax.‍ ‍ It includes tax software and filing guidance, as well as help filing your state return. That can be helpful, because service members often have special benefits they can take advantage of at tax time. Many military bases and installations also offer in-person tax preparation and filing assistance through the Volunteer Income Tax Assistance, or VITA, program.‍ ‍

Should you DIY your taxes?

If your tax situation is relatively simple, you might be able to file yourself using free IRS tools or online software. If your situation is more complicated, like if you’re self-employed or have a lot of investments or other special circumstances, working with a tax professional might be the way to go. Both methods have their pros and cons.

Step 4: Set up direct deposit.

Expecting a refund? Get it faster by filing your return online and directing the U.S. Treasury Department to securely deposit the money into your bank account.

Using direct deposit is the fastest and safest way to receive your refund. You don't have to deal with the hassle of a paper check, it removes the risk of mail theft, and you may get your money weeks earlier. You can also use direct deposit to divide your refund into several accounts, which could be a good way to immediately funnel some of the money toward savings.

Common credits for first-time filers

There are several ways you may be able to save when you file taxes, including credits. Unlike deductions, which lower the amount of income you’re taxed on, credits lower your overall tax bill dollar for dollar. The most common credits that might apply to new filers include:

• Earned Income Tax Credit, or EITC: Low-to-moderate income workers; available to taxpayers with or without qualifying children, with eligibility and benefit amounts based on income, filing status, and number of qualifying children.
• American Opportunity Tax Credit, or AOTC: Eligible students can claim a credit of up to $2,500 for qualified tuition and course materials during the first four years of higher education.
• Lifetime Learning Credit: You can claim up to $2,000 to help pay for undergraduate, graduate or professional degree courses, or classes to improve job skills.
• Saver’s Credit: This may be available if you made eligible contributions to an IRA, 401(k) or other retirement plan. Subject to income limits.
• Child and Dependent Care Credit: If you pay for the care of a qualifying child under age 13 so you can work or look for work, subject to income and expenses.
  
  

Avoid these common tax filing mistakes

Tax time can be stressful, especially if you’re doing it for the first time. It can be easy to accidentally enter the wrong information or miss a deadline or credit. If that happens, it can cause a headache to untangle, or you may miss valuable savings. Here are a few common mistakes to avoid.

Filing with the wrong Social Security number

Entering your Social Security number or a dependent’s Social Security number incorrectly could lead the IRS to reject your return. And it may seem obvious, but make sure your name is spelled correctly, too.

Forgetting income like side gigs

If you have a side hustle like freelance work, a part-time job or gig work, you have to report that income on your tax return. You may receive a 1099 for that work, but even if you don’t, you’re still required to report your earnings to the IRS. If you file before you receive all your 1099s or you forget one, you’ll have to file an amended return, which could delay your refund.

Choosing the wrong filing status

If you file as single when you could have qualified for head of household, it could affect your tax bracket and your standard deduction, costing you money.

Missing credits and deductions

First-time filers often overlook credits and deductions that could help them save, like the deduction for student loan interest or education credits. Maximize your refund by making sure you’re getting all the credits and taking the deductions that make sense for your situation.

Not reporting crypto or investment income

The IRS treats cryptocurrency as property, so trading one cryptocurrency for another is generally a taxable event—even if no cash is involved. However, transferring crypto between wallets you own is not taxable. You must also report taxable income and transactions even if you didn’t withdraw cash, since tax liability is triggered by sales, exchanges, or income events—not just cash withdrawals.

You also need to report any income from investments, even if the transaction didn’t result in a cash withdrawal. Many people think they only need to report investment activity if they sell an asset for profit or withdrew money, but that is not the case.

Protect yourself from scams

Scammers love tax season: People are stressed and nobody likes dealing with taxes or the IRS, so it can be easier for bad actors to steal your money or personal information.‍ ‍ Scammers often will impersonate IRS agents or tax preparers, creating a false sense of urgency or promising unrealistic refunds to fool you into giving them your sensitive personal information and access to your bank accounts.

Keep in mind that the IRS will typically only contact you through the mail, not by text, email or phone call. And file your tax return as early as possible to avoid someone else attempting to use your stolen Social Security number to file a fake return and claim a fraudulent refund in your name. If that happens, you might only find out when the IRS rejects your legitimate return because one has already been filed.

Be sure to protect your Social Security number and only give it to licensed, reputable tax preparers. If you’re worried about scams or someone filing a false return, you can protect your identity using an IP PIN.‍ ‍ This is a six-digit number that is known only to you and the IRS and helps the IRS verify your identity when you file your tax return.

What happens after you file your taxes?

Once you file your tax return, the IRS will process it. If you e-file, you should receive notification within 24 to 48 hours whether your return has been accepted or rejected. If it is accepted, it means your return is being reviewed and processed. If it was rejected, there likely were basic errors, like a misspelled name or the wrong Social Security number, and you will need to correct them and re-file.

Once it’s accepted, your return is reviewed for math errors or missing information, and it’s compared against the information about you the IRS has on file, like the income reported by your employers. You can track the progress of your return using the Where’s My Refund? tool.‍ ‍

What if I owe?

If you owe taxes, don’t panic. If you’re able, you can pay any taxes due when you e-file your return using a credit card or bank account number. Even if you can’t pay right away, you should still file your return on time to avoid fees or penalties. If you can’t pay the full amount owed at the time, submit what you can with your return, then consider your options:

• Short-term payment plan: If you owe less than $100,000, you can request up to 180 days to pay the balance in full. There is no set-up fee, but you will still incur interest and penalties.
• Installment agreement: If you need longer to pay, you can set up monthly payments. You can set up an agreement online if you owe less than $50,000. There are fees, but they are reduced for low-income taxpayers.
• Take out a loan: IRS late-payment penalties compound daily, so it might be cheaper to look at other financing options, like a low-interest personal loan or a credit card. Compare using a loan or a credit card to pay the IRS in full to see if it could help you save in the long run.

How long should I keep my tax documents?

Once you’ve hit submit on your tax return, don’t celebrate by tossing all your files in the trash can. You need to hold onto your tax records and documents like receipts or all records related to property for up to seven years, depending on your specific situation. You’ll need them if the IRS decides to audit your return.

• 3 years: Keep returns and supporting forms, like your W-2s, 1099s and expense receipts, for three years from the date you filed or the due date.
• 6 years: If you fail to report income that you should have, keep your records for six years if it’s more than 25% of the gross income shown on your tax return.
• 7 years: Keep documents if you filed a claim for a loss from worthless securities or a bad debt deduction.

Consider digitizing all of your paper tax records and save them as secure, searchable PDFs. Use clear file names to indicate the tax year and description so you can find the files again quickly if needed, and consider saving them in an encrypted, cloud-based service so you can access them remotely and don’t have to worry about accidentally losing them.

Frequently asked questions
Question: Can I file my taxes for free?
Answer: You may be able to file your tax return for free using IRS Free File if you meet the income requirements. Military members, veterans and their families may be able to file for free using MilTax.

Question: When are tax documents usually mailed out?
Answer: Many common tax documents, such as W-2s and certain 1099 forms, must generally be sent to you by January 31 (or the next business day). However, not all tax forms follow the same deadline. Some documents, particularly investment-related forms like 1099-DIV and 1099-B, are often issued later, commonly in mid-February or even later, because additional time is needed to finalize reporting details. Forms such as 1098s (for mortgage interest or tuition) are also typically sent around the end of January, though timing can vary slightly depending on the issuer. As a result, it’s common to continue receiving tax documents into mid-to-late February before you have everything needed to file.

Question: How long does it take to get a tax refund?
Answer: It can take up to 21 days after your return is accepted by the IRS for your refund to be issued. It can take longer if you submit a paper return. If you request your refund via direct deposit, you likely will get your money quicker. It can take three to four weeks for a paper check to arrive.