First-Time Tax Filing: What New Graduates Need to Know
Congratulations on earning your degree! While you might be celebrating this exciting milestone, don’t forget that tax season is just around the corner. If this is your first time filing taxes, here’s what you need to know to make the process easier and ensure you stay on the right side of the IRS.
1. Understand Your Filing Status
Your filing status impacts the tax rate you’ll pay and the deductions you can claim. Most new graduates will file as “Single,” but if you’re married or have dependents, your status may be different. Knowing this is important as it affects your overall tax obligations.
2. Gather All Necessary Documents
Make sure you have all the required forms before you start filing. This includes:
- W-2 forms from your employer(s) that report your earnings and taxes withheld.
- 1099 forms if you worked as a freelancer or had other income sources.
- Receipts for deductible expenses, such as student loan interest or education costs.
3. Consider Student Loan Deductions
New graduates often have student loans, and you can take advantage of tax breaks related to them. For example, you can deduct up to $2,500 in student loan interest on your tax return if you meet the income requirements.
4. Take Advantage of Tax Credits
Don’t miss out on credits that can reduce your tax bill. The Earned Income Tax Credit (EITC) and American Opportunity Tax Credit (AOTC) are particularly beneficial for those just starting out in their careers.
5. File Early and File Electronically
Filing your taxes early can help you get your refund faster and avoid potential delays. Plus, filing online with reliable tax software makes the process smoother and can help you catch deductions you might miss otherwise.
Stay Financially Organized with Life Planner
To make your first tax season and beyond easier, use the Life Planner app. It’s packed with personal finance tools like an Expense Tracker and Budget and Budgeting Tools that can help you keep tabs on your income and expenses year-round. With the app’s Savings Goal Tracking and Financial Reports features, you’ll always be prepared when tax season rolls around.
Get Ready for a Stress-Free Tax Season
Don’t let tax season catch you off guard. Prepare now, stay organized, and consider downloading the Life Planner app to help you manage your finances with ease. Available on Google Play and App Store, the app is your go-to tool for tracking expenses, budgeting, and more. Download it today and start making your financial future brighter!