It’s time to learn how to file your taxes.
The W Forms
Figuring out where to start when preparing to file your taxes can be one of the biggest challenges of the entire process — after all, the tax code has a reputation for being extremely convoluted. Because of this, completely understanding the tax code is nearly impossible, but there are a few important aspects to try to wrap your head around, like which forms you’ll need.
Understanding the difference between a W2 and a W4 form is a good place to start. A W4 form helps your place of employment understand how much money they need to take out of each of your paychecks, and during tax season a copy will be submitted to the IRS as part of the company’s taxes. A W2 is essentially a statement of how much money was withheld by your employer. You’ll get a copy every year that you’ll need to complete your taxes.
A simple way to remember the difference is that a W4 is for your employer, while a W2 goes to you.
Dependent or Independent
Another factor to consider is whether you are being accounted for in your parents’ tax forms as a dependent, or if you are going to be filing as independent. If you are under 19 and not in school, or under 24 and still in school, your parents can claim you on their taxes as a dependent. This can help defray some of their costs for supporting you. Before filing your taxes, it will be important to double check with your guardian(s) about what they consider your status to be.
If you’re working and paying for over 50 percent of your living expenses (college tuition, food, fuel, rent, etc.) then it might be a good idea to consider filing independently — especially if you’re a full-time student since you’ll likely get a substantial return. However, it’s important to remember that if you file independently and your parent’s also claim you on their taxes, both of your returns will be flagged by the IRS, which could turn into a huge hassle.
There are several ways to get more back on your taxes if you are filing on your own this year. For example, if you are paying interest on student loans, it’s likely that you’ll get a majority of the interest you paid back in your yearly return. You’ll receive a 1098-E form from each of your loan servicers, so make sure you submit your taxes with those forms included.
In addition to education-related refunds, there are a few ways to get additional money back after filing. For example, you can claim any charitable donations you have made over the past year, including items you have dropped off at the thrift store or food bank. You can also get some tax refunds for going green. If you bike to work rather than drive, you are eligible for an extra $20 every month from your employer as part of the Emergency Economic Stabilization Act of 2008.
You can always visit irs.gov to find out what forms you’ll need to file for your federal taxes. Visit your state’s official website to find out what forms you’ll need to file state taxes. You can also check out free or low-cost services online to help you file, like TurboTax or H&R Block. Another easy part of learning how to do your own taxes? Electronic filing can be done for federal taxes, and you can file online for most states, too. That means you can have your tax returns deposited directly into your checking or savings accounts without having to worry about paper checks and forms.
Taking your taxes into your own hands is quite the achievement. Learning the tax lingo can be difficult, but well worth it. You may even end up with more money in your pocket than you’d hoped.