by Bob Williams
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If you're about to embark on doing your taxes for the first time, you might feel a bit … lost. Sound familiar? Well, you can relax. We can shed some light on what you need to know and do now.
In the Beginning
In taxes, there are two sides to the equation, like matter and anti-matter, but in this case they're income and deductions. One makes our tax bill higher, the other can reduce it.
In January your employer will mail (or email) a Form W-2 to you. It will show how much they paid you in 2015. It will also show how much they held out of your paycheck for things like federal income tax, Social Security and Medicare taxes, maybe withholding for state income tax and for various benefits. How much federal income tax they held out depends on your choices on that Form W-4 you filled out when you started work.
Now, what to do with this W-2? When you're doing your taxes with 1040.com, it's pretty straightforward: just enter the numbers from your W-2 into the same numbered boxes on our W-2 screen.
For a lot of taxpayers, especially if you're in your first job and you aren't yet a homeowner, that's pretty much all there is to doing your taxes. But there could be more, depending on your situation. Now you enter the world of deductions and credits. Simply put, deductions save you money by decreasing your taxable income, so less is taxed. Credits are a straight-up amount taken off your tax.
Less is More
To qualify for most deductions, normally you have to have a certain level of deductions before you can claim them on our tax return. But some deductions don’t carry that limit. For example, if you had to pay for certain items needed for your job – uniforms, tools, gas to travel between job sites (but not commuting to work), and other job-related expenses – you can reclaim them, even if you don’t meet the threshold for claiming deductions otherwise. Other deductions that you can claim regardless of the limits: interest on student loans, moving expenses you paid to get to your first job (provided it was 50 miles away from your old home), and any tuition and fees for college you paid during the tax year.
Don't worry, you don't have to keep all this straight in your head. When you start your 1040.com tax return, we’ll ask you a few questions to see if these deductions apply to you.
The Bottom Line
Doing your first income tax return can be a lot simpler than you think. Once your W-2 hits your mailbox, you could be ready to start. After a stop at our Name and Address screen, visit the W-2 form to enter your numbers. Add any dependents, fill out any deduction or credit forms, and you could ready to send your return screaming through cyberspace to the IRS.
If you get stuck, we’re only an email away. Drop us a line and we’ll help you out. It’s that simple.
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