Slacker’s Syllabus: A newbie’s guide to filing your taxes

Illustration: Lorenza Centi

Filing your taxes for the first time is stressful.

Before you start spiraling, though, some words of reassurance: “As a young person, it’s actually pretty easy,” especially if you’ve been checking in on your finances throughout the year, so you know what tax documents to expect, says Mary Beth Storjohann, a certified financial planner and founder of financial education and empowerment platform Workable Wealth. Even if you haven’t stayed on top of your finances as much as you would’ve liked, Storjohann says you still have options.

Here’s a beginner’s guide to doing your taxes.

Giphy/@grownish

The 2021 federal income tax filing deadline for all states except Maine and Massachusetts, which have an April 19 deadline. To confirm when you need to file your state income tax return, Storjohann suggests Googling “2021 tax filing deadline, [your state].”

Giphy/@emmys

Evaluate your situation

Still deciding between using a self-filing service like TurboTax and hiring a tax professional? Start by assessing the complexity of your situation, Storjohann says.

If it’s pretty straightforward —

that is, you work for an employer that sends you a W-2 form, and you’ve earned interest on a savings account, “those online platforms will be easy to utilize” — even if you have kids and own a home, Storjohann explains. “They’ll tell you which box to look at in your W-2, you plug in that information, and they’ll walk you through it.”

Giphy/@cbc

But if you own a business, or have inheritances or investment accounts,

you might want to opt for professional help, especially if you’re new to managing your finances, Storjohann notes. She also suggests hiring a tax professional if this is your first year working a side hustle, and/or you aren’t managing it as a separate entity — in other words, you’re mixing your income and expenses from your side hustle with those from your day job, in the same bank accounts.

A tax professional will help you manage your side hustle separately from your other work, Storjohann says.

Giphy/@fallontonight

Trust your gut. If you have anxiety in any way about doing it on your own, just spend a little extra money and pay somebody to do it for you.

Mary Beth Storjohann

Giphy/@theoffice

If you want to hire a pro, do it soon

Ideally, you’d want to hire an accountant by the end of January, before they’re booked up, Storjohann says. Otherwise, she suggests asking your personal and professional networks for recommendations rather than wading through online search results.

If your situation isn’t that complicated, and you just want a pro to put you at ease, something like H&R Block — which allows walk-ins — would suffice.

That said, “self-filing platforms are getting better and better,” and some even offer free representation in case the IRS audits you, Maddox says. There’s no right answer. It all depends on your personal needs and comfort.

Giphy/@A24

Gather your records and documents

Whether you decide to use a self-filing service or work with a professional, you’ll need the same basic list of information, according to Storjohann.

Start with personal information:

Your name, date of birth, Social Security Number, and routing and bank account numbers. You’ll also need this info for your spouse, if you’re filing jointly, as well as the names, birthdates, and Social Security Numbers for any dependents.

Giphy/@broadcity
Shutterstock

Now, (some of) the forms:

  • W-2
  • 1099-INT for any bank accounts that earned interest or dividends
  • 1099G for any unemployment income
  • 1099-MISC and 1099-NEC for contract work
  • Information you’ve tracked on your own
  • Income
  • Business-related expenses
  • Any estimated tax payments for contract work
  • If you have kids: Childcare expenses that you’ve tracked, since you can write some off to earn certain credits
  • If you own a home: Mortgage interest and property tax payments
  • Charitable donations, medical expenses and health insurance payments. If you’re like me and buy health insurance through the Affordable Care Act, you’ll get Form 1095-A, which has information about your coverage.

Remember: Remember: Remember: Remember:

Remember:

You’re still responsible for reporting income from any companies that didn’t send you a 1099, Storjohann says. “If you didn’t get a 1099 from a company that you worked for, and they paid you $10,000, you still need to report that $10,000 on your taxes and pay what you owe on it,” she says.

Maddox agrees. “Make sure the amount [on the 1099] matches the income you tracked on your own,” she says. Creating separate checking and savings accounts for your business or side hustle will make income and expense tracking way easier, Storjohann says.

What about charity donations?

Maddox also suggests collecting annual contribution statements from charities you’ve donated to.

And if you’re paying off student loans,

my accountant also asks me to provide her with Form 1098-E, the Student Loan Interest Statement, which your lender should’ve sent you.

Giphy/@theleftovershbo

Get organized

Ideally, you’d upload tax forms onto a Google Drive or Dropbox folder as you receive them so that they’re ready to go come tax season, she adds. If you don’t have time to organize them, even setting them aside can help. “Sometimes it can be overwhelming to receive a ton of tax statements in the mail all at once, but try to stash everything in a folder until you can sort through it,” Maddox says. “Each year, I make a file folder for tax documents.”

$12,550

The 2021 standard deduction for single people and married people filing separately; for married people filing jointly, it's $25,100. Deductions lower your taxable income, Storjohann explains. Itemizing deductions for certain expenses can work in your favor if they exceed the standard deduction, Storjohann says, so that you pay less taxes than you would if you’d claimed it. You’ll most likely benefit more from claiming the standard deduction.

IRS

Giphy/@nickrewind

If you’re paying more than [$12,550] total in your property taxes, state taxes, mortgage interest, and charitable contribution[s], that’s when you [itemize]. But most [young] people aren’t doing that at this point in time.

Don’t obsess over tax credits and deductions

Storjohann notes that there are lots of blog posts on the eligibility criteria for tax credits and deductions, suggesting the average consumer needs to know which of these they can claim. But you actually don’t, she notes.

That’s the beauty of using a self-filing service or working with a professional. Both will ask questions to gauge whether you qualify for these deductions and credits.

Giphy

In other words...

You don’t need to be a tax expert to file your taxes. Nowadays, many self-filing services are really intuitive and user-friendly, Storjohann says. But if you need a human to walk you through the process or just offer some reassurance, you can always call an accountant. Filing your taxes may seem like a Scary Adulting Task, but it doesn’t have to be.

Giphy/@roosterteeth