How to File Your First Income Tax Return

You should not have fear when the time comes to file your first tax return. First time filers typically have a simple form to fill out, and this usually only takes a few minutes with most online tax preparation services. Take a deep breath and make sure your mind is focused before you begin.IncomeTaxScrabblePic

Gather Tax Forms

Your employer must postmark your W-2 or 1099 by January 31st of any given year. If you do not receive your W-2s by then, contact them immediately. Make sure they have your correct mailing address. Ensure that their employer tax identification numbers are included in the appropriate boxes.

Complete Deduction Worksheets

Even as a young individual, you may qualify for deductions. If you are in college or are a young parent, there are credits and deductions that you may be eligible for. Use the available worksheets to determine if you can take the credits.

Online preparation services will tell you immediately if you are eligible or not.

Double Check Information

Before you submit your first tax return you should double check every piece of information you’ve put down. Go back through each page and make sure that all of the numbers entered are correct. Read all of the additional questions asked and the answers to ensure that they are correct. This prevents tax return denial and reduces the likelihood of an audit.

Bottom Line

Take your time with your first return. There is no rush. Just make sure that your return is submitted, or at least postmarked, by the tax filing deadline. The deadline to file taxes in 2016 is April 18th instead of the typical April 15th date.

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The Worst Tax Form

When it comes to filling out taxes there isn’t much fun in the process. On every tax form, you will have to pay attention to make sure you fill out the form correctly and entirely. Many forms will also require you to look up the actual numbers to support what you are writing on the form. While many tax forms are boring or monotonous, there is one that is disliked more than all the others.InvestmentHouse

The Worst of the Worst

Experts and laypeople alike dislike form 1099-B as a tax form. 1099-B happens to be the form that you receive to declare your investment income. The reason why this form is so difficult is because of its tedious nature and the numerous calculations it requires from investors. Most investors will receive a 1099-B form from a number of companies.

Company Extensions

Even if you are OK with receiving and getting your 1099-B income together, there is one extra problem that is out of your control. The issue is that many financial businesses apply for and receive an extension when it comes to sending out 1099-B forms. Though the forms have a deadline of February 15th to get to customers, a lot of companies file for extensions and receive them. This can throw off your entire tax schedule.

Getting Over the Hurdle

If you have other methods for figuring out your 1099-B income, such as online statements or looking at your bank statement, you may be able to get around waiting for your investment forms. If you are able to log in and find the information, doing so can keep you on a tax schedule.

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What You Need to Know About Form 1095

Obamacare saw the healthcare system change forever. It also came with three new tax forms. The 1095 family of tax forms is there to determine if you need to make any shared responsibility payments. This is the fee you have to pay if you don’t have a valid health insurance policy.Form1095Pic

If you already have insurance, these forms will help you to determine if you are entitled to receive a tax credit.

What Do the Forms Mean?

  • Form 1095-A is issued by insurance companies participating in healthcare exchanges.
  • Form 1095-B is for companies with fewer than 50 employees who also offer health insurance policies.
  • Form 1095-C is for companies with more than 50 employees offering health insurance policies.

What Information Should You Provide?

The information you need to provide is pretty simple. Enter all the usual information on your tax form, such as name and social security number. You also need to mention how much coverage you have and how much you have paid for said coverage.

For companies, it’s vital that you enter the number of dependents and the level of coverage. It’s that simple.

How Much Am I Entitled to?

You can find out whether you are entitled to a premium tax credit from the IRS website, assuming you already have health insurance. If you don’t have enough health insurance, you can also discover how much you will have to pay to the Federal government.

These forms will be automatically issued to you, so don’t request them directly. This will stop you from having a situation where you have more forms than you need.

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An Overview of Form 1040EZ

Form 1040EZ is just one of many IRS forms you may come across. It’s a type of statement designed to report how much you’ve earned to the IRS. If this form is brand new to you, we are going to introduce you to the main facts.1040EZ

The Simplest Form

This is the easiest and fastest form to file with. It’s one of three income statements you can use to submit your income. You can only include salary, taxable interest, tips, and wages on this form. If you have anything else and you will have to use a different form.

Payments and Credits

The next section involves you looking into whether you are claiming working tax credits, or any other benefits. You will write down anything that’s withheld and combine it with the W-2 form you should have received. This information is used to calculate whether you are entitled to a tax refund or not. However, keep in mind that this form has limits regarding the type of credits that you can claim.

The Signature

It’s alarming how many tax returns are sent to the IRS without being signed. It’s vital that you sign it because if you don’t the form is considered invalid. If you’re filing jointly, your spouse must sign the form as well.

Do You Need a Tax Preparer?

Despite this being the simplest form, it’s still a complex document and can be difficult to fill out correctly, especially if you have minimal experience. It’s always worth consulting with a tax professional to receive a level of help proportionate to your current tax situation.

Spend your time researching various tax professionals in your area to see which one is best for you.

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Huddleston Tax CPAs of Seattle & Bellevue
Certified Public Accountants Focused on Small Business

(800) 376-1785
40 Lake Bellevue Suite 100, Bellevue, WA 98005

Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching, Quickbooks consulting, bookkeeping, payroll and business valuation services for small business. We serve Seattle, Bellevue, Redmond, Tacoma, Everett, Kent, Kirkland, Bothell, Lynnwood, Mill Creek, Shoreline, Kenmore, Lake Forest Park, Mountlake Terrace, Renton, Tukwila, Federal Way, Burien, Seatac, Mercer Island, West Seattle, Auburn, Snohomish and Mukilteo. We have a few meeting locations. Call to meet John Huddleston, J.D., LL.M., CPA, Tawni Berg, CPA, Jennifer Zhou, CPA, Jessica Chisholm, CPA or Chuck McClure, CPA. Member WSCPA.