Take a deep breath. Being a first-time tax-filer is something like being given a spacecraft that you never wanted, and a manual in an intentionally confusing language. This whole procedure is based on making you have enough doubts to stop asking questions…
It is entirely possible. Without a finance degree, you will manage it without taking an emergency supply of anxiety pills. It seems terrifying, but think of it as one long and boring but super-high-stakes game, and you will be rewarded with not receiving a threatening letter from the IRS.
First, Stock Yourself with Weapons
As you know, there is no dragon fighting without a sword, and there is no tax filing without papers. Your employer, the place where you spend your life to earn money, will give you the W-2 form. This form will become your guidebook for the year of finance.
Please, do not file without this form. Really. Find it in the mail or in your work email or payroll portal, e.g., ADP or Paylocity. In case you had any freelancing (e.g., driving for Uber or selling vintage Beanie Babies on Etsy), you will need 1099-NEC or 1099-K form. It will serve as proof for the IRS of your independent income.
Main Battle: Software Will Help You
In case math and existential horror are not your things, use tax preparation software. TurboTax, H&R Block, or FreeTax USA will help you go through this whole ordeal. There are free options available to file your tax if your situation is simple enough, and yours is now.
It will ask you questions in simple English. Did you pay any interest on your student loans? Did you donate anything to Goodwill last month? Answer truthfully and upload your W-2 form when software prompts you to do it. It will make all the math which will turn your brain into mush.
Some Scary Terms Which Are Not So Scary
Deductions and credits appear as some secret club passwords. Deduction is a reduction of the amount of income subjected to taxation by the government. Credit reduces your tax liability by a dollar-for-dollar amount.
One of the most important ones for those in their twenties and thirties is the standard deduction. It is the amount of money which IRS allows you to reduce your taxable income without giving any explanation. For 2023, it equals $13,850 for single filers. It is the one you usually take unless you are a homeowner or a philanthropist with huge donations… and, let us be honest, most of us are not.
Conclusion
Once you enter all the information, software will make all the calculations and will determine whether you will owe some money or receive a refund. Searching for the amount of the refund is as easy as finding a twenty in your winter coat. And paying the tax? It is not as pleasant as a refund.
Submit your return electronically, and IRS will process it. If you have a refund, then it will happen via direct deposit and be done quickly, in several weeks. And if you owe the money, then you will pay them via your bank account.
The most terrible thing you can do is not file because you are scared. There are penalties for late filing enforced by the IRS. Just do it. You will survive, and then you will feel like a functional adult for a while.