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How to do taxes: 4 steps for first-time filers

Don't let the upcoming tax deadline stress you out. These four easy steps guide you through the process for filing income taxes.

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Robert Steen, Ph.D., CFP® Reviewed by: Editorial contributors

It's natural for first-time income tax filers to feel anxious, but relax and take a deep breath. As you prepare for the April deadline, think of it as a financial recap of the year. Follow these tips to smooth your filing process.

1. Get organized.

There are different documents and IRS forms you'll need depending on your employment status, investments and loans.

  • If you have a full-time job, expect to receive a year-end W-2 statement from your employers by Jan. 31.
  • If you have a part-time or contracting job, expect to receive a Form 1099-MISC by early February.
  • If you're self-employed, track your business income and expenses throughout the year. You'll need this information for Form 1040 and Schedule C when you file your return. Businesses designated as "pass-through entities," which include sole proprietorships, partnerships, LLCs and S-Corporations, may now be able to deduct up to 20% of "qualified business income," which is basically business revenue minus business expenses.
  • If you have investments, gather bank statements and investment reports, such as your 1099-DIV and 1099-B. You may need these to show total interest, dividends, and investment gains or losses.
  • If you have loans and need to review the latest information on mortgage interest, refer to IRS Publication 936 Opens in a New Window.‍ ‍ See note 1 For the latest information on mortgage interest deduction, refer to IRS Publication 936 Opens in a New Window.‍ ‍ See note 1 For information on education credits and student loan deductions, check IRS Publication 970 Opens in a New Window.‍ ‍ See note 1

2. Understand your deductions.

For many, the standard deduction may be higher than itemized deductions. You can see how much your standard deduction may be with the IRS Interactive Tax Assistant tool Opens in a New Window.‍ ‍ See note 1 It may still make sense for you to itemize deductions. You can receive more information about this at the IRS website Opens in a New Window.‍ ‍ See note 1 If so, keep in mind that the rules for itemized deductions can be complex and the limits can vary, so it's important to check with your tax advisor or the IRS for information on Schedule A – Itemized Deductions Opens in a New Window.‍ ‍ See note 1 Some common situations where you might consider itemizing your deductions are when your expenses are high in the following areas:

  • Medical expenses
  • State and local taxes
  • Investment interest expenses
  • Mortgage interest and points
  • Charitable contributions
  • Casualty losses

3. Use free tax filing.

If eligible, take advantage of free electronic tax preparation and filing through IRS Free File Opens in a New Window.‍ ‍ See note 1

4. Set up direct deposit.

Expecting a refund? Get it faster by filing your return online and directing the U.S. Treasury Department to securely deposit the money into your bank account.

As you prepare and file, you may still find yourself with questions. It's crucial to carefully consider your situation and consult a tax professional for advice before making important tax decisions.

Find the forms, discounts and answers you need.

Visit the USAA Tax Center

The USAA Advice Center provides general advice, tools and resources to guide your journey. Content may mention products, features or services that USAA Federal Savings Bank does not offer. The information contained is provided for informational purposes only and is not intended to represent any endorsement, expressed or implied, by USAA or any affiliates. All information provided is subject to change without notice.

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Related footnotes:

  1. The preceding discussion is not tax, legal or estate planning advice. Consult with your tax, legal or estate planning professional regarding your specific situation.

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