|Taxes can certainly seem daunting at first, but the process is fairly straightforward when you're adequately prepared.|
The first thing you'll need on hand is a copy of all your W-2 or earning statements from each employer you worked with throughout 2011. The good news is that these forms should be mailed to you, so you don't have to worry about hunting them down unless you have moved and an old employer may not have your new address. Federal law stipulates that employers must send out your copy of a W-2 by Jan. 31, so now's the time to keep a close eye on your mailbox, especially since the W-2 isn't the only form you should on the lookout for. Depending on your current portfolio, you may also get a 1099, which is issued for all additional income that has not yet been taxed. This can include dividends from stocks or mutual funds or interest earned on savings or other bank accounts. (According to Bob Meighan, vice president at Intuit's ( INTU) TurboTax, first-time filers typically need to know how much interest they paid on their student loans, which should also be on mailed to them on a Form 1098-E around this time of year.) Basically, you'll need to check your mail for "anything that comes in January that says 'important tax information' on it," says Daniel Morris, senior partner at Morris + D'Angelo, a certified public accounting firm. These forms are essential when you sit down to do your taxes. You can find a more in-depth look at all the forms you should bring to your tax preparer in this roundup.
All taxpayers are going to fill out a version of the Internal Revenue Service's 1040 Form. Meighan says that most first-time filers will be eligible to file either the 1040EZ, reserved for taxpayers with no dependents or itemized deductions, or the 1040A form, which allows for dependents but no itemized deductions. Those who need to itemize deductions (either a single person who is eligible for deductions totaling more than $5,800 or a married couple eligible for deductions totaling more than $11,600) need to fill out the 1040 long form. Otherwise, all taxpayers get a standard deduction of those two amounts depending on their filing status. >>Most Commonly-Asked Tax Questions Mark Steber, chief tax officer with Jackson Hewitt Tax Service, says that those who typically qualify for itemizing have something large, such as a mortgage payment, on the books. Many deductions require significant record-keeping. Charitable donations, for instance, can't be deducted unless you have the receipts to prove funds were contributed. Admittedly, first-time filers may have not have the foresight to save such receipts, but Amy Miller, director of the Tax Institute at H&R Block ( HRB), says taking the time review tax forms carefully during your initial filing will help you learn what you need to collect for next year. "The people that do the better job of record-keeping get a bigger refund," Steber agrees. He says step one to better record-keeping involves printing a copy of your completed tax return this year and storing it in a safe place so you can use it as a reference next year.
How to file
Taxpayers have several options when it comes to preparing and filing their taxes, Morris says.