When you're a tax return beginner, everything's confusing. So many details, so many numbers, so many questions.
Do I really need to pay someone to do my taxes? What happens if I don't file? How do I get more time to file? How do I get more time to pay?
Relax. We've got you covered. The questions pile up quickly, but the answers are usually pretty simple. (Answers to above questions: It depends ... The IRS will be in touch … File a form … File a different form.)
And don't be afraid of the IRS. They're kind of your helpful, knows-everything friend. They've got answers as well as a free help line: 1-800-TAX-FORM (1-800-829-3676).
1. You're not the only one who's confused.
First, a simple explanation. You make money. The government wants its share. Your employer takes some out from each paycheck and sends it. Usually it's enough if not more — then you get a refund. If it's not enough — you pay a tax bill.
Brian Stoner, a CPA in Burbank, California, says new filers are often confused about what they have to declare as income. Cancellation of a debt, or gambling income from a casino or from a prize … anything you receive that's on a 1099 form must be reported as income.
2. Do I need to pay someone?
If your financial life is simple — one job, no complicated financial holdings such as multiple, individual stocks — probably not.
Check out Free File from the IRS — an easy, DIY online option for your federal taxes if you earned less than $66,000. The site includes links to look up your state's forms. If you earned more, you can still do it yourself for free at the IRS's Free File site.
If you have more than a couple of jobs, with different W-2s, or a couple of a kids or a house, you might want to consider paying a preparer or a CPA.
More from Invest in You:
Stashing cash finally starts to pay off
Why HSAs are ideal millennial savings vehicles
Smart moves for long-term financial security
3. What if I need more time to file?
The IRS is cool with you not filing on time. Just let them know you're going to be late by filing Form 4868 by April 15. Live in Massachusetts or Maine? Your deadline to file for an extension is April 17.
"You'll still have to estimate your taxes, though, so you pay close to the right amount on April 15," Stoner said.
Any common tax software should be able to help you file an extension.
Special this year because it's the first year of the new system under the Tax Cuts and Jobs Act: no penalty if you didn't pay enough in 2018.
4. What if I need more time to pay?
If you owe the IRS money, you don't have to pay it all at once. But again: Let them know. Generally, the IRS forgives first-timers for not paying enough. Set up a payment plan so you can pay off the amount in installments if you cannot come up with the full amount.
5. Yikes, I owe money!
If you didn't have enough taxes withheld from your paycheck, you will owe the government money at the end of the tax year.
If you had too much money withheld, the government owes you. Yay, refund time!
Although many financial advisors advise against this, it is an easy way to save. So, if you are shocked either way — you have to write a check or you're not getting a big enough refund — ask your HR department to file a new W-4.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.
