Hi Taylor – My daughter is filing taxes for the first time this year and I’m probably as nervous as she is. How can I be the most helpful and make sure she gets it done right? – India

Hey India – Filing taxes for the first time is daunting for everyone, and it reaches new levels with parents of first-time filers. With the right approach, the process becomes less intimidating and even exciting. Here are three areas to focus on.

–1. Understand the basics. Before you can help your daughter, you might need to give yourself a little education. The U.S. tax system is overly complex at times, but the general concepts aren’t all that bad. For many young adults, tax filing won’t even start at 18. People who are single and earn below a certain income threshold may not need to file. If your daughter still lives at home and works part time, she might not have to worry about filing at all. That said, even with barely any income, filing could be beneficial if your daughter qualifies for any tax credits. No matter how much she made, I recommend filing for every adult. It’s good to get into the routine and you might find out that the government owes a little kickback.

–2. Gather your documents. The scariest part of all is feeling like you don’t have the right documentation. I’m guessing your daughter isn’t running her own business, so the paperwork shouldn’t be too frightening. Here’s a little checklist of things you might need:

a. W-2 Forms: If employed by an employer, this form shows total wages and tax withholding.

b. 1099 Forms: For the self-employed, independent contractors, and gig workers, this form reports income from non-employers.

c. Student Loan Interest Statements: The 1098-E form shows the amount of interest paid, which can make for a nice deduction.

d. Other Income and Deduction Information: Any other forms or receipts related to income, expenses, or deductions are helpful. There likely won’t be many, but every bit helps.

–3. Choose your filing method. There are lots of options when it comes to filing taxes. The safest bet is probably to file your daughters’ taxes the same way you file your own unless you have a really complex situation. If that’s the case, ask some friends who use online filing services and take the advice of someone you trust.

Filing taxes really isn’t actually that scary. If you have a basic understanding of what you need and when to file, it’s good to just get into the habit of doing it on time. Thanks for the question!

TAYLOR J KOVAR
CHIEF EXECUTIVE OFFICER
CERTIFIED FINANCIAL PLANNER™