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4 Things to Know About Filing Taxes for the First Time

Maurie Backman, The Motley Fool

There are certain firsts in life that can be intimidating to say the least. Your first attempt at riding a bike. Your first go at driving a car. But if there's one first that doesn't have to be worrisome, it's filing your taxes for the first time. Here are a few pieces of information that'll help prepare you for the process.

1. You can do it yourself

If you're new to the world of taxes, you may be inclined to hire a professional to file on your behalf. In fact, an estimated 37% of Americans use tax preparers. But unless your return is particularly complicated, you may be better off saving your money and filing that return yourself. This particularly holds true if you aren't planning to itemize on your tax return.

Person with calculator filling out a tax form

IMAGE SOURCE: GETTY IMAGES.

Working Americans have two choices for filing taxes: taking a standard or itemized deduction. . With the former, you simply deduct $6,350 from your taxable income if you're a single filer, or $12,700 if you're married and filing a joint return. (Note that this is what the standard deduction looks like for the 2017 tax year; the standard deduction has nearly doubled for 2018.) With the latter, you add up all of your various deductions, such as mortgage interest and charitable contributions, in the hopes that they exceed the standard.

Of course, just because you're itemizing doesn't mean you won't be capable of doing your own taxes. But if you're a salaried employee taking the standard deduction with no outside sources of income, there's really no reason to waste money on a tax preparer.

2. You're better off filing electronically

It used to be the case that filing taxes meant filling out physical forms. But these days, taxpayers have the option to file electronically, and there are plenty of good reasons to go this route. For one thing, you're less likely to make a mistake with an electronic return. Whereas the error rate for paper returns is 21%, it's less than 1% for electronically filed ones.

Furthermore, you'll typically get your refund sooner if you file your taxes electronically. The IRS expects to issue most refunds within three weeks this year for electronic returns, but it'll probably take six to eight weeks to get your money back if you file on paper. Not only that, but your refund status will be available almost immediately once you file an electronic return, whereas you'll need to wait on that information if you file on paper.

3. Your chances of getting audited are lower than you'd think

Perhaps the most daunting aspect of filing a tax return is getting audited. But the reality is that less than 1% of tax returns are audited each year, and if you file electronically, your chances of landing on that list are even lower. Keep in mind, however, that you don't need to be rich to get flagged for an audit. In fact, filers who report no income are roughly 10 times as likely to get audited as middle earners.

Another thing you should know about getting audited is that there's a good chance it'll happen to you if you lie about your income. Whenever you get a tax document reporting income you earned, the IRS gets a copy as well, and if its system detects a mismatch, your return will get flagged. So if, for example, you're thinking you might hide the fact that you made $800 in freelance income last year, don't. It's not a risk worth taking.

4. You may be eligible to file for free

Each year, countless taxpayers are appalled to learn that there's a fee for filing taxes. But if you earn less than $66,000, you're in luck, because you can file your tax return for free. Just visit the IRS website for more information on how to go about it.

Though the idea of filing a tax return might shake you to your very core, don't be intimidated by what's actually a fairly painless process. Chances are, filing your taxes will take less time and effort than you'd think, and the sooner you start, the less stressed you'll be as the deadline approaches.

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