You’re a Tax-paying Adult, Now What?

An important rite of passage for young adults is taking responsibility for having their personal income tax returns prepared and filed.  It can be confusing for young adults to know if and when they are required to file, and what they are required to file. A good tax preparer will explain the basics and walk them through the process step by step. Following is a brief overview of some basics we like to share with young taxpayers, and you may want to share this article with young adults in your life.

Tax Return Filing Requirements.  How do you know if you need to file a personal income tax return this year? If your gross annual income is above the minimum federal filing requirement (in 2025, the minimum was $15,750), you must file a personal income tax return with the IRS (and possibly one or more states).[1] Even if your annual income is below the minimum filing requirement, you might still want to file a tax return because you might be entitled to a refund of withholding taken out of your paychecks.[2]

When do you need to file? The filing deadline for most federal and state personal income tax returns is April 15.[3]

What should I do with Tax Stuff? When you receive tax forms in the mail, always send a copy to your tax preparer. They may need it to determine whether you need to file something or take any actions. Following are some common items needed by your tax preparer.  

Form W-2. If you have a job, you will likely encounter a Form W-2 (Wage and Tax Statement) because W-2s are sent to most employees.[4] If you receive a W-2, send it to your tax preparer. Your tax preparer needs the information on your W-2(s) to fill out your personal income tax return.

Forms 1099. You might receive multiple Forms 1099 (Information Reports) if you earned money from sources besides your wage paying job.[5] Common Forms 1099 include Form 1099-NEC, -MISC, -DIV, and -INT.[6] Same as W-2s, if you receive Forms 1099, send them all to your tax preparer. Your tax preparer needs the information on your Form(s) 1099 to fill out your personal income tax return.

Both Forms W-2 and 1099 are typically mailed to you, so if you ever move, make sure to notify your employer/broker of your new address promptly, so that sensitive forms don’t get lost in the mail.[7] Sometimes these forms can also be found in an online portal. If you don’t get a W-2 or 1099 for the prior year by the end of January, reach out to request it.

Credits & Deductions.  Good news, you may qualify for credits and deductions. Credits are discounts on your taxes owed.[8] Common credits include higher education payments and putting money into retirement savings.[9] If you have a child, you may also qualify for a Child Tax Credit.[10] Click here to learn which credits apply to you. Don’t leave money on the table by missing credits.

Deductions are reductions to your annual income. [11] You can choose to take standard or itemized deductions, whichever gives you the larger reduction.[12] For most folks, the standard deduction is the best answer because itemizing your deductions requires keeping track of what you spent during the year with receipts, bank statements, medical bills, and the like.[13]

Common itemized deductions are your student loan interest,[14] mortgage interest,[15] charitable donations,[16] and state property and income taxes.[17] You (or your tax preparer) can apply deductions when filling out your personal income tax return. Click here to learn which deductions apply to you.

If you earn income from a side-job business, keep track of any expenses that you pay that are necessary to conduct that business.[18]  You may be able to deduct those expenses against your income.[19]  We suggest using Microsoft Excel, or, if your business is getting complex enough or you want the ability to run reports, a program like QuickBooks can be helpful.  Those 1099s mentioned above?  If you have a business and you make payments to any vendors for expenses, you need to get a currently dated IRS Form W-9 from each vendor prior to making that first payment, track all payments made, and issue a 1099 in January of each year for every vendor you paid, unless certain exemptions apply.  It is not optional; it is the law.  If you do not do it, you could be subject to fines, penalties and interest.  It is not enough for a vendor to tell you they are “exempt,” you need that currently dated W-9 for your records proving they are exempt.  If you are ever in doubt about whether you need to issue a 1099, issue one.

Send your tax preparer information on all these types of payments that you made during the year and any forms and statements you received in the mail about them.

Correspondence.  If you ever get a letter from the IRS or a state taxing authority, don’t panic, but don’t ignore it. It is normal to receive letters in the mail. Often, they are routine, but they can have important information your tax preparer needs. Sometimes they are wrong and your tax preparer will need to send a letter in response to correct the IRS or State. Other times, the letter informs of important action that needs to be taken. These matters are typically time sensitive, so don’t delay or wait until next tax season. Send anything like this to your tax preparer immediately when you receive it.

Estimated Tax Payments. If you owe income taxes, it is often due on April 15^th. However, you sometimes need to make estimated payments in advance. Estimated tax payments are quarterly payments that you pay yourself to the IRS or state to cover taxes on the income not reported on your W-2, such as earnings from interest, dividends, trading gains, self-employment (side-business), or rental properties.[20] Click here to learn if you are required to make estimated payments. If you are unsure whether you owe estimated payments, ask your tax preparer.

The dates for making personal federal and state estimated payments are generally as follows and there are penalties for being late or underpaying:[21]

• Quarter 1 due: April 15^th
• Quarter 2 due: June 15^th
• Quarter 3 due: September 15^th
• Quarter 4 due: January 15^th

What Next?  Long story short, if you don’t have a relationship with a tax preparer, develop one now. Don’t wait until the last minute to form that relationship because it can be nearly impossible to find a tax preparer in the thick of tax season.

When year-end arrives, don’t delay in gathering and submitting your tax documents. As soon as they arrive, forward them to your tax preparer, even if that means submitting things in a couple waves.

Carefully review your return when you receive it for signature and ask questions. A good tax preparer will be happy to talk you through any questions you have. The more you learn about your tax returns, the more confidence you will have next year. Like many life skills, knowing how to navigate your personal income tax filing requirements are skills you will need for the rest of your life, so it is best to address it head on. 

[1] Check if you need to file a tax return

[2] Check if you need to file a tax return

[3] Tax Day: What It Is, How It Works, and Special Considerations

[4] About Form W-2, Wage and Tax Statement

[5] Instructions for Forms 1099-MISC and 1099-NEC

[6] What are the Different Types of 1099 Forms?

[7] Gather your documents

[8] Credits and deductions for individuals

[9] Retirement Savings Contributions Credit (Saver’s Credit)

[10] Child Tax Credit

[11] Credits and deductions for individuals

[12] Id.

[13] Standard Deduction vs. Itemized Deductions: Which Is Better?

[14]Topic no. 456, Student loan interest deduction

[15] Can I deduct my mortgage-related expenses?

[16] Topic no. 506, Charitable contributions

[17] Topic no. 503, Deductible taxes

[18] Starting a Business and Keeping Records

[19] Id.

[20] Estimated taxes

[21] When to pay estimated tax