Getting your first job is a big step. You start earning your own money, receiving paychecks, and becoming more independent. But having a job also means dealing with something you may have never had to think about before: taxes.
If this is your first job, words like W-2, withholding, tax return, refund, and deduction may sound confusing. That is completely normal. Most people are not taught how to file a tax return before they start working.
The good news is that filing your taxes does not have to be complicated. Once you understand the basics, the process becomes much easier.
Why Are Taxes Taken Out of My Paycheck?
When you receive your paycheck, you may notice that the amount you actually receive is less than the amount you earned.
For example, you might earn $800 during a pay period but receive less than $800 in your bank account.
That is because your employer may take money out of your paycheck for federal income taxes, California state income taxes, Social Security, Medicare, and other required deductions.
This is called tax withholding.
The amount withheld during the year helps determine whether you owe additional income tax when you file your tax return or whether you may receive money back as a tax refund.
What Is a W-2?
If you work as an employee, your employer will generally give you a document called a Form W-2 after the year ends. Do not throw it away.
Your W-2 shows important information about your job, including how much money you earned and how much tax was withheld from your paychecks.
You will normally need this information when preparing your tax return. If you worked for more than one employer during the year, you may receive a separate W-2 from each employer.
Do I Need to File a Tax Return?
Not every person is required to file a federal income tax return. Whether you need to file can depend on factors such as your age, income, filing status, and the type of income you received.
However, even if you are not required to file, there are situations where filing a return may still benefit you. For example, if federal or state income taxes were withheld from your paychecks, filing may allow you to claim a refund if you qualify.
This is one reason it can be helpful to have a tax professional review your situation instead of assuming you do not need to file.
What Is a Tax Refund?
A tax refund is money returned to you when you have paid more income tax during the year than you ultimately owe.
Think of it this way: your employer sends some of your money to the government throughout the year. When you file your tax return, the numbers are calculated based on your income and tax situation.
If too much qualifying income tax was withheld, you may receive some of that money back. A refund is not guaranteed, and the amount is different for everyone.
What Information Should You Keep?
Once you start working, it is a good idea to keep your important tax documents together.
Keep your W-2 forms, other tax forms you receive, and records related to other income you earned. You should also keep your current mailing address updated with employers so important tax documents can reach you.
If you move or change jobs, do not forget about your previous employer. You may still need a W-2 from that job when tax season arrives.
What If Your Parents Still Claim You?
Getting your first job does not automatically mean your parents can no longer claim you as a dependent.
Dependency rules involve several factors, including your age, whether you are a student, where you lived, and how much financial support you provided for yourself.
This can become confusing for young workers filing for the first time. Before filing, make sure you understand whether someone else can claim you as a dependent.
Your First Tax Return Doesn’t Have to Be Stressful
You do not need to become a tax expert just because you started working.
Your first tax return is also a good opportunity to learn how taxes work. Understanding your paycheck, keeping your tax documents, and learning basic tax terms can make managing your money easier as you get older.
And if you do not understand something, ask for help before guessing.
Local Tax Can Help With Your First Tax Return
If you recently started your first job and have never filed taxes before, Local Tax can help guide you through the process in simple terms.
Our team can review your tax documents, explain what the information means, help determine your filing requirements, prepare your tax return, and answer questions you may have along the way.
You do not need to understand every tax form before asking for help. Bring the tax documents you received, and our team can help you understand what comes next.
Whether you are a high school graduate starting your first job, a college student working part-time, or a young adult beginning your career, Local Tax is here to make filing your taxes easier to understand.
Local Tax
9429 Somerset Blvd
Bellflower, CA 90706
(562) 925-2203
Starting your first job is a major milestone. Filing your first tax return is another. Local Tax can help you get started and make sure you understand what you are filing.