When Do I Start Doing Taxes? Key Steps to Get Started

Taxes are an unavoidable part of adulthood, and knowing when to start can save time, stress, and potential penalties. Whether you’re filing for the first time or unsure about deadlines, getting organized early makes the process smoother.

Understanding key dates, required documents, and possible extensions ensures you meet your obligations without last-minute scrambling.

Minimum Filing Criteria

Not everyone is required to file a tax return. Whether you must file depends on income, filing status, and specific tax situations. The IRS sets income thresholds that change annually based on inflation. For 2024 tax returns, single filers under 65 must file if they earn at least $14,600, while married couples filing jointly must file if their combined income exceeds $29,200. These amounts increase for those 65 and older due to the additional standard deduction.

Self-employed individuals must file if they earn at least $400 in net income, as they are subject to self-employment tax. Those receiving unemployment benefits, dividends, or capital gains may need to file if their total taxable income surpasses the threshold. Individuals who owe taxes on retirement account distributions, Social Security benefits, or early investment withdrawals may also be required to file.

Even if filing isn’t required, it can still be beneficial. Many taxpayers qualify for refundable credits, such as the Earned Income Tax Credit (EITC) or the Child Tax Credit, which can result in a refund even if no taxes were withheld. Those who had federal income tax withheld but earned below the filing threshold may also be eligible for a refund.

Gathering Source Documents

Having the right documents before starting a tax return prevents errors and missed deductions. Employers must issue W-2 forms by January 31, reporting wages and withheld taxes. Independent contractors and freelancers receive a 1099-NEC if they earned at least $600 from a client, though all income must be reported. Investment earnings are reported on various 1099 forms, including 1099-B for stock sales, 1099-DIV for dividends, and 1099-INT for interest income.

Bank statements and brokerage summaries help verify reported amounts, especially for those with multiple accounts. Homeowners receive a Form 1098 for mortgage interest paid, which may be deductible. Those who paid student loan interest receive a 1098-E, while students or parents paying tuition receive a 1098-T, which may qualify them for education credits like the American Opportunity Credit or the Lifetime Learning Credit.

Medical expenses, charitable contributions, and state or local tax payments can also impact tax liability. Medical costs exceeding 7.5% of adjusted gross income may be deductible, but receipts are required. Charitable donations over $250 require written acknowledgment from the organization. State and local tax payments, including property taxes and estimated payments, may be deductible up to the $10,000 cap set by the Tax Cuts and Jobs Act.

First Available Filing Dates

The IRS typically opens tax season in mid-to-late January, with e-filing for 2025 expected to begin around January 20. Those who file electronically with direct deposit often receive refunds faster, as the IRS processes most e-filed returns within 21 days. Paper returns take longer, sometimes exceeding six weeks due to manual processing.

Some taxpayers may need to wait for additional forms. Those with complex investments, such as real estate partnerships or REITs, often receive a Schedule K-1, which investment firms aren’t required to issue until mid-March. Filing before receiving all necessary documents can lead to errors and require an amended return. Tax software and professional preparers can help track missing forms to ensure accuracy.

Late Filing Penalties

Failing to submit a tax return on time can lead to penalties, especially for those who owe money. The Failure to File penalty accrues at 5% of the unpaid tax per month, capped at 25% of the total balance. If a return is more than 60 days late, the minimum penalty is either $485 or 100% of the unpaid tax, whichever is less. This penalty applies even if a taxpayer cannot pay their full balance immediately, so filing on time and arranging a payment plan is advisable.

For those who do not pay their tax liability by the deadline, a separate Failure to Pay penalty applies, starting at 0.5% per month and maxing out at 25%. If both penalties apply in the same month, the Failure to File penalty is reduced to 4.5%, keeping the total combined penalty at 5% per month. Interest also accrues on unpaid taxes, calculated at the federal short-term rate plus 3%, compounded daily.

Extension Filing Considerations

Taxpayers who need more time to prepare their returns can file an extension, which moves the deadline from April 15 to October 15. However, this extension applies only to filing the return, not to paying any taxes owed. The IRS requires estimated payments by the original deadline to avoid penalties and interest. Those who fail to pay at least 90% of their total tax liability by April 15 may face additional charges, even with an extension.

Submitting an extension is simple and can be done electronically using Form 4868 through tax software or the IRS Free File system. Those living abroad or serving in the military, particularly in combat zones, may qualify for automatic extensions beyond the standard six months. While an extension prevents the Failure to File penalty, interest on unpaid taxes continues to accrue, making it beneficial to estimate and pay as much as possible by the original deadline.