As a millennial, you might have a surprisingly complex tax situation. Owing student loans, working multiple side hustles, and investing at a young age are all complicated scenarios come tax season.
Because of this, filing your own taxes often comes with added stress and unknowns. To help streamline this chore, here are eight tax tips for filing taxes when you have multiple streams of income and various financial responsibilities.
1. Don't Miss the Tax Deadline
The most important part of filing your taxes is doing it by the deadline. The IRS doesn't mind if you need more time or you don't have the funds to pay the entire tax bill right now, but you must take the proper steps to alert them.
Decide which route to take: Either file your taxes completely, request an extension, or apply for a payment plan. Whatever you do, don't ignore the situation and hope it will just go away.
If you miss the tax deadline without requesting an extension, you could be subject to penalties, interest, and late fees.
2. Choose the Right Tax Software
If your tax situation is fairly simple, you may feel comfortable filing your own taxes using a DIY tax software program. There are many reputable programs available, so shop around to find a good deal.
You may even qualify for free filing services. If you earn less than $64,000 a year, the IRS offers free software to help you file your taxes at no charge.
3. Write Off Side Hustle Expenses
Sure, you know how to file taxes for the income from your day job. But if you also earn money through a side hustle, you may have extra considerations.
For example, you may be able to write off certain expenses you incurred through your side hustle. If you purchased equipment or office supplies, these costs can be deducted on your tax return. Doing so reduces your taxable income, meaning you would owe less to the government.
4. Maximize Education Tax Savings
If you have student loans, you could save money come tax time. Nearly all education costs, whether it's interest paid on your student loans or additional classes you've taken for continuing education requirements, are tax deductible. See a full list of education credits and deductions here.
List out all of your higher education expenses to see which ones you qualify for. If you're unsure, speak to a tax professional who can offer additional tax tips, or follow the prompts in your tax software.
5. Inquire About the Saver's Credit
The longer you wait to start saving for retirement, the less time compound interest will have to work on your behalf. To encourage people to stash away money in a retirement account, the IRS offers a tax credit called the Saver's Credit.