18 Tax Moves for Beginners: Simple Tips That Could Save You Thousands
Taxes feel confusing when you’re just starting out. Forms, deductions, credits, it all sounds like a foreign language. Mess up, and the IRS might take more than its fair share. Get it right, and you could keep thousands in your pocket.
A recent survey found that 44% of tax filers stress over doing their taxes, and it’s even worse for younger generations. 51% of Gen Z and 48% of millennials worry about missing deductions, filing wrong, or owing more than expected.
This fear keeps too many people stuck, avoiding what could actually be a huge financial opportunity.
This article breaks it down into simple, practical steps. Choosing the right filing status, grabbing every deduction, and using tax credits can shrink your bill fast. The IRS isn’t going to remind you what you’re owed, you need to take advantage of every break available.
Before making any big tax decisions, talk to a real tax professional who knows what they’re doing. I am sharing the tax rules here, but I do not know your specific situation.
Let’s get into it.
Table of Contents
Choose the Correct Filing Status
The IRS loves labels, and picking the right filing status can change your entire tax bill. There are five options: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er).
Each one has different tax brackets, standard deductions, and rules. If you’re married, filing jointly usually saves more, but if one spouse has a ton of medical bills or student loans, separate returns could be better.
Head of Household comes with a bigger deduction and lower tax rates, but you need to support a dependent and pay more than half the household costs. Get this wrong, and you could either miss out on savings or owe a painful amount come tax time.
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Understand the Standard Deduction
The standard deduction is the IRS’s way of saying, “Don’t bother with receipts, we’ll just knock this much off your taxable income automatically.” For 2024, it’s $14,600 for single filers, $29,200 for married couples filing jointly, and $21,900 for heads of household.
If your deductible expenses like mortgage interest, medical costs, and donations add up to more than the standard deduction, itemizing could be worth it. But for most beginners, taking the standard deduction is the easiest and most tax-efficient move.
It lowers your taxable income instantly, and you don’t have to justify a thing.
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File Electronically and Use Direct Deposit
Paper tax returns are slow, outdated, and prone to mistakes. The IRS processes electronic filings much faster, often within 21 days, while mailed returns can take six weeks or more.
Direct deposit makes things even smoother, getting refunds into your account without the risk of lost checks or delays. If you’re owed money, why wait longer than necessary? Filing online also reduces errors since tax software catches common mistakes before they cause problems.
The IRS even offers free e-filing options for those with an income below $84,000.
Maximize Retirement Contributions
Throwing money into a 401(k) or IRA isn’t just about future you, it’s a tax move that lowers your taxable income today. In 2024, you can contribute up to $23,000 to a 401(k) and $7,000 to an IRA ($8,000 if you’re 50+).
Every dollar you put in reduces the income the IRS can tax, and if your employer offers a 401(k) match, that’s free money. Traditional accounts get you a tax break now, while Roth accounts mean tax-free withdrawals later.
Either way, contributing means keeping more of your money and building long-term wealth at the same time.
Related Video: The Top Mistakes People Make with Their 401ks and How to Avoid Them
Use IRS Free File if Eligible
For those with an adjusted gross income of $84,000 or less, the IRS offers free tax filing software through its Free File program. These tools handle calculations, deductions, and credits automatically, making filing easier.
Even if income is above the limit, Free Fillable Forms are available for those comfortable doing the math themselves. Paying for tax prep isn’t necessary when the IRS provides legit free options.
Claim the Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) is one of the most overlooked tax breaks out there, and it’s a big one. This is a refundable credit, meaning if it’s bigger than what you owe, you actually get money back.
For 2024, the EITC ranges from $632 (no kids) to $7,830 (three or more kids). The catch? You need earned income from a job or self-employment, and your total income has to fall below a certain limit.
For a single filer with no kids, that limit is $18,591. For a married couple with three kids, it’s $66,3819. If your income qualifies, this credit can boost your refund by thousands, so don’t miss it.
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Deduct Student Loan Interest
If you’re paying off student loans, at least you get a little tax break. The IRS lets you deduct up to $2,500 of student loan interest from your taxable income. It’s not a huge amount, but it helps. This deduction applies even if you don’t itemize, and it directly reduces the amount of income the IRS can tax.
The only downside? If your income is too high, over $80,000 for single filers or $165,000 for joint filers, the deduction starts phasing out and is completely eliminated at $95,000 for single filers and $195,000 for joint filers.
If you’re still making payments, this is one of the easiest tax moves to take advantage of.
Consider Itemizing Deductions
Most taxpayers stick with the standard deduction, but if expenses like mortgage interest, medical bills, and charitable donations add up to more, itemizing could save more money.
In 2024, medical expenses exceeding 7.5% of adjusted gross income are deductible. Mortgage interest on loans up to $750,000 also qualifies. Charitable donations are deductible, but only if made to IRS-approved organizations.
If total deductions don’t exceed the standard deduction amount, itemizing isn’t worth it, but for homeowners and those with high medical bills, it can make a difference.
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Utilize Education Credits
College isn’t cheap, but tax credits can soften the blow. The American Opportunity Tax Credit (AOTC) covers 100% of the first $2,000 in qualified education expenses and 25% of the next $2,000, for a max credit of $2,500 per student.
The Lifetime Learning Credit (LLC) offers 20% back on up to $10,000 in expenses, worth up to $2,000 per tax return. The AOTC is the better deal, but it only applies for four years. The LLC doesn’t have a time limit, so it works for grad school or part-time classes.
Both of these reduce your tax bill dollar for dollar, and the AOTC is partially refundable, meaning you could get money back even if you don’t owe anything.
Keep Accurate Records
The IRS isn’t a fan of “I swear I had a receipt.” If you want to claim deductions, credits, or business expenses, you need proof. That means keeping W-2s, 1099s, and records of student loan payments, charitable donations, and medical expenses.
If you freelance or have a side hustle, keeping track of income and expenses is even more important, because the IRS will come knocking if your numbers don’t add up. Digital apps make this easy, and setting aside a few minutes each month to update records beats scrambling during tax season.
Good records don’t just help you avoid audits, they also make sure you don’t miss out on tax savings.
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Beware of Tax Scams
Tax season brings out scammers trying to steal refunds or personal information. The IRS will never call, email, or text demanding payment or threatening arrest. If someone claims to be the IRS and asks for payment through gift cards, wire transfers, or cryptocurrency, it’s a scam.
Fake tax preparers are another problem, promising huge refunds but filing with false information. That kind of mistake could trigger an audit, leaving you on the hook for penalties and back taxes.
Always use a trusted tax professional or verified tax software to avoid getting scammed.
Contribute to a Health Savings Account (HSA)
For those with high-deductible health plans, an HSA is a powerful tax tool. Contributions are tax-deductible, funds grow tax-free, and withdrawals for medical expenses stay untaxed.
In 2024, limits are $4,150 for individuals and $8,300 for families, with an extra $1,000 for those 55 and older. Unused money rolls over, so unlike flexible spending accounts (FSAs), there’s no rush to spend it.
Keeping money in an HSA long-term can turn it into a backup retirement account, since after age 65, withdrawals can be used for anything, taxed like regular income.
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Check for State Tax Benefits
Federal taxes get most of the attention, but state tax rules can make a big difference. Some states, like Florida, Texas, and Tennessee, don’t tax income at all, while others, like California and New York, have some of the highest rates.
Many states offer credits for renters, homeowners, or education expenses, which get overlooked. If a refund seems smaller than expected, state-level deductions and credits could be the missing piece.
Live Here And Save More: 21 States With the Best Tax Breaks
Understand Taxable vs. Non-Taxable Income
Not everything counts as taxable income, and knowing the difference keeps more money in your pocket. Wages, freelance payments, rental income, and investment profits all get taxed.
Gifts, inheritances, life insurance payouts, and some disability benefits don’t. Scholarships used for tuition and required fees are tax-free, but money spent on room and board is taxable. Selling personal items at a loss? No taxes owed. Sell for a profit? That’s taxable.
Understanding these differences avoids unnecessary tax payments and surprises at filing time.
Plan for Estimated Taxes if Self-Employed
Getting paid without taxes withheld feels great, until the IRS asks for its cut. Freelancers, gig workers, and business owners must pay estimated taxes every quarter if they expect to owe at least $1,000 at tax time.
Skipping payments leads to penalties, even if a refund is expected later. The easiest way to stay ahead? Set aside 25-30% of income for taxes and make quarterly payments on April 15, June 17, September 16, 2024, and January 15, 2025.
Keeping records of business expenses helps too, since deductions for home offices, equipment, and travel reduce taxable income.
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Keep Track of Charitable Contributions
Giving to charity feels good, and it lowers taxable income, but only when done correctly. Donations must go to IRS-approved organizations to qualify, and cash contributions over $250 need a written acknowledgment.
Non-cash donations like clothes or furniture also count, but fair market value must be estimated. Driving for charity? Mileage can be deducted too, at $0.14 per mile, but this rate is fixed by law and does not change annually.
Keep records, since the IRS won’t just take your word for it.
Stay Updated on Tax Law Changes
Tax rules change constantly, and missing an update could cost money. For example, income limits for credits and deductions adjust yearly for inflation, and laws affecting retirement accounts, business deductions, or child tax credits can shift with new legislation.
Staying informed through the IRS website or a qualified tax professional prevents missed opportunities and costly mistakes. The tax code isn’t designed to be easy, but knowing the latest rules puts more money in your pocket.
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File on Time (or Request an Extension If Needed)
Missing the April 15, 2025 tax deadline comes with penalties and interest, making a bad tax situation worse. Those who need extra time can request an automatic extension until October 15, 2025, but that doesn’t delay payments, only the paperwork.
Any taxes owed must still be paid by April 15 to avoid penalties. If a refund is expected, filing late won’t cost extra, but waiting too long could mean losing the refund entirely.
The IRS only allows three years to claim a refund before it’s gone for good.
Smart Taxes for Beginners
Taxes aren’t exciting, but keeping more of your money definitely is. The right tax moves can keep thousands in your pocket instead of handing it over to the IRS. Filing status, deductions, and credits all make a difference, and missing even one can cost serious money.
The tax code isn’t designed to be easy, but understanding the basics puts you ahead of the game. Filing smarter now sets up a lifetime of keeping more of what’s yours.
Don’t guess, use every advantage available and make tax season work for you.
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