Tax season can be challenging for many people, but a recent survey found it especially stressful for Gen Z taxpayers, with one in every four expressing a need for therapy to cope with the pressure. 

First-Time Tax Filers' Struggles

According to the Cash App Taxes survey, 54% of Gen Z respondents have either shed tears during past tax seasons or anticipate doing so this year. Experts believe that the amount of stress among younger taxpayers stems from educational institutions failing to fully prepare youngsters for the complexity of filing taxes (via CNBC).

A significant challenge faced by first-time filers is knowing which documents they need. A staggering 62% of these individuals admit to being unsure about obtaining essential forms such as W-2s or 1099s. CNBC emphasizes the importance of being aware of one's documents, urging young filers to compile a checklist to ease the process.

Important Documents for First-Time Tax Payers

Key documents for tax filing include the W-2, which reports income and tax withholdings, and the 1099-INT, which is particularly important for those earning interest from savings accounts. 

Additionally, individuals involved in cryptocurrency investments should be vigilant about reporting their earnings, as centralized exchanges like Coinbase may issue 1099-MISC forms for earnings exceeding $600.

Education-related expenses can also impact tax filings. Those paying college tuition should watch out for the 1098-T form, which helps determine eligibility for education-related tax credits. However, it is essential to note that this form doesn't cover student loans, for which a separate form, the 1098-E, is necessary.

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Online Tools to Help with Tax Filing

As tax season approaches, resources are available to assist young filers. The IRS website offers tools such as the Interactive Tax Assistant and an extensive FAQ section tailored to individual tax circumstances. Additionally, tax software tools like CoinTracker and Koinly can help streamline the process, especially for crypto transactions.

Despite these resources, a concerning trend emerges regarding where young taxpayers seek advice. A survey conducted by Prolific indicates that a staggering 79% of American millennials and Gen Zers turn to social media for financial and tax guidance. While platforms like TikTok, Instagram, and YouTube offer accessible information, caution is advised.

The IRS warns against the prevalence of misleading advice on social media, highlighting instances where users have been misled about tax forms and potential refunds. 

In light of these challenges, the IRS's "Dirty Dozen" list serves as a guide to identify common tax scams and misinformation prevalent on social media platforms. Tax professionals advise users to exercise caution and rely on credible sources when seeking tax advice online.

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