Taxes aren’t pleasant for people of any age, but they can be especially stressful for younger generations, many of whom may have never filed a return before.
In fact, 1 in 4 Gen Z taxpayers said they would need a therapist to deal with the stress of tax season, according to a recent Cash App Taxes survey. In addition, 54% said filing taxes had made them cry in the past or expected it to happen this year.
Richard Pianoforte, managing director of tax at Fiduciary Trust International, is surprised that this figure is not higher.
“I have kids in that age range…and I don’t think they’re prepared for it, school doesn’t prepare them for it, and that’s completely understandable,” he says.
Even figuring out what documents you need to file can be anxiety-inducing, with 62% of new filers saying they don’t know where to get their W-2 or 1099.
“Make sure you know what (documents) you have,” Pianoforte says. “I think that’s the biggest problem when you ask young people, ‘Did you get a 1099 from your bank?’ Sometimes they don’t even know what a 1099 is.”
Gen Z Tax Document Checklist
To reduce tax-related stress, young filers should start by making a list of documents needed to put together their own guide, which can be used this year and in the future, Pianoforte says.
Read on to find out the main documents you’ll need and where to find them.
1. Form W-2
The first form you’ll want to collect is your W-2, or Wage and Tax Statement. You will receive a W-2 form from your employer if you worked for pay or earned at least $600 in 2023. This form shows the income your employer paid you and the amount withheld in taxes.
The Internal Revenue Service requires employers to send W-2s by January 31, but if you don’t have a paper copy of the form, don’t worry: Some employers also make W-2s available online via your human resources. payroll department or processor, Pianoforte says.
If you still don’t have a W-2 from your employer, contact them to make sure they have the correct address on file.
People who worked as freelancers or independent contractors last year will receive a Form 1099-NEC from their employer instead of a W-2 to report their income.
2. Form 1099-INT
Thanks to high interest rates in 2023, you may have received a Form 1099-INT from your bank if you earned $10 or more in interest on your savings account.
Be careful even if you’ve never received one before. “In previous years it might have been less than $10, so they didn’t get that form,” Pianoforte says.
You can find Form 1099-INT by logging into your bank account and following the instructions to access the tax documents. Other interest-earning products, like investment accounts, will also have a 1099-INT form.
3. Form 1099-MISC or other cryptographic documents
Around 55% of Gen Z investors are currently investing in cryptocurrencies – and it is their responsibility to report any crypto income to the government when filing taxes.
“People still think that crypto is somehow invisible to regulators,” Shehan Chandrasekera, a CPA, told CNBC Make It. “The truth is, the IRS knows in many ways that you have something to do with crypto.”
Centralized exchanges like Coinbase should send you a 1099-MISC form if you earned $600 or more last year. But even if you don’t receive a form from your exchange, “that doesn’t mean you don’t need to report it,” Pianoforte says.
Keeping track of your crypto transactions can be difficult, but tax software tools like CoinTracker or Koinly can help generate the necessary tax forms when filing, Douglas Boneparth, certified financial planner and president of Bone Fide Wealth, told CNBC Make It.
The IRS’s frequently asked questions about crypto transactions are also helpful in answering more detailed questions about how to report cryptocurrencies on your taxes.
4. Form 1098-T
If you pay tuition, a Form 1098-T will help you determine which education tax credits you are eligible for. This form is usually found directly through your school, Pianoforte says.
It’s important to note that your 1098-T does not include student loans. If you paid $600 or more in interest on a student loan, you should have received a 1098-E, which you can find from your loan servicer.
Other resources for young filers
Nearly half of Gen Zers surveyed by Cash App Taxes were unsure about the tax deadline. You will need to file your federal personal income tax return by April 15, also known as Tax Day.
Fortunately, there are many online resources to help young filers get through tax season. Pianoforte recommends checking the IRS website, which has an interactive tax assistant tool that can answer questions specific to your individual tax situation, as well as a detailed FAQ page.
“I would start there,” he said. “(The IRS site) is a great resource, and it’s gotten a lot better over the years.”
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