The rule of thumb generally demands that people who earn some sort of income must file taxes each year. However, if you plan on filing taxes for the first time this year, you may be uncertain of how the tax filing process actually works. Before you begin your returns, you would do well to understand some basic details that could work in your favor. These tips can financially and legally protect you during tax time this year. 

Know if You are Your Parent's Dependent

In your rush to embrace adulthood, you may have overlooked the fact that your parents legally can claim you as a dependent. If you are under a certain age or you have not made enough money to file your own taxes, your parents can claim you as a dependent if they have contributed to most of your financial and physical upkeep this past year.

Even if you are away at college, you can still be claimed by your parents if they are paying your tuition, paying for your insurance and medical bills, or helping you out in other key financial ways. If your own income falls below the required limit for filing, your parents have the right to claim you on their own taxes.

Get Your Paperwork Organized

If you can file taxes this year, you should make it a point to get organized as soon as possible. You will need your W-2 form or 1099, depending on whether you are an employee or an independent contractor. You will also need to gather documents like:

• Medical expenses
• Utility expenses if you work from home and want to claim them as business-related costs
• Paid student loan interest documentation
• State income and food tax if you plan to file for the Homestead tax credit

Having all of these papers organized and ready to go can shorten the amount of time it takes to file your taxes.

Choose Your Filing Method

As a tax filer, you have several options available to you when it comes to filing. You can hire a tax firm to file your taxes for you. You can also do them yourself online using one of the reputable sites now available.

Many people, however, still favor the tried and true method of preparing their taxes by hand. You can go to your local library and find a host of tax forms and booklets that you can fill out and then mail to the IRS. Some people believe that they make fewer mistakes on their taxes by filing them on paper rather than electronically.

Know Your Deductions

If you cannot be claimed as anyone's dependent, you may be able to claim several deductions on your taxes. Money that you have paid into rent, food tax, state tax, and other expenses may be returend to you through a federal or state refund.

If you are a parent, you can also claim the Earned Income Credit if you meet the required criteria. Claiming the EIC requires that you meet the criteria perfectly, however, which is why many parents use professional tax companies to help them take advantage of this deduction.

File in a Timely Manner

The IRS generally starts accepting returns the second or third week of January. You have from that time until April 15 to file your taxes. With that in mind, you should resolve to filing your returns in a timely manner.

If you rush it and file too soon, you could make mistakes and miss out on important deductions. If you file too late, you could face having to pay penalties. Rather than face either scenario, you should make it a point to find spare time in your schedule and file your taxes in a calm, yet timely manner so your return will be accepted the first time.

Filing taxes for the first time may seem like an exciting, yet overwhelming prospect. You can make it easier by keeping these tips in mind this year.