What is the first step in filling out a federal and state individual income tax return?

The first step in filling out a federal and state individual income tax return is to collect necessary documents such as W-2 and 1099 forms. This step is crucial because these documents provide the essential information needed to accurately report income.

W-2 forms show wages earned from employers, including taxes withheld, while 1099 forms report various types of income, such as freelance work or passive income. Gathering these documents ensures that you have a complete picture of your earnings for the tax year, which is the foundation for accurately completing your tax return. Once you have all your income information in hand, you can proceed to work on deductions, credits, and other tax-related details with a clearer understanding of your financial situation.

Understanding your income is the starting point of the tax preparation process, making this step integral before considering other aspects like potential tax credits or filing extensions.