The deadline to file taxes is creeping up and with it are the tears of young people anxious about filing this year.

A recent Cash App Taxes survey found that 54% of Gen Zers have cried over filing their taxes. Stress around taxes isn’t new and impacts every generation but with Gen Z having the most side hustles in 2023 and student loan interest deductions at play, many young people are nervous about how to get started in the tax filing process.

“One big reason I think many young folks have so much anxiety around doing their taxes is that by and large we don’t teach high school or college students how to file their taxes. The process can be intimidating – even for experienced filers. Not knowing how to file or when can be overwhelming,” Caroline Bruckner, professor and managing director of the Kogod Tax Policy Center at American University in Washington, D.C., told Reckon.

The strain of tax season had 33% of Gen Z Cash App Taxes survey respondents admitting that they would rather give up all social media if it meant they didn’t need to file their taxes.

“It’s clear that many Americans — but particularly younger filers —view filing their taxes as a confusing, anxiety-inducing experience that’s painful to navigate,” said Erika Carney, product lead for Cash App Taxes.

Reckon chatted with Bruckner, a tax expert about tips for young people and how they should approach taxes this season.

Get your papers in order

The Internal Revenue Service (IRS) website advises all taxpayers to gather year-end income documents. You receive a W-2 form from a full- or part-time job. You receive a 1099 form if you were self-employed, either full-time or as a contractor, which includes most (legal) side hustles. These forms should be mailed to taxpayers before tax season.

Holding on to information that can support a filer’s tax return, like past receipts and voided checks can also be helpful.

All taxpayers should have their Social Security numbers, bank account and routing numbers available when filing. This will streamline the process and ensure their information and possible tax returns will be deposited into the correct account. The deadline to file taxes is April 15, 2024.

Who should do your taxes?

Deciding between paying a tax preparer professional or using tax tools and services like TurboTax and H&R Block comes down to the intricacy of a person’s tax situation. Most Americans can use free federal tools to file their taxes.

A Small Business Tax Literacy Project in 2023, co-led by Bruckner found that 87% of respondents hired someone or bought software to do their taxes.

If taxpayers work a full-time or part-time job where they receive a W-2 form, they can likely use online tax tools or file for free, while people who are self-employed or have several investments might need the assistance of a tax preparer professional.

Even young people with multiple side gigs should consider consulting a professional, but because paying someone isn’t always affordable Bruckner suggests checking out the VITA locator tool on IRS.gov to find volunteer income tax assistance preparation sites in your state.

“There are great free options available for young folks to get help with their taxes. First, go to IRS.gov and check and see if you’re eligible for DIRECT FILE, which is the new IRS free tax preparation services,” Bruckner told Reckon.

Currently, 70% of taxpayers qualify to file their taxes for free, but almost nobody does. As of 2024, the IRS is offering a free Direct File service for individuals to file their 2023 federal taxes online. The free Direct File service is a new pilot launching in 12 states with plans to expand to all states next year.

The launch of the IRS free Direct File service will be in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.

Side hustles and taxes

More Americans than ever have picked up extra work in addition to their full-time jobs to make ends meet.

With the average American’s wages remaining the same for the past decade, more young people than ever have part-time jobs. Close to 53% of Gen Zers are working one or more side gigs, 50% of Millennials and 40% of Gen X have a side hustle.

These side gigs help younger generations supplement their income, but oftentimes impact them when it comes time for tax season.

“People don’t always remember to keep track of their side hustle income and expenses. Also, people don’t realize they need to pay self-employment tax (i.e., Social Security and Medicare taxes) on income earned outside of traditional employment. These mistakes can cause problems down the road,” Bruckner explains.

Having a side gig or freelance job means keeping a detailed account of expenses is crucial to ensure the taxpayer doesn’t owe money after tax season.

Many tax experts suggest obtaining an Employer Identification Number (EIN), used to identify a business entity, from the IRS and a business bank account where the income from a side gig is deposited, making it easier to differentiate whether a taxpayer’s income is from a full-time job or a side gig.

Tax breaks for the young and Gen Z

While there aren’t specific tax breaks for young people, there are ways Gen Z can capitalize on deductions that may apply to them.

“There are important deductions younger taxpayers may need to be aware of: the student loan interest deduction and the qualified business income deduction come to mind,” Bruckner told Reckon.

The student loan interest deduction is a way for federal student loan borrowers who qualify to deduct up to $2,500 of student loan interest per tax return per tax year. They can claim the tax deduction as an adjustment to income by using form 1098-E, from their lender.

Since federal student loan interest and payments restarted last fall, many Gen Z borrowers made their first payment for the first time in 2023 and could qualify for the student loan interest deduction.

Gen Z taxpayers may also be eligible for the qualified business income deduction, a way for self-employed and small-business owners to deduct up to 20% of their business income from their taxes. Any taxpayer with sole proprietorships, partnerships, S-corporations or limited liability companies (LLCs) are eligible.

Because 53% of Gen Z has a side gig that aligns with a qualified business they might also be applicable for the deduction.