25% of Gen Zers say they’ll need a therapist to deal with tax filing stress

Apr 1, 2024 11:10 pm | News

Taxes aren’t enjoyable for people of any age, but they can be particularly stressful for younger generations, many of whom may have never filed before. 

In fact, 1 in 4 Gen Z taxpayers said they’ll need a therapist to deal with the stress of tax-filing season, according to a recent Cash App Taxes survey. Additionally, 54% said filing taxes has either brought them to tears in the past or expect it to this year.

Richard Pianoforte, managing director of tax at Fiduciary Trust International, is surprised that number isn’t higher. 

“I have children in that age group…and I don’t think they’re prepared for it, school doesn’t prepare them for it, and it’s totally understandable,” he says.

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Even figuring out which documents you need to file can be anxiety-inducing, with 62% of first-time filers saying they aren’t sure where to get their W-2s or 1099s. 

“Make sure you know what [documents] you have,” Pianoforte says. “I think that’s the biggest issue when you ask younger folks, ‘Did you get a 1099 from your bank?’ Sometimes they don’t even know what a 1099 is.”

Gen Z’s tax document checklist

To take the stress out of taxes, young filers should start by making a list of necessary documents to form their own guide, which can be used this year and in the future, says Pianoforte.

Read on to learn 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 a paycheck or earned at least $600 in 2023. This form reports the income your employer paid you as well as how much it withheld in taxes.

Employers are required by the Internal Revenue Service to mail out W-2s by Jan. 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 HR department or payroll processor, says Pianoforte.

If you still don’t have a W-2 from your employer, contact them to make sure they have the right address on file.

People who worked as freelancers or independent contractors last year will receive a 1099-NEC form from their employer instead of a W-2 to report income. 

2. Form 1099-INT

Thanks to high interest rates in 2023, you might have received a 1099-INT form from your bank if you earned $10 or more in interest on your savings account.

Look out for this even if you haven’t received one before. “In prior years, it could have been under $10, so they didn’t get that form,” Pianoforte says.

You can find the 1099-INT form by logging into your bank account and following directions to tax documents. Other interest-earning products, like investment accounts, will also have a 1099-INT form.

3. Form 1099-MISC or other crypto documents

Roughly 55% of Gen Z investors currently invest in cryptocurrency — and it’s their responsibility to report any crypto earnings to the government when filing taxes. 

“People still think that crypto is kind of invisible to regulators,” Shehan Chandrasekera, a certified public accountant, told CNBC Make It. “Truthfully, there are so many ways the IRS knows you’ve had 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 get a form from your exchange, “that doesn’t mean you don’t need to report it,” says Pianoforte. 

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 on crypto transactions is also helpful for answering more detailed questions about how to report crypto on your taxes.

4. Form 1098-T

If you’re paying college tuition, a 1098-T form will help determine which education-related tax credits you’re eligible for. This form is usually found through your school directly, says Pianoforte. 

It’s important to note that your 1098-T doesn’t include student loans. If you paid $600 or more in student loan interest, you should have received a 1098-E, which can be found through your loan servicer.

Other resources for young filers

Almost half of the members of Gen Z surveyed by Cash App Taxes were unsure of the tax deadline. You’ll want to file your federal individual income tax return by April 15, also known as Tax Day. 

Luckily, there are many resources online to help young filers navigate tax season. Pianoforte recommends checking out the IRS website, which has an Interactive Tax Assistant tool that can address questions specific to your individual tax circumstances, as well as an extensive FAQ page.

“I would start there,” he says. “[The IRS site] is a great resource, and it has gotten much better throughout the years.”

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