I'm a Tax Advisor: Here Are 6 Questions Gen Z Should Ask Before Filing
Members of Gen Z have reached several major milestones in recent years. Many of them are graduating from college and getting their first jobs. They’re also new to filing taxes. While reviewing W-2s or 1099s and preparing a return won’t make their parents’ eyes misty like other achievements, it’s still important that Zoomers file their taxes correctly. And that means asking the right questions...
To help Gen Z learn which questions they should ask themselves and their tax advisors before filing, MoneyLion turned to Mike Sibley, CPA, a partner at James Moore & Co.
“Today’s young professionals face financial realities that are very different from previous generations. Side hustles, student loans, gig income, investing apps, remote work and cryptocurrency are all part of the equation,” he said. “What seems straightforward on the surface can quickly become more complex than expected.”
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1. What Type of Income Did I Actually Earn?
The answer to this question may seem obvious, but Sibley reminds Zoomers that not all income is taxed the same way.
“If you worked a traditional job, you likely received a W-2,” he said. “But if you drove for a rideshare company, freelanced, created online content or sold products through digital platforms, you may receive one or more 1099 forms — or in some cases, no form at all. The IRS still considers that income taxable.”
Sibley says that understanding whether your income is classified as employee wages, self-employment income, investment income or digital asset gains can help you determine several key factors:
Whether you owe self-employment tax
Whether quarterly estimated payments are required
Which deductions you can legally claim
If you had multiple income streams this year, preparing your return may be more complex than simply entering information from a single form.
2. Do I Owe Self-Employment Tax?
Speaking of that freelance life, Sibley says Zoomers in the gig economy should ask whether they owe self-employment tax. Remember, unlike traditional employment, taxes typically aren’t withheld automatically from gig payments.
“Self-employment income is subject not only to income tax but also to self-employment tax, which covers Social Security and Medicare contributions," he said. "This can significantly increase what you owe. If no estimated payments were made throughout the year, you could also face penalties.”
Knowing whether you’re on the hook for self-employment taxes can help prevent unpleasant surprises — and potentially costly penalties.
3. Am I Eligible for Education Credits?
If there’s one thing Gen Z is known for — other than its creative slang — it’s prioritizing education. Unfortunately, that also means taking on student loans and other higher education expenses. But there may be a silver lining in the form of certain credits and deductions.
Sibley encourages Zoomers to determine whether they qualify for:
The American Opportunity Tax Credit
The Lifetime Learning Credit
The student loan interest deduction
“These credits and deductions can meaningfully reduce tax liability, but eligibility depends on income levels, enrollment status and who claims you as a dependent,” he said. “If your parents are still claiming you, that affects who can use the credit.”
4. Did I Trade or Hold Cryptocurrency?
Younger investors have shown strong interest in digital assets such as cryptocurrency. While crypto can feel informal or experimental, Sibley says many taxpayers do not realize that “buying, selling, trading or even using cryptocurrency to purchase goods can trigger taxable events.”
Many Zoomers assume that if they didn’t “cash out” into dollars, no tax applies. That’s not always correct.
“Crypto transactions may create capital gains or losses, and those must be reported,” he said. “Ignoring them can create problems later, especially as reporting requirements continue to expand.”
Even exchanging one cryptocurrency for another may create a taxable event.
5. Am I Still a Dependent?
For Zoomers stepping out on their own, knowing whether you’re still considered a dependent is critical. Sibley says whether someone can claim you as a dependent affects several factors:
Eligibility for credits
Standard deduction amounts
Stimulus or other relief payments
Education benefits
“Having an open conversation with parents or guardians before filing prevents duplicate claims and IRS processing delays,” he said.
Dependence status is based on IRS rules — not simply whether you live at home — so reviewing the criteria carefully is essential.
6. Should I Be Thinking Beyond This Year?
Gen Z has decades of earning potential ahead, which is why Sibley advocates using tax season as a springboard into long-term financial planning. Instead of viewing taxes as a once-a-year burden, he suggests using them to build stronger financial habits.
“If you're building income streams, launching a business, investing or planning major financial decisions, proactive tax planning matters,” he said. “Waiting until April to think about taxes limits your options.”
Sibley recommends asking:
Should I be making estimated tax payments?
Would forming an LLC make sense?
Should I contribute to a Roth IRA?
Am I tracking deductible expenses properly?
“These decisions are easier — and more beneficial — when made before year-end,” he said. “For Gen Z, the biggest opportunity is not just minimizing this year’s tax bill. It's establishing good financial systems early.”
The Bottom Line
Paying taxes can feel overwhelming, especially if you're filing on your own for the first time. But asking the right questions and seeking expert guidance when needed can help Zoomers file accurately and set themselves up for long-term financial success.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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