First, place your cursor anywhere within your paragraph. Go to the Home tab and in the Parargraphs section, click the dialog icon on the bottom right corner of the Paragraph section.

When you click that, a dialog box pops out:

In the Special Field of the Paragraph dialog box, you tell Word you want to indent the first line by choosing First Line from the menu options. In the By field, you tell Word the amount, in inches by which you want to indent. Then click OK.
If you want to indent a whole paragraph youuse the indentation fields in the page layout tab. Indentation allows you to indent your paragraph from the left and/or right margin. You may find this necessary when you are quoting a large block of text or you want to add a picture next to the paragraph. To do this, put your cursor in any part of the paragraph you want lto indent. Then on the Page Layout tab, on it's Paragraph section, you will find the Indents scale.

Change the amount you want to indent the paragraph from the left or right margins until you find a setting that's suitable. When you adjust this, Word will apply it to the paragraph.
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