Filing your taxes is challenging, requiring much information and complex calculations. It can be stressful because the U.S. tax code is quite detailed and requires a license to understand it (accountants go through a lot of education to be able to help people navigate the system). Yet, there are some basics you should understand.

Who Needs to File a Tax Return

The first step is to determine if you need to file taxes. You must file with the IRS if you are a U.S. citizen or a permanent resident who works in the U.S. and meets the annual minimum income requirements. You also should consider filing your taxes if you have had any federal income tax withheld from your paycheck throughout the year. You may also need to file a tax return if you made estimated taxes during the year or if you are qualified to claim tax credits.

You should consider several factors when deciding whether you need to file a tax return:

• Verify if your income level meets the IRS minimum requirement for filing by checking their website.
• You should ascertain your filing status, as this affects the income thresholds for filing.
• If you are over 65, determine whether your retirement income is subject to taxation.

Important Tax Deadlines

It is critical to know when you need to file your taxes. Typically, your taxes are due on April 15 of the year following. However, the government may adjust this deadline in some situations, such as when the tax deadline falls on a weekend.

If you're self-employed or an independent contractor, be aware that you may need to file taxes more frequently. You must pay quarterly estimated taxes, due the month following the end of a quarter. For instance, you should pay the estimated taxes for the final quarter of 2023 by January 16, 2024.

Gathering Documentation

Your next step is gathering all the necessary information to file your return. Typically, you will need:

• Your W-2s from employers
• All 1099s issued to you as an independent contractor
• Mortgage interest statements
• Charitable contribution statements and receipts
• Investment income statements

Choosing Your Filing Method

Picking a filing status is the next step in the process and requires you to choose based on your current situation. The five filing statuses include:

• Single: You are unmarried, divorced, or legally separated.
• Married filing jointly: Both agree to file a single return if married.
• Married filing separately: If you are married but want to file separately, this could lower your tax bills.
• Head of household: If you are not married but pay more than 50% of the expenses for your household and have a qualifying family member.
• Qualifying widow(er): If your spouse dies, you can file jointly with the deceased spouse.

Tax Forms and Schedules

To accurately report your income and taxes, you must complete various tax forms, including Form 1040, the standard federal income tax form used to report an individual's gross income.

There are different versions of the IRS Form 1040 to accommodate different tax situations:

• Form 1040: The standard form that most taxpayers will use. It can accommodate many types of income, deductions, and credits.
• Form 1040-SR: A version of the 1040 form designed for senior taxpayers aged 65 and older, which has a larger font and a standard deduction chart that includes the extra standard deduction amount for seniors.
• Form 1040-NR: Used by nonresident aliens for tax purposes to report their income from U.S. sources.
• Form 1040-SS: Self-employed individuals in U.S. territories use this version to report net earnings and to pay self-employment tax.

Each form serves the same essential purpose—to report income and calculate taxes owed—but they include different items specific to the taxpayer’s circumstances. Taxpayers should choose the form that best fits their specific tax situation, and when in doubt, consult with a tax professional or refer to IRS guidelines.

In addition to Form 1040, there are some additional forms and schedules that might be required:

• Form W-2: Your employer issues this form to report your annual wages and taxes withheld.
• Form 1099-NEC: You'll receive this form if you've earned more than $600 from someone who is not your employer.
• Form 1099-MISC: This form reports other types of income, such as rent or prizes, if it totals more than $600.
• Form 1099-INT: Issued if you've earned more than $10 in interest during the tax year.

Additionally, you may need to fill out particular schedules that accompany Form 1040:

• Schedule A: Used to itemize deductions if you choose not to take the standard deduction.
• Schedule B: Lists sources of interest and dividend payments you've received.
• Schedule C: Used by self-employed individuals to report their income or loss from a business.
• Schedule D: Reports the sale or exchange of capital assets.
• Schedule EIC: Allows you to claim the earned income tax credit if you're eligible.
• Schedule SE: Calculates the self-employment tax owed on income from self-employment.

These schedules help provide the IRS with a detailed account of your financial situation. Always consult the IRS instructions or a tax professional to ensure you use all the required forms and schedules for your tax situation.

Filing the Return

Once you complete your taxes, you will file it with the IRS. You can do them yourself by completing the documents on paper, mailing them in, or filing them digitally. You can hire a professional or use specialized tax software to file your return.

Filing Outcomes

Once you file your taxes, the IRS will verify that the information is accurate and then accept them. If they have questions or concerns about your taxes, they will notify you for more information or correct any errors.

Takeaway

Filing your taxes is a critical part of managing your finances. If you need help, look for the free tax tools online or visit your local tax reporting agency for additional support.