How to file taxes: What you need to know
January 24, 2023 6 min read
Filing federal income taxes can be straightforward and easy. Sure, it’ll probably require some preliminary groundwork. But whether you’re filing for the first time or have filed income taxes before, the following information can make the filing process more manageable.
- Taxpayers can file taxes electronically on the Internal Revenue Service (IRS) website, use commercial tax prep software or get a tax preparation professional to help.
- Depending on income and filing status, there may be no need to file a tax return at all.
- Most taxpayers will receive income documentation, like a W-2 or 1099, from their employers before the tax deadline.
- Failing to pay federal income taxes can result in penalties and other consequences.
1. Determine whether you have to file a tax return
Most people who work in the United States are required to pay federal income taxes and file an income tax return. But not everyone has to file a tax return.
Whether someone is required to pay taxes depends on gross income, age and tax filing status. But even if someone isn’t required to file a tax return, they may still want to do so in order to benefit from certain tax credits or other tax advantages.
2. Find your filing status
The IRS categorizes taxpayers into five general tax filing statuses:
- Head of household
- Married filing separately
- Married filing jointly
- Qualifying widow or widower
The IRS has an online filing status tool for taxpayers who don’t know their filing status or need help deciding which status is most appropriate for them.
A taxpayer’s filing status is used to determine:
- Whether they will file an individual income tax return or a joint return
- Whether they can take advantage of certain credits
- What their standard deduction is
- What they owe in taxes or the tax refund they’ll receive
3. Gather tax and income information
The tax forms and information taxpayers need to file can vary based on income, employment and marital status. But providing this information may allow filers to qualify for tax deductions and credits, such as for educational expenses, unreimbursed medical expenses or the earned income tax credit.
Some of the most commonly required details include:
- Personal information like the taxpayer’s name, address, Social Security number or Individual Taxpayer Identification Number.
- Banking information like bank account numbers and routing numbers to set up direct deposit for tax refunds.
- Income documents such as W-2s and 1099s from earned wages.
- Pretax contributions like money paid into certain types of retirement accounts or health savings accounts.
- Charitable donations to help taxpayers determine whether to take the standard deduction or to itemize donations.
- Other expenses like interest paid toward student loans or mortgages, medical expenses or dependent care.
- Tax documentation from the previous year, including federal and state tax returns.
4. Choose where and how to file your tax return
After gathering the files, receipts and other documentation needed in order to file taxes, it’s time to do the actual filing. There are five main filing options.
File taxes for free online with e-file
Filing federal taxes online can be done for free. The IRS makes Free File electronic filing—or e-filing—software available to taxpayers who have an adjusted gross income (AGI) below a certain amount (for the 2022 tax year, the AGI threshold is $73,000). The software guides taxpayers through the filing process.
The IRS also makes fillable forms available online to those who don’t want to use the guided e-filing method or who have an AGI over the free-file threshold.
Get help from a tax assistance program
The IRS’ Volunteer Income Tax Assistance program and Tax Counseling for the Elderly program provide basic tax filing services for those who qualify. But certain guidelines apply. For example, the programs may only be available to those with incomes under $58,000 or to taxpayers aged 60 or older.
File taxes online with commercial tax preparation software
Commercial tax preparation software is available from several companies online, usually for a fee. In general, these step-by-step software packages make tax preparation easier for those who aren’t accustomed to filing taxes or who may have a more complicated tax return. The software platform typically submits the return directly to the IRS.
Visit a tax preparer
Filers can enlist the help of a trusted tax professional, like a tax preparation company or accountant. The IRS offers a directory of authorized e-file providers to help taxpayers find an experienced professional.
File paper forms
The old-school method of filing still exists. The IRS makes paper tax filing forms available, which can be filled out by hand and mailed to the IRS through snail mail. However, the IRS notes that filing paper returns may delay processing for up to six months. So filing electronically may be a better idea for most taxpayers.
What about filing a state income tax return?
Depending on what state the taxpayer lives in, there may be no state income tax to pay. But most states require taxpayers to file a state tax return in addition to the federal return.
Most commercial tax preparation software and tax preparers can help individuals file state returns along with the federal returns. And some states have their own free-file system for those who meet certain requirements.
What happens if you don’t file taxes?
The last day to file 2022 taxes is April 18, 2023. But a taxpayer can typically file for a tax extension without an issue as long as the return is in by October 16, 2023—six months after the original April tax deadline. And if the taxpayer still doesn’t turn in their taxes? A few things could happen:
- If a taxpayer doesn’t owe taxes or is due a refund, they may not have to pay a failure-to-file penalty for filing late.
- If a taxpayer owes taxes, they may be charged both a failure-to-file penalty and a failure-to-pay penalty. They’ll also typically be charged interest at the current short-term federal rate plus 3%. The interest gets compounded, so the longer taxes aren’t paid, the more money is owed. And if the taxes remain unpaid, the government could place a lien on property, garnish wages or refuse to pay out future tax refunds.
How to file taxes in a nutshell
When it comes to filing taxes, it pays to be organized. It’s a good idea to set aside relevant documents all year. And keep an eye out for forms from employers and financial institutions in January and February. Then use whichever method is most comfortable—whether that’s e-filing from home or hiring a professional to file the return.