By Jake Chang, 2024 Get It Back Campaign Intern

Are you new to taxes? Understanding taxes may seem difficult, but it doesn’t have to be.  Whether you don’t know where to start with tax filing or simply need a refresher, you are in the right place.  This guide introduces you to the United States tax system and walks you through the tax filing process.

Click on any of the following links to jump to a section:

• What are taxes?
• What is income tax?
• How much is my income tax?
• Can I lower the amount of income tax that I owe?
• What is tax withholding?
• What happens if I withhold too little or too much tax?
• Do I have to file a tax return?
• What is the Internal Revenue Service (IRS)?
• How do I file and pay taxes?
• When do I need to file a tax return?
• What happens if I miss the tax filing deadline?
• What happens after I file a tax return?
• What happens if I don’t file?
• Where can I get tax help?
• Resources

What are taxes?

Taxes are an amount of money that people must pay to governments. Money from taxes pays for public services and programs such as highways, hospitals, schools, and more. While organizations and businesses also pay taxes to governments, this guide focuses on taxes individuals pay.

There are different types of taxes that you may already pay. For example:

• You pay income tax on the money you earn.
• Your employer takes your share of payroll tax from your paycheck and sends it to the federal government to fund social services.
• Businesses collect sales tax when you buy something.
• You pay property tax based on the value of a home that you own.

Different levels of government typically collect different types of taxes. For example, local and state governments manage property and sales taxes, while the federal government oversees payroll taxes. You may pay some types of taxes to more than one level of government, like income tax, which both state and federal governments collect.

What is income tax?

Federal and state governments collect income tax from money you earn. This includes salaries, wages, and tips—known as earned income—and unearned income such as interest from a savings account or dividends from stocks.

Income tax is a pay-as-you-go system. This means that they government requires you to make tax payments regularly as you earn wages.

How much is my income tax?

Your tax rates determine the amount of your income tax. The federal tax system has a progressive income tax, meaning people with higher incomes pay a larger percentage of tax on their income than people with lower incomes. View the federal tax rates based on income.

Some states have tax rates that are similar to the federal tax system’s progressive income tax. Others have a flat rate meaning everyone pays the same percentage of their income in taxes, regardless of their total income. And other states do not have state income tax at all. Find out the tax rate for your state if you don’t know it.

Can I lower the amount of income tax that I owe?

Yes. You may be able to lower the amount of income tax that you owe if you qualify for tax deductions or tax credits.

• A tax deduction is an amount of money you can subtract from your income when you file your tax return to lower the amount of your income that will be taxed.
• A tax credit is an amount of money you can claim when you file taxes if you meet certain guidelines. It can reduce the amount that you owe in taxes. Some tax credits are refundable, meaning they will give you money back if you don’t owe the full amount in taxes.
  

What is tax withholding?

When you earn money as an employee, your employer must send part of each paycheck to the IRS, based on your estimated income for the year. Called tax withholding, you are paying part or all of your taxes during the year.

Complete Form W-4, Employee’s Withholding Certificate to let your employer know how much to withhold from your paycheck. You’ll want to fill out this form every year and whenever your personal or financial situation changes (e.g. you move, have a child, take on another job, etc.). You can use the IRS’ Tax Withholding Estimator to help you estimate the amount of tax to withhold.

If you don’t have an employer and work for yourself, you must pay quarterly estimated taxes instead. You will need to complete Form 1040-ES, Estimated Tax for Individuals and pay taxes in four payments throughout the year. You can use our Quarterly Estimated Payments Calculator to help estimate your quarterly payments.

What happens if I withhold too little or too much tax?

If you or your employer withhold(s) too much tax from your paycheck, you will get this money back as a tax refund when you file taxes. If you don’t withhold enough money from your paycheck, you will owe any unpaid taxes.

Do I have to file a tax return?

Whether you need to file an income tax return generally depends on your income, age, and filing status. Most U.S. citizens and permanent residents who work in the U.S. must file and pay taxes.

The Internal Revenue Service (IRS) sets the income guidelines for who must file a tax return each year. Learn more about who needs to file a tax return based on the current tax year.

You also may have to file if you meet specific conditions. Use the IRS’ Interactive Tax Assistant to check whether you need to file.

If you do not owe taxes and aren’t required to file, you may still want to. You can claim any tax credits you are eligible for from up to three previous years. Some credits may provide money back even if you don’t owe any taxes.

What is the Internal Revenue Service (IRS)?

The IRS is the federal government agency that enforces federal tax laws. The IRS processes tax returns and helps tax filers meet their tax responsibilities. Most of the IRS’ work focuses on individual and corporate income taxes.

When you file your tax return, you send it to the IRS. This is true for any method you use to file taxes. The IRS issues tax refunds, notices, and other tax updates. If you receive something in the mail from the IRS, be sure to review it carefully and take the actions needed for follow-up.

Know that the IRS will NOT initiate contact with you through home visits, emails, text messages, telephone calls, or social media to request sensitive information (like your SSN or bank account details). The IRS also will NOT demand untraceable payments through money orders, gift cards, cryptocurrency, or cash. If you experience any of these, it is a scam which you should report to the Federal Trade Commission.

How do I file and pay taxes?

You pay taxes by filing a tax return and paying the amount (if any) calculated on your return. Remember, you will only owe taxes when filing your return if you didn’t withhold enough. Then you will still owe the remaining amount.

If you or your employer withheld too much tax, you may receive a tax refund. If you owe the government other debts, however, the government can apply the extra tax withholding to pay those debts.

To file taxes, you must fill out Form 1040, U.S. Individual Income Tax Return. You will need the following documents:

• Form W-2 for every job you had last year (each employer should send this by January 31^st by mail and/or electronically)
• Other earning and interest statements (Forms 1099)
• Records of income not included in Forms 1099
• Records of expenses including receipts, credit card statements, etc.
• Previous year tax returns, if you have them

In addition to these documents you typically need to file an individual tax return, depending on your situation, you may need forms reporting other types of income, insurance premium tax credits, or education expenses. Check our tax appointment checklist to see if you need other items.

Once you have your documents, there are several ways you can file your taxes by yourself or with help. You can:

• E-file using tax preparation software (free and paid options are available).
• Receive free tax help at a Volunteer Income Tax Assistance (VITA), Tax-Aide, or Tax Counseling for the Elderly (TCE), site.
• Fill out paper forms and mail your tax return to the IRS (not recommended).
• Find a paid tax preparer who can file for you.

If you owe taxes, you can pay in the following ways:

• Follow the guidance from your tax software or tax preparer.
• Online using an IRS Online Account. You can use a debit or credit card or pay from your bank account.
• Mail a check or money order with your payment voucher to the IRS. (Use a trackable mail delivery service so you’ll have a record of the date that the IRS received your payment.)

If you need more time to pay your taxes, you can apply for a payment plan online that allows you to pay over time. However, the IRS will usually charge you fees and interest.

When do I need to file a tax return?

You need to file a tax return by Tax Day, which is usually on or around April 15. You can file as soon as the IRS announces the date that it accepts tax returns, usually late January. The period from January to April is typically called “tax season.”

You must also pay any taxes you owe by Tax Day. It is better to file earlier than later because the IRS may charge penalties—additional money owed on top of your taxes—if you file or pay after Tax Day. The IRS also charges fees if you are required to file a tax return and do not file at all. If you are due a refund and do not owe taxes, the IRS does NOT charge late fees.

Most people are required to file by Tax Day, but not everyone. If you need more time to file, you can request an extension (typically until October 15) by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, by Tax Day. The IRS also provides extensions for people in certain disaster areas and for other situations.

If you receive a tax filing extension, this does NOT mean you have more time to pay taxes. You still need to pay the estimated taxes on your return by Tax Day, even if you file later.

Remember, if you are due a refund and do not owe tax, you don’t need to request a filing extension. You can file your tax return when you are ready. 

What happens if I miss the tax filing deadline?

If you miss the filing deadline, you can still file past due tax returns up to three years after the original deadline. Filing past tax returns means you can claim any tax credits you are eligible for and reduce any fees and interest the IRS may charge.

What happens after I file my tax return?

After you file, you can check that the IRS received your tax return in the following ways:

• Check your federal tax return status on your IRS Online Account within 24 hours if you filed electronically or four weeks after you mailed it. Go to the “Tax Records” section once you are in your account to view your tax return status.
• Contact the IRS by phone at 800-829-1040 three weeks after you filed your return electronically or six weeks after you’ve mailed it.
• Look for e-mail or status updates from your electronic filing website or software.

If you are eligible for a tax refund, you can check its status using the IRS’ Where’s My Refund? tool.

Once you’ve filed your taxes for the year, keep your tax documents for future reference. You may need them if you need to correct a mistake on your tax return by filing an amended return.

What happens if I don’t file?

If you don’t owe taxes and are due a refund, the IRS does not charge late filing fees or penalties. If something prevented you from filing taxes or paying on time—such as experiencing natural disasters or serious illness—the IRS may waive the fees it typically charges. 

If you do not file and pay your taxes on time, the IRS may charge fees based on how late you file, and the amount owed. The IRS will send you a notice or letter by mail notifying you if you owe fees.

Two common fees associated with not filing are the failure to file penalty and failure to pay penalty. These penalties are calculated as percentages of the original tax you owe and increase to as much as 25% each month that you do not file or pay. Always remember to file and pay taxes on time to avoid these additional charges.

Where can I find tax help?

You do not have to file your taxes alone. There are many in-person and electronic options available that can help you file your taxes.

Get in-person assistance:

• Volunteer Income Tax Assistance (VITA), Tax-Aide, or Tax Counseling for the Elderly (TCE) sites are places that can file your taxes for free. IRS-certified volunteers staff sites serving different communities. Sites have income limits for who they serve, generally under about $64,000. Find a nearby site.
• Local trusted preparers can also help file tax returns. Check that preparers are IRS-recognized and have a preparer tax identification number (PTIN). Ask about pricing before making an appointment with a preparer since prices for services can vary.  Be wary of “instant” refunds that are really just expensive, short-term loans. Review these tips to find a trusted preparer.
• IRS Taxpayer Assistance Center offices provide general tax support. While they do not file tax returns, they can help with certain documents, like the application for an Individual Taxpayer Identification Number. Find a nearby office.

File your taxes with help (or on your own) electronically:

• Get Your Refund is a fully virtual intake process that allows you to file with an IRS-certified volunteer or on your own. To file with help, your income must be less than $66,000. To file on your own, your income must be under $79,000.
• MyFreeTaxes allows you to file your own taxes and has no income limit.
• Direct File offers a way to file your own taxes directly with the IRS. This tool is only available in states that partner with Direct File, so this option may not be available to you.

If you need to contact the IRS directly, call their individual helpline number at 800-829-1040 during 7 a.m. to 7 p.m. local time. 

Resources

• Tax Time Guide – Internal Revenue Service (IRS)
  • Updates on yearly changes to taxes and tax filing process.
• Understanding Taxes Student – Internal Revenue Service (IRS)
  • Activities and tax tutorials to learn about the federal tax system.
• Taxes – USAGov
  • Landing page for resources and guides for filing federal income taxes.