Filing Taxes

Almost every U.S. citizen and permanent resident who earned money in the previous year must file a federal income tax return each April 15th. The date was chosen to give taxpayers time to collect the necessary information on their income and expenses from the prior tax year so they can file an accurate return. Most Americans don't like the tax filing process but are legally required to file.

While the task of preparing and filing your individual income tax return will never be fun, the computerization of both tax preparation and the Internal Revenue Service over the past 20 years has made it much easier to do. You can either use tax preparation software to guide you through the return process, often for free if your adjusted gross income is $79,000 or less, or you can file your return directly with the IRS. 

Even if you still choose to file a paper return, the internet can still provide the resources you need to answer any questions you may have.

Who must file?

U.S. citizens and permanent residents must file a return if their gross income is more than a specified amount. The filing requirements are based on your age and filing status and are adjusted each year for inflation. The filing thresholds for the 2023 tax year are:

Note: If a couple is married filing jointly and only one spouse is 65 or older, the filing threshold is $29,200.

What is gross income?

The filing thresholds are based on a taxpayer's gross income, which is different from their taxable income. Their taxable income is based on their income after you have claimed any adjustments or tax deductions they are entitled to. Gross income includes all income from sources like employment, contract work, a small business, rentals, Social Security, retirement plans, and investments.

What if I live abroad?

The federal tax code requires U.S. citizens and lawful permanent residents to pay the federal income tax each year, regardless of where they live and work. However, if you live abroad and pay taxes to another country, you may still avoid paying taxes on your income twice. That is because you can take advantage of tax benefits like the foreign earned income exclusion and the foreign tax credit.

Should I still file if I'm not required to?

It's usually a good idea to file a federal income tax return each year, even if you aren't required to. That's because federal benefits like the earned income tax credit are only available to filers and can result in you receiving a refund, even if you paid no taxes.

How should I file?

You have several options for filing your federal income tax returns. You can hire a tax professional or do it yourself using tax preparation software, the IRS's Direct File program, or fill out your tax forms and mail them to the IRS. The IRS's Direct File program is new for 2024 and can be used to fill out your 2023 tax forms online with the IRS for free.

The IRS generally encourages electronic filing to reduce errors when data is transferred from paper returns into an electronic format and to get tax refunds back to you more quickly. The IRS reports that roughly 90% of taxpayers e-file, whether it's through online tax software or through tax professionals who use specialized software to file returns.

When do I file?

Taxes are usually due April 15th, but not always. If April 15th falls on a weekend or on a holiday, your taxes will be due the first non-holiday weekday following April 15th. Thus, if April 15th falls on a Saturday and the following Monday is a holiday, the due date will be Tuesday, April 18th. If you live outside of the United States and Puerto Rico, you will receive an automatic two-month extension to file and pay your taxes.

You can also request an automatic six-month filing extension from the IRS that will push your filing date back to October 15th. You must file for the extension by the April 15th filing deadline or the IRS will impose a failure to file deadline. In addition, your tax payment is still due April 15th and the IRS will impose penalties and interest if you fail to pay your full tax liability by that date. 

For that reason, it's recommended that you estimate the taxes you will owe and submit that amount to the IRS when you file for an extension.

How do I get a tax refund?

Taxpayers usually get a tax refund when they have more income withheld from their paychecks than they are required to pay in taxes. After you file your taxes for the year, the IRS refunds any amounts that have been withheld that are more than the taxes you owe. 

If you get a large refund each year, it is probably a good idea to adjust your withholding with your employer by filing a new Form W-4, Employee's Withholding Allowance Certificate, asking that less money be withheld from your paycheck each pay period. This should increase the size of your paycheck and reduce the size of your tax refund.

There are also situations where you may get a refund that doesn't involve tax withholding. You can get a refund if you qualify for some tax credits in amounts that exceed your tax liability, overpaid your estimated taxes, or filed an amended return that decreased the amount of tax due in a prior tax year after you have already paid your tax bill. 

Estimated taxes are paid by individuals who aren't subject to withholding, such as the self-employed, small business owners, and individuals who make most of their income from investments.

What if I owe taxes and can't pay?

The IRS understands that not everyone can pay the taxes they owe by April 15th each year. That's why the agency offers several different payment plans and, in some limited cases, accepts less than what you owe. There is often a fee for setting up a payment plan, but the IRS charges less if you set up automatic payments from your bank account. The fee is often waived for low-income taxpayers.

What if I don't file?

You should always file a federal income tax return each year, even if you can't pay the tax you owe. That's because the monthly failure to file penalties are usually much higher than the penalties for failure to pay. The standard failure to file penalty is 5% of your unpaid taxes each month, up to 25% of your tax due. The IRS can also impose a failure to pay penalty and charge interest for each month you don't pay your penalty. There is no failure to file penalty if you owe no taxes and aren't due a refund.

The failure to pay penalty is 0.5% of your unpaid taxes per month, up to a maximum of 25%.

What can the IRS do if I don't file?

Willful failure to file is a misdemeanor that rarely results in prison time. However, the IRS has numerous options available to collect any unpaid taxes, penalties, and interest you might owe. For example, it can seize your bank accounts, property, or businesses. It can also have your wages garnished.

Have More Tax Filing Questions? Talk to a Lawyer

Many taxpayers find the federal income tax filing process to be confusing. If you have questions about the filing requirements and how IRS rules apply to you, a local tax lawyer can help. A tax attorney understands tax law and the rules and regulations the IRS expects you to follow when filing your return. A tax lawyer can also answer difficult questions about your personal financial situation.