How to file taxes

Do I need to file taxes?

You should file tax returns if you've had money withheld from your paycheck, made estimated tax payments or if you think you qualify for a tax credit. Armine Alajian, founder and tax consultant at the Alajian Group, told us, "Most U.S. citizens who work and earn money will need to file taxes. However, you might need to file if you owe any kind of special taxes or have any special situations that require you to file."

Typically, you'll need to file taxes if you received:

• Gross income above the minimum for your tax filing status
• Self-employment income with more than $400 in net earnings
• Distributions from a medical savings account (MSA) or health savings account (HSA)
• Wages from a church or church-related organization that equals or exceeds $108.28

Even if you don’t owe taxes, filing a return ensures that you’ll receive any refund you’re entitled to. If you are eligible for a refund, you may lose out on your claim to that money if you don't file your tax returns within three years of the original deadline. You may also lose eligibility for tax credits if you fail to file.

» LEARN: How to file an extension for taxes

What are my filing options?

Taxpayers have three main tax filing options: using tax software, filling out paper forms or hiring a tax preparer. Since each option varies in cost and complexity, you’ll want to choose the one that best fits your budget and comfort level.

Online tax software

Filing your taxes online by yourself is fairly straightforward with tax software. Many programs can import data directly from employers and financial institutions to save you time.

TurboTax, H&R Block and other companies offer tax preparation software priced at around $100. This software makes it easy to file your taxes with step-by-step instructions. As of publishing, taxpayers with an adjusted gross income of $84,000 or less can file for free through IRS partner companies.

Tax software simplifies filing by guiding you through each step and helping you claim credits and deductions you might otherwise miss. Many programs also offer live support from tax professionals plus optional audit protection at an additional fee.

Paper filing through the mail

You can also file your taxes on paper, sending your tax return to the IRS via snail mail. Tax preparation software lets you complete your forms and print them for mailing. You also have the option of filling them out by hand.

Filing taxes by mail does, however, have its challenges. It can be tricky to figure out which forms you need, and filling them out by hand increases the chance of errors, like miscalculations or placing numbers in the wrong columns. If your handwriting is hard to read, the IRS might not process your return correctly.

The address to mail your tax return depends on your state, the form you’re using and whether a payment is included. A full list of addresses by state is available on the IRS website.

Using a professional tax preparer

Many taxpayers turn to professionals for help with their annual tax returns. Tax preparers include certified public accountants (CPAs), enrolled agents and independent tax professionals. Hiring a tax preparer typically costs between $300 and $600, though more complicated returns — such as those involving multiple income sources, self-employment or significant investments — may cost more.

The more complex your taxes are, the more likely you are to benefit from working with a professional tax preparer.

You’re more likely to benefit from professional help the more complex your tax situation is. A tax preparer’s training can uncover deductions or credits you might miss on your own. It can also help you avoid common errors that self-filers often make, including ones that trigger audits. While employing a tax preparer is the most expensive filing option, the potential savings and reduced stress can make it worthwhile, especially for those with complicated returns.

Some tax preparers will sit with you and guide you through the process step-by-step, while others will collect your documents and handle everything independently. Either way, they take on the heavy lifting, allowing you to focus on gathering the necessary paperwork instead of navigating the tax code yourself.

What documents do I need for taxes?

In order to file your taxes, you'll need to gather all tax forms with information documenting your income. You’ll also need to decide between itemized and standard deductions.

Tax forms

There are specific tax forms that employers, banks and other companies issue to document your sources of income.

• W-2: This form identifies your salary and wages, including withholding amounts for federal and state income taxes, Social Security, company retirement accounts, HSAs and more.
• 1099-NEC: You’ll use this form if you’re self-employed, perform contract work or have a side hustle. Companies issue 1099-NECs to report how much they paid nonemployees during the year.
• 1099-DIV, 1099-B and 1099-INT: When you receive dividends, capital gains or interest from your investments or bank accounts, you'll receive one of these forms.
• 1099-R: People who take distributions from their retirement account, including rollovers into a new account, will receive a 1099-R.
• K-1: Partnerships, LLCs and certain trusts issue K-1 statements to report your share of the entity’s income, deductions and credits, including profits and losses.

Deductions

When filing your taxes, you can choose the standard deduction or itemize your deductions. In 2024, the standard deduction was $29,200 for those married and filing jointly ($14,600 for single taxpayers). For many households, using the standard deduction is easier and offers a lower tax bill than if you were to add up all potential deductions individually.

It is still possible to qualify for other deductions and tax credits when using the standard deduction, including:

Itemize deductions if you’re self-employed or run your own business. Otherwise, the standard deduction is usually best.

• Company retirement plan contributions
• Traditional IRA contributions
• HSA contributions
• Child tax credit
• Earned income tax credit
• Home mortgage interest
• Student loan interest
• Medical and dental expenses (above 7.5% of your income)
• Charitable contributions

Alajian suggests that itemizing is better for certain taxpayers. "Are you self-employed or running your own business? Do you own a home? Then you should most likely itemize."

How do I pay my taxes?

After completing your tax returns, you’ll need to pay any taxes due before the filing deadline to avoid interest and penalties. The IRS offers several payment options that include:

• Mailing a check: Send a paper check with your tax return or separately if you filed electronically.
• Bank withdrawal: Link your bank account to pay directly via electronic funds transfer.
• Credit or debit card: Use one of the IRS-approved third-party processors to pay with a card.
• Electronic payments: Enroll in the Electronic Federal Tax Payment System to pay online or by phone.
• Estimated payments: Self-employed individuals and business owners sometimes make quarterly estimated payments since they don’t have taxes withheld from a paycheck.
• Payment plan: If you can’t pay the amount in full, you have the option of signing up for a payment plan.

» MORE: Best tax relief companies

How do I get my tax refund?

If you’ve withheld too much from your paycheck, overpaid estimated taxes or qualified for tax credits, you might be eligible for a refund. To get it, you’ll need to file your tax return. The IRS offers several ways to access your refund:

• Direct deposit: This is the fastest and safest option. If you include your routing and account numbers when filing, the refund will be sent directly to your account.
• Prepaid debit card: If you don’t have a bank account, you can request to have your refund loaded onto a prepaid debit card.
• Paper check: You can request a check by mail, but be aware that you may see possible delays due to theft, weather events or postal errors.
• Savings bonds: Your refund can be used to purchase Series I U.S. Savings Bonds.
• IRA contributions: Refunds can be applied to retirement savings through traditional, Roth or SEP IRAs.

Most refunds are issued within 21 days. You can check your refund status on the IRS’s "Where's My Refund?" page, which is available 24 hours after e-filing or four weeks after mailing a paper return.

Bottom line

Most people find filing taxes each year stressful, but it doesn’t have to be overwhelming. You can get started by gathering all necessary documents regarding income and expenses.

Tax software or professional tax preparers can help simplify the process, especially if you’re unfamiliar with tax laws or have a complicated financial situation. Filing electronically is often the quickest and most accurate option, with many platforms allowing you to import data directly from banks and other institutions.

After filing, you may either receive a refund or owe money to the IRS. Direct deposit is the fastest way to get your refund, but there are other options, like purchasing government bonds. If you owe taxes, you can pay by check or electronically, but it’s crucial to file your return on time, even if you can’t pay the full amount. If you can’t pay all at once, a payment plan can help minimize penalties.