- You can use IRS Free File or IRS Direct File if you qualify.
- Online tax-prep companies offer free and paid options for a range of financial situations.
- You should file a return even if you can't afford to pay the tax you owe to avoid additional penalties.
No matter how many times you do it, filing a federal tax return can cause a lot of stress. And that stress can be intensified the longer you wait to do it.
It's important to understand how the process works, where you can go for help, and what's at stake if you miss the April 15 tax filing deadline.
Understanding tax-filing options
There are four main routes you can take to prepare your annual tax return:
Tax-preparation websites or online software
Tax-prep websites such as TurboTax, H&R Block, and TaxAct are the go-to method for many Americans with simple tax situations. All of these sites use a question-and-answer format to learn about your income and household and check your eligibility for deductions and credits.
How much you pay for these online tax-prep services will depend on the complexity of your return. Most platforms allow people at any income level to file for free, as long as they only need to file basic forms.
Generally, the more forms you need to file, the more expensive it will be to use an online platform.
IRS Free File
The Free File program is a partnership between the IRS and tax preparation companies that provide their products for free. There are two ways to utilize it:
- Traditional IRS Free File provides free online tax preparation on IRS partner sites to taxpayers whose adjusted gross income, or AGI, is $79,000 or less.
- Free File Fillable Forms are electronic federal tax forms you can fill out and file online for free. This option requires that you know how to prepare your tax return and is available for taxpayers whose AGI is greater than $79,000.
IRS Direct File
After a successful pilot program in spring 2024, the IRS is bringing back its Direct File software in 2025 and planning to expand its reach.
Currently, only Americans in certain states can use Direct File to prepare and file federal returns online at no cost. Non-traditional income earners, such as self-employed and gig economy workers, cannot use the software yet. It also does not support itemized deductions and certain credits.
Hiring a tax preparer
Hiring a tax preparer tends to be the most expensive option for tax filing, but it could pay off if you have a complex situation or planning needs that extend beyond tax season.
A tax preparer can be an enrolled agent (EA), certified public accountant (CPA), or a licensed tax preparer (Annual Filing Season Program member).
While hiring a professional may seem like the easiest option, you still need to provide the tax preparer with all your paperwork and take time to review your return to ensure everything has been accurately reported.
The costs of hiring a tax professional can range widely. Some charge a set fee per tax form or schedule, while others charge an hourly fee. Their professional credentials can also factor in. Many CPAs, for instance, offer year-round tax planning in addition to tax prep, leading to increased fees.
According to a 2023 study by the National Association of Tax Professionals, the average fee charged by tax preparers for an individual return was $248.
Elderly, disabled, low-income, and limited English speakers can find free tax-filing help through the Volunteer Income Tax Assistance (VITA) program or Tax Counseling for the Elderly (TCE) program.
The old-fashioned way — by hand
Although most people these days file their taxes electronically, it isn't required. You can still follow the IRS instructions, fill out the paper forms, and mail them in. It's tedious, though, and raises the risk of making mistakes.
"I would never recommend that someone complete and file their return in paper form," says Kimberly Dula, a CPA with Marcum in Philadelphia. "There is too much risk that an error will be made in the various calculations that go into the return."
Gathering your tax documents
Depending on the complexity of your financial situation, you might have very few or an overwhelming number of documents to compile.
Some will arrive in the mail — including those from your employer, banks where you have interest-bearing accounts, or brokerage firms where you hold investments — in envelopes clearly marked as tax-related. Or they may arrive via email or become available for download in your online account in late January or early February.
"Be sure to visit all of the websites for your various investment accounts since many providers no longer send paper tax documents," Dula says.
Among the most common information and documents you'll need to file your taxes are:
- Personal information like your Social Security number or Individual Taxpayer Identification Number (ITIN) and address
- If you are an employee, Form W-2, which details your income and tax withholdings, among other items
- If you're self-employed, Form 1099-NEC, which details your self-employment income
- Additional 1099 forms, which detail interest, dividends, royalties, pensions, Social Security benefits, and other types of payments not received from your employer
- Receipts and other records detailing the amounts paid on deductible items such as mortgage interest, charitable donations, and certain medical expenses
Step-by-step guide to filing your taxes
1. Choose your filing status
Your filing status is a critical factor in the calculation of your federal tax liability. It's the very first question asked on your tax return. It determines your tax bracket, your standard deduction, and your eligibility for deductions and credits.
There are five filing statuses: single, married filing jointly, married filing separately, qualifying surviving spouse, and head of household (or single parent).
For married couples, choosing to file taxes jointly or separately can have a significant impact on the amount of income tax owed. If you got married on or before December 31, you're considered married for the entire year for tax purposes.
If you're unsure of your status, the IRS has a five-minute tool to help you decide.
2. Calculate your income
Next, you need to report your income from all sources. This includes wages, tips, retirement distributions, payments from employers or clients, and income from investments or property sales. See a list of IRS taxable income to determine what to include in your gross income.
3. Claim deductions and credits
Deductions reduce the amount of your taxable income. You can individually itemize deductions or use the standard deduction.
Standard deductions for the 2024 tax year — claimed by the vast majority of taxpayers — are $29,200 for married couples, $14,600 for single filers and married individuals who file separately, and $21,900 for those who file as head of household.
Certain taxpayers can't use the standard deduction, like a married individual filing separately whose spouse itemizes deductions.
Common itemized deductions include:
- Interest paid on a mortgage
- Charitable donations
- Medical and dental expenses
- Property taxes
- State income taxes
If the total of your itemized deductions amounts to less than the standard deduction, take the standard deduction. If the total exceeds the standard deduction (and doesn't get capped by other tax rules), then itemize. In addition to itemized deductions, you can deduct expenses directly related to your business or rental property.
You may also be able to claim tax credits, such as the Child and Dependent Care credit, the Child Tax Credit, or education credits.
Deductions are taken before credits and reduce your income. Once your tax is calculated, then you apply credits to reduce your final bill.
4. Calculate your tax liability
If you're using online tax software or an IRS program to prepare your return, it will do the math for you based on all the information you have provided about your household and financial situations.
If you've chosen to hire a professional, they will likely use their own software to crunch the numbers. Always review the details you've provided, ask to see their work, and obtain a copy of your final tax return for your records.
Once you've finished, be it on your own or through a professional, you'll discover whether you owe the IRS money or if you overpaid and are due a refund.
5. File your return
The last step to filing your tax return is to, well, actually file the tax return.
According to the IRS, the vast majority of individual tax returns are filed electronically. That's also the quickest way to get a refund. If you — or your tax preparer — e-file, you'll usually get your refund within a few weeks.
If you're a paper filer, be sure to attach all the required forms and supporting documents. Don't forget to sign and date your return. And be sure to have the envelope postmarked by the April 15 deadline.
If you need more time to prepare your return, getting a tax extension is simple. Your federal deadline will automatically be pushed back six months, to October 15, but you will still need to pay your bill by the original filing date.
6. Pay any taxes, or get your refund
If you owe money
If you're unable to pay the tax you owe by your original filing due date, the balance is subject to interest and a monthly late payment penalty. There's also a penalty for not filing a tax return. So file on time, even if you can't cover your balance in full, to avoid extra charges.
The IRS accepts payments in a variety of ways, including online via electronic transfer. You can also use a credit or debit card for an additional fee.
If you can't afford to pay your bill in full, you can avoid penalty charges by applying for a monthly payment plan with the IRS.
If you're due a refund
If you've filed electronically and provided your bank account information, the IRS will send the refund directly to your account. You can request a physical check instead, but that could take much longer. And there's always the possibility it could get lost in the mail.
You can check your refund status online beginning 24 hours after you e-file or four weeks after you file a paper return.
Tax tips to maximize your refund
If you're angling for a bigger refund, make sure you review all the deductions and credits available to you. In general, people who have low incomes and/or dependents can qualify for significant tax breaks.
Business owners and self-employed workers should work
FAQs on how to file taxes
The difference between a tax deduction and a tax credit is that a deduction reduces your income and a credit reduces your tax bill.
Yes, there are many options to file your taxes for free. If you live in one of the states where IRS Direct File is available, and you meet the additional requirements, that's a good place to start. If not, check out the IRS Free File program if your adjusted gross income is less than $79,000. Finally, see what free options are available from online tax-prep companies, like TurboTax, H&R Block, and TaxAct. If you have a very simple tax situation, such as a traditional job and no itemized deductions, you should be able to file for free at any income level.
If you miss the tax-filing deadline, a failure-to-file penalty will apply, which is a percentage of your unpaid taxes. The balance will also accrue interest. If you don't owe any money and calculate a refund, it won't be processed until you file.
