How filing a tax return works

Teach: How filing a tax return works

What to say

Filing a tax return means reporting last year's income, usually by mid-April in the US, and settling the gap between tax withheld from your pay and tax owed. Employers send a W-2 and other payers a 1099 by early February. If too much was withheld you get a refund; too little and you pay the difference.

What to show, in order

1. Collect every income form by early February: a W-2 from each employer and a 1099 for contract, bank interest or other income.
2. Gather the other records the forms ask about, such as student loan interest, tuition statements and last year's return.
3. Choose how to file: the federal tax agency's own free filing options, tax software, or a paid preparer.
4. Enter the numbers exactly as they appear on each form, and double check your bank details for a refund.
5. File by the deadline, usually mid-April, or file an extension, which extends the time to file but not the time to pay.
6. Pay any amount owed by the deadline to avoid penalties and interest, or set up a payment plan with the agency.
7. Keep a copy of the return and the forms for at least three years.
8. Adjust your withholding on a new W-4 with your employer if you owed a lot or got a very large refund.

When to stop and call a professional

• You are self-employed, own a rental, sold property or investments, moved states, or earned income abroad: use a qualified tax preparer.
• You receive a letter from the tax agency: read it carefully and contact a qualified preparer or the agency through its official site.
• You owe back taxes or have not filed for years.

The check question

Ask: What does a filing extension give you? Answer: More time to file, but not to pay

From EveryManSkills. General information, not professional advice.