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How to File Your Income Taxes

Updated on August 2, 2012

Income Tax Anxiety

April 15 seems to roll around sooner every year, and as the cutoff date to file your income taxes approaches, the more tax procrastinators start to sweat. If you don’t know how to file, or if you don’t know what documents you’ll need, never fear. A step-by-step approach to getting together everything you need and completing the forms will help you finish the task with the least amount of pain. I can’t promise you that you’ll get a big, juicy refund, but just getting your income taxes filed will be a weight off your shoulders.

Necessary Documents for Filing Your Income Taxes

The Internal Revenue Service (IRS) decides how much income taxes you owe by adding together all the money you earned for the year and then subtracting allowances. If you worked for someone else last year, they will send you a W-2 form in the mail or by email, before the last week in January.

If you worked for more than one employer, you’ll get a W-2 form from each one. Put these forms in a safe place until you’re ready to file your income taxes.

If you worked for yourself last year, doing tasks as an independent contractor, the companies that purchased your services must send you a 1099 form that details how much they paid you. Unlike a W-2, a 1099 form will not show taxes withdrawn from your wages and paid to the government.

The third option occurs when you’re self-employed, and in this case, you must keep track of all your sales as well as the costs you paid to be in business. A bookkeeping software program, like Quickbooks, can help you organize all your income and expenses if you were self-employed.

Help is a Click Away

Finding Free Income Tax Help

If you’re looking at your tax booklet for the first time, it’s not unusual to be filled with a sense of dread. The long windy instructions, that are often worded so no one but a tax attorney can understand them, are par for the course. Don’t worry. You’re not alone. Most taxpayers either don’t fully understand the instructions or they just give up and guess at the answers they’re supposed to write down.

The IRS isn’t quite the grouch they sometimes appear to be. In fact, they offer taxpayers free help with understanding and filling out their tax forms. I’ve found the IRS phone representatives to be quite warm and congenial and very helpful. Visit the IRS Telephone Assistance Website to find the phone numbers where you can get free help right now.

Filing Income Taxes Online

If you made less than $54,000 last year, you may be eligible to file your taxes online free. The IRS offers an eFile option for individual taxpayers to fill out their tax forms quickly and easily. This only applies to your federal taxes, if you live in a State where you have to file state taxes, you must do that separately.

If you don’t qualify for free online filing from the IRS, you can still fill out your tax forms on the computer, with qualified tax preparation software, like TurboTax, which offers an online filing option for a fee. Programs like TurboTax usually offer a free edition for taxpayers who only file the 1040EZ form, which is the form for young workers just starting out.

These programs also offer more in-depth tax preparation software for taxpayers who have numerous deductions, rental or investment property or individuals who are sole proprietors and even corporations or partnerships. The caveat here is that software, no matter how good it is, might miss some deductions that a tax accountant would have found. The best practice is to use tax preparation software if you don’t have to claim intangible taxes and if you don’t have to document things like Capital Gains rollover transactions. It’s almost a sure bet that a good tax accountant will save you money over a software program.

I Can’t Make the Deadline!

Relax. Not everyone files their income taxes by April 15, although that’s the common cutoff date. If you’re still waiting for a copy of your W-2 to arrive, or you need copies of your checking statement or any other income or expense documentation, you can file an extension that allows you additional time to get your act together.

File IRS Form 4868 to request an extension for filing your taxes. Be aware that any amount of taxes you owe the IRS is still due by April 15, but you’ll have until October 15, to file the actual forms. Just make sure that you mail off Form 4868 before April 15, or the IRS will consider you late for filing.

How to Pay Taxes on an Installment Agreement

Okay. You finally got your income taxes figured out but you owe the IRS and you don’t have enough money to pay them the balance. This happens to many people, especially those who are self-employed. Don’t fret. The IRS will allow you to pay your tax liability on an installation plan.

Call the same number listed on the URL I linked to in the above section, titled “Finding Free Income Tax Help,” and ask for an installment plan. You’ll have to tell the IRS representative how much you can afford to pay on your tax debt every month. Pay as much as you possibly can to reduce any penalties and fees the IRS might charge for late payment.

Getting Penalties and Fees Removed


It doesn’t always work, but sometimes the IRS will waive the penalties on late income tax payments. Don’t even bother asking, however, until you’re caught up on your payments. Then, write a letter to the IRS, detailing why you think you deserve to get the penalties and fees removed, and you just might get a nice refund check in the mail.

Anytime you ask the IRS to consider a request, they will put your account on hold, send you a notice that they are looking into the situation and that you need not pay on your plan until you hear back from them. Pay anyway, especially if you have an installment plan. The IRS frowns upon non-payment, especially if you have an installment plan. If something happens and you can’t make this month’s payment, don’t let the payment date pass without notifying the IRS by phone and explaining the situation.

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