What Is a Tax Return, and Do I Need to File One?

Ben Steele
A calendar with a yellow post-it note attached to it that reads “file tax return!”
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Everyone who earns income (with few exceptions) pays income tax. People who pay taxes, and even some of those who don’t, are required to make a report to the Internal Revenue Service (IRS) at the end of each fiscal year.

This report is called a tax return, and it’s how the IRS ensures that the tax system is working, and that the right people are paying the right amount of tax. While a tax refund is the amount of money you get back if you’ve been paying more than you legally owe, the tax return is the document that is submitted to decide upon whether you receive a refund, and how much you get back. Generally speaking, if you hope to receive a refund, you must first file your return.

Do I Have to File a Tax Return?

There are some circumstances under which you may not have to file a return. Generally, for the majority of people, the answer is “yes,” if you earned any money in the last year, you have to file a tax return.

Earning Less Than the Standard Deduction

However, if your income is less than the standard deduction currently in effect for your tax filing status, you won’t need to file.

The standard deductions can change when new tax legislation is passed, so you will want to double check and make sure you have the most current information.

IRS Filing Requirements

The IRS usually provides a filing requirements chart for each new tax year. The tax filing requirements chart for 2018 notes that, for example, a single status person under the age of 65 must make $12,000 or more in the year in order to be required to file. Anyone who makes below these standard deductions each year does not need to file.

Dependant Status Rules

There are additional rules for having status as a “dependant.” Dependants don’t have to file unless they make a certain amount of money ($12,000 for 2018) or an “unearned” income of $1,050. The rules are slightly different for dependants over the age of 65, or dependants who are disabled.

File to Ensure You Get a Refund

If you have taxes deducted from your paycheck, but don’t make enough to qualify to submit a tax return, it’s still a good idea to do so, so that you can reclaim that money.

If you’re unsure whether you are required to file for any reason, it’s likely safer to file, and consider asking a professional before making any decisions.

How to File a Tax Return

There are three main ways to file your tax return with the IRS: manually by mail, electronically, or through a professional accountant or tax agency. No matter how you choose to file, you will need the same set of documents, which include:

  • Records of your income such as W2 forms from your employer, invoices you send to clients, account statements for savings and investments, and any other forms of income.
  • Records of any applicable expenses if you plan to take itemized deductions, such as tools / supplies relevant to your self employment or business, a portion of bills required to run your home office, a child tax credit, medical bill tax credits, and others. This list is very far from exhaustive, it’s best to seek advice on whether you should itemize, and how to do it.
  • Information about any dependants.
  • Your personal information such as your social security number.
  • Home ownership information, health insurance information, and standard expenses such as childcare.
  • Other documentation if required by the filing forms.

How to Manually File a Tax Return

To file a tax return yourself, you need to fill out form 1040 from the IRS. Include the form, any required supporting documentation, and any payments, in an envelope and mail it directly to the IRS. Tax returns are usually due on or around April 15th — it’s important not to be late!

This method of filing is free, however it is the most complex, and takes the longest amount of time. It’s easy to make mistakes when you’re filing without additional support.

How to E-File a Tax Return

Filing your taxes online has become an increasingly popular option, and there are now services dedicated to helping people do just that.

The IRS has options for e-filing, including fillable forms and a free website to assist people in preparing the forms.

There are also e-filing services offered that can be completed cheaply, sometimes for free, depending on the amount of complexity in the filing. Companies like H&R Block and TurboTax provide these e-filing services, which often come with certain guarantees, such as the services of a tax attorney if you get audited on anything they prepare.

How to Professionally File a Tax Return

There are a number of companies that will file a tax return for you, giving you access to accountants who can advise you about the best course of action.

This is usually the most expensive option, but it can be worth it, especially if you are self-employed or a business owner. If there are complications with your taxes, it can often be more advisable to spend $300-$500 on a professional rather than risk getting audited. People with large tax refunds sometimes consider professional services the cost of doing business because their expertise in tax law can help reduce the amount they pay.

How to Check the Status of Your Tax Return

The time it takes to get your tax refund can vary. Generally, if you paper-file, it will take 6-8 weeks. If you e-file, it can take 3 weeks to get your refund, potentially faster if you sign up for direct deposit.

Generally, you should only need to check on the status of your refund if it’s late. In that case, it’s best to contact the IRS directly to ask about the status of your tax return. Double check the timing, because, for the most part, it’s just a waiting game.

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