How To File Your Taxes

Filing your taxes is an annual obligation for most U.S. residents, and understanding the process can help you avoid costly mistakes, claim the credits and deductions you qualify for, and minimize your risk of IRS penalties or audits. Whether you are filing for the first time or have decades of experience, the tax landscape changes frequently. This guide walks through the essential steps for filing your 2024 federal income tax return (due in 2025), covering everything from gathering documents and choosing a filing method to understanding deductions, credits, and what to do if you cannot pay what you owe.

Step 1: Determine If You Need to File

Not everyone is legally required to file a federal income tax return. Your filing requirement generally depends on your gross income, filing status, and age. For the 2024 tax year, the IRS outlines minimum income thresholds in Publication 501. Below are the general thresholds for most taxpayers:

Filing Status	Age at End of 2024	Gross Income Threshold
Single	Under 65	$14,600
Single	65 or older	$16,550
Married Filing Jointly	Both under 65	$29,200
Married Filing Jointly	One spouse 65 or older	$30,750
Head of Household	Under 65	$21,900
Head of Household	65 or older	$23,850

Even if your income falls below these thresholds, you may still want to file. If federal income tax was withheld from your pay, or if you qualify for refundable credits like the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit, filing a return is typically the only way to claim that money back.

Special Filing Situations

Self-employed individuals generally must file a return if their net earnings from self-employment are $400 or more, regardless of total gross income (per IRS Publication 334). This is because self-employment tax (covering Social Security and Medicare) applies at lower income levels than the standard filing thresholds. Additionally, individuals who received distributions from Health Savings Accounts (HSAs) or marketplace health insurance subsidies may have filing obligations even at lower income levels.

Step 2: Gather Your Documents

Before sitting down to prepare your return, collecting all relevant tax documents helps ensure accuracy and completeness. Missing a form is one of the most common reasons taxpayers need to file amended returns later. Key documents typically include:

• W-2 forms from each employer, reporting wages and tax withholding
• 1099 forms for freelance income (1099-NEC), interest (1099-INT), dividends (1099-DIV), investment sales (1099-B), retirement distributions (1099-R), and other income types
• 1098 forms for mortgage interest paid and tuition statements (1098-T)
• Form 1095-A if you purchased health insurance through the Marketplace
• Records of estimated tax payments made during the year
• Receipts and documentation for deductible expenses (charitable contributions, medical bills, business expenses)
• Your prior year’s tax return, which may be helpful for reference and carryover amounts
• Social Security numbers or Individual Taxpayer Identification Numbers (ITINs) for yourself, your spouse, and any dependents

Most employers and financial institutions are required to issue these forms by January 31, 2025, for the 2024 tax year. Brokerage firms issuing 1099-B forms may have until February 15, 2025, and some consolidated statements arrive even later. If a form is delayed, contacting the issuer directly is typically the fastest resolution.

Step 3: Choose Your Filing Status

Your filing status affects your tax bracket thresholds, standard deduction amount, and eligibility for various credits and deductions. The five filing statuses recognized by the IRS are:

1. Single
2. Married Filing Jointly (MFJ)
3. Married Filing Separately (MFS)
4. Head of Household (HOH)
5. Qualifying Surviving Spouse

In most cases, married couples benefit from filing jointly because MFJ typically offers the widest tax brackets and the largest standard deduction ($29,200 for 2024). However, there are situations where Married Filing Separately may be advantageous, such as when one spouse has significant medical expenses (which are deductible only above 7.5% of AGI) or when one spouse has concerns about the other’s tax reporting accuracy. It is worth noting that MFS filers lose access to several credits, including the EITC and education credits, so the trade-offs can be significant.

Head of Household status provides a larger standard deduction ($21,900 for 2024) and more favorable tax brackets than Single status, but it requires that you be unmarried (or considered unmarried) on the last day of the tax year, have paid more than half the cost of maintaining your home, and have a qualifying dependent who lived with you for more than half the year. The IRS scrutinizes HOH claims closely, and incorrectly claiming this status may result in penalties or audit inquiries (per IRS Publication 501).

Step 4: Decide Between Standard Deduction and Itemizing

One of the most impactful decisions in your tax return is whether to take the standard deduction or to itemize deductions on Schedule A. For the 2024 tax year, the standard deduction amounts are:

Filing Status	2024 Standard Deduction
Single	$14,600
Married Filing Jointly	$29,200
Married Filing Separately	$14,600
Head of Household	$21,900

Taxpayers age 65 or older, or those who are blind, generally qualify for an additional standard deduction amount ($1,950 for single/HOH filers or $1,550 per qualifying spouse for MFJ filers in 2024, per IRS Revenue Procedure 2023-34).

According to the Tax Foundation, approximately 87% of taxpayers claimed the standard deduction following the Tax Cuts and Jobs Act of 2017, which nearly doubled the standard deduction amounts. Itemizing typically makes sense only when your total qualifying expenses exceed the standard deduction. Common itemized deductions include:

• State and local taxes (SALT), capped at $10,000 per return
• Mortgage interest on up to $750,000 of acquisition debt
• Charitable contributions (generally up to 60% of AGI for cash donations to qualifying organizations)
• Medical and dental expenses exceeding 7.5% of AGI

A Practical Example

Consider a married couple filing jointly with $95,000 in combined income. They paid $8,500 in state and local taxes, $12,000 in mortgage interest, and donated $4,200 to qualifying charities. Their total itemized deductions would be $24,700, which is less than the $29,200 standard deduction. In this case, taking the standard deduction would typically result in a lower tax liability. However, if the same couple also had $6,000 in unreimbursed medical expenses on an AGI of $70,000 (with $5,250 deductible after the 7.5% threshold), their itemized total could exceed the standard deduction, making itemizing potentially more beneficial.

Step 5: Choose a Filing Method

There are generally three ways to file your federal tax return, each with its own advantages and limitations:

Tax Preparation Software

Commercial software programs guide you through the filing process with interview-style questions and typically handle calculations automatically. Costs vary widely, from free versions for simple returns to $100 or more for complex situations. These programs generally reduce errors compared to manual preparation, though they are only as accurate as the information you enter.

Professional Tax Preparers

Enrolled agents, CPAs, and other tax professionals may be particularly valuable for taxpayers with complex situations: rental properties, business income, multistate filings, or significant life changes. The National Society of Accountants reported that the average fee for preparing an itemized Form 1040 with a state return was approximately $323 in 2023. Costs in 2024 and 2025 may be higher. When selecting a preparer, verifying their Preparer Tax Identification Number (PTIN) and checking for disciplinary actions through the IRS Directory of Federal Tax Return Preparers is a prudent step.

Free Filing Options

The IRS Free File program offers free federal tax preparation and e-filing for taxpayers with an AGI of $84,000 or less in 2024 through partner software providers. The IRS Direct File pilot program, expanded for the 2025 filing season, allows eligible taxpayers in participating states to file directly with the IRS at no cost. Additionally, the Volunteer Income Tax Assistance (VITA) program provides free tax preparation for individuals who generally earn $67,000 or less, persons with disabilities, and limited English-speaking taxpayers (per IRS Publication 3676-B).

Step 6: Understand Key Credits and Deductions

Tax credits directly reduce your tax liability (dollar for dollar in most cases), while deductions reduce your taxable income. Knowing which ones you may qualify for can significantly affect your bottom line.

Common Tax Credits for 2024

• Child Tax Credit: Up to $2,000 per qualifying child under age 17, with up to $1,700 refundable as the Additional Child Tax Credit. Phase-out begins at $200,000 AGI ($400,000 for MFJ), per IRS Publication 972.
• Earned Income Tax Credit (EITC): Worth up to $7,830 for a family with three or more qualifying children in 2024. Income limits vary by filing status and number of children. This is a fully refundable credit, meaning you may receive it even if you owe no tax (per IRS Publication 596).
• American Opportunity Tax Credit: Up to $2,500 per eligible student for the first four years of higher education, with 40% (up to $1,000) refundable.
• Lifetime Learning Credit: Up to $2,000 per return for qualified education expenses, not limited to the first four years of college but nonrefundable.
• Child and Dependent Care Credit: Based on expenses for the care of qualifying dependents while you work, covering up to $3,000 in expenses for one dependent or $6,000 for two or more.

Above-the-Line Deductions

These deductions reduce your AGI and are available whether or not you itemize. They include:

• Contributions to traditional IRAs (up to $7,000 for 2024, or $8,000 if age 50 or older), subject to income-based phase-outs if covered by a workplace plan
• Student loan interest (up to $2,500), per IRS Publication 970
• Self-employment tax deduction (50% of self-employment tax paid)
• Health Savings Account (HSA) contributions (up to $4,150 for self-only coverage or $8,300 for family coverage in 2024)
• Educator expenses (up to $300 for qualifying K-12 teachers)

Step 7: File Your Return and Handle Payment or Refund

E-Filing vs. Paper Filing

The IRS strongly encourages electronic filing. For the 2023 filing season, approximately 93% of individual returns were filed electronically, according to IRS data. E-filed returns are typically processed faster, contain fewer errors (an error rate of less than 1% compared to roughly 21% for paper returns, per IRS estimates), and allow for direct deposit of refunds. Paper filing may still be necessary in limited situations, such as when filing certain amended returns or when the taxpayer prefers not to use electronic methods.

If You Owe Taxes

If your return shows a balance due, payment is generally expected by April 15, 2025, even if you file an extension. Payment options include:

• IRS Direct Pay: Free bank transfer directly from your checking or savings account
• Electronic Federal Tax Payment System (EFTPS): Requires enrollment but allows scheduled payments
• Credit or debit card: Accepted through third-party processors, though processing fees apply (typically 1.85% to 1.98% for credit cards)
• Installment agreement: The IRS generally allows taxpayers who owe $50,000 or less to set up a payment plan online. Interest and penalties continue to accrue on the unpaid balance. The current interest rate on underpayments is 7% per year (as of Q1 2025, per IRS Revenue Ruling 2024-24), compounded daily.

Important: The failure-to-file penalty (typically 5% of unpaid taxes per month, up to 25%) is generally much steeper than the failure-to-pay penalty (typically 0.5% per month, up to 25%). If you cannot pay in full, filing on time and paying as much as possible typically minimizes total penalties, per IRS Topic No. 653.

If You Are Expecting a Refund

The IRS typically issues refunds within 21 days of accepting an e-filed return when direct deposit is selected. Paper-filed returns may take six to eight weeks or longer. You can track your refund status using the IRS “Where’s My Refund?” tool or the IRS2Go mobile app. Returns claiming the EITC or Additional Child Tax Credit may experience delays, as the IRS is required by law (under the PATH Act) to hold these refunds until mid-February.

Step 8: File an Extension If Needed

If you cannot complete your return by April 15, 2025, filing Form 4868 grants an automatic six-month extension to file (making the new deadline October 15, 2025). This extension applies only to filing, not to payment. Any taxes owed are still due by the original deadline, and interest accrues on unpaid balances from April 15 forward.

Filing an extension is generally a better option than filing an inaccurate or incomplete return. However, it is worth noting that consistently filing extensions may, in rare cases, draw additional scrutiny if combined with other factors, though an extension by itself does not increase audit risk according to most tax professionals.

Common Mistakes to Avoid

Even experienced filers make errors that may trigger IRS notices or delays. The most common mistakes include:

• Math errors: Still among the top reasons the IRS adjusts returns, even with software preparation
• Incorrect Social Security numbers: A transposed digit can delay processing or cause a rejected return
• Forgetting to report all income: The IRS receives copies of all W-2s and 1099s. Omitting a 1099 for $500 in freelance work, for example, will likely generate an automated CP2000 notice
• Claiming ineligible dependents: Only one taxpayer may claim a dependent, and specific residency and support tests must be met (per IRS Publication 501)
• Missing the filing deadline: Even if you owe nothing, late filing can delay refunds and complicate future filings
• Choosing the wrong filing status: Particularly common with Head of Household, which has specific qualifying requirements

Audit Risk: What to Know

The overall individual audit rate has declined significantly in recent years. According to IRS Data Book statistics, the audit rate for individual returns filed in recent years has hovered around 0.4% overall, though rates vary dramatically by income level. Taxpayers with income above $1 million face audit rates several times higher than average, while EITC claimants have also historically been audited at elevated rates.

Certain items on your return may increase scrutiny, including large charitable deductions relative to income, significant business losses reported on Schedule C (particularly losses claimed year after year), home office deductions, and high unreimbursed expenses. Maintaining thorough records and documentation is the most effective way to support your return in the event of an IRS inquiry.

Data Sources

• IRS Publication 501 (2024): Dependents, Standard Deduction, and Filing Information
• IRS Publication 334 (2024): Tax Guide for Small Business
• IRS Publication 596 (2024): Earned Income Credit
• IRS Publication 970 (2024): Tax Benefits for Education
• IRS Publication 972 (2024): Child Tax Credit
• IRS Publication 3676-B: VITA/TCE Volunteer Resource Guide
• IRS Revenue Procedure 2023-34: Inflation Adjustments for Tax Year 2024
• IRS Revenue Ruling 2024-24: Quarterly Interest Rates
• IRS Topic No. 653: IRS Notices and Bills, Penalties, and Interest Charges
• IRS Data Book (2023): Examination Coverage and Results
• Tax Foundation: “The Tax Cuts and Jobs Act Simplified the Tax Filing Process for Millions of Americans” (2024 analysis of standard deduction usage)
• National Society of Accountants: 2023 Income and Fees Survey
• IRS Free File Program: Eligibility and partner information for the 2025 filing season
• IRS Direct File: Program details and participating states for the 2025 filing season