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A tax return is a series of forms you file with the IRS or other taxing authority to report your income, calculate the tax you owe and determine whether you'll owe additional taxes or receive a refund. Your tax return shows your filing status, dependents, deductions, tax credits and withholding or estimated tax payments.
Understanding how your tax return works can help you prepare for tax season and get your filing right, whether you choose to do your own taxes or work with a tax advisor.
What Information Appears on a Tax Return?
You file your individual taxes using IRS Form 1040, which allows you to report income, claim deductions, account for payments made throughout the year and calculate refunds or additional taxes owed. Here's a general breakdown of what's on an individual tax return:
- Your filing status: Either single, married filing jointly, married filing separately, head of household or qualifying widow(er)
- Your personal contact information: Name, mailing address and Social Security number
- Your dependents including their relationship to you and their Social Security numbers
- Income: Wages, salaries, tips, business income from independent contracting, investment and interest income, retirement distributions and Social Security benefits
- Standard or itemized deductions: If you itemize, you'll file Schedule A separately to show your deductions
- Taxes paid: Tax withheld from your paycheck (shown on your W-2) and estimated taxes you've paid throughout the year
- Tax credits if you are eligible for the child tax credit, child and dependent care credit, earned income tax credit or other refundable or nonrefundable tax credits
- Refund or amount you owe after calculating your tax for the year and comparing it to what you've paid in withholding and estimates
What Do You Need to File a Tax Return?
The forms, documentation and information you'll need to file your taxes varies depending on your situation. Being self-employed, itemizing your deductions and having investment income or capital gains are just a few of things that can complicate your tax return and require additional paperwork.
For basic individual filers, here's the information you'll need to get started on your tax return. Download Form 1040 and get out your pencil or consider using tax preparation software for interactive help.
Report Your Earnings and Income
Be ready to account for all income you've made throughout the year. This includes money you earned on a job, self-employment or a side gig. It also includes interest from your bank accounts, dividends paid on your investments and any capital gains (or losses) you've made.
If you receive any of the W-2 or 1099 forms shown below, be aware that the IRS also receives copies. When you file your tax return, your reported income should account for the income in all W-2s and 1099s you've received: If your W-2 says you earned $70,000 and you only report $37,000, the IRS will inquire about the difference and may audit your tax return.
These are the forms you'll use to report your income:
- W-2 forms show how much you earned from your employer(s)
- 1099-NEC forms show income from independent contracting. Use Schedule C to calculate self-employment income.
- 1099-INT shows interest paid to you
- 1099-DIV shows dividends paid
- Schedule D, completed separately, shows income or losses from capital gains
Add Up Taxes You've Paid
- Use information from your W-2 to report taxes withheld from your wages.
- Add up any estimated tax payments you've made throughout the year.
Document Deductions and Credits
- Determine your correct filing status.
- Count your dependents.
- Choose between a standard or itemized deduction. If you itemize, use Schedule A to show your deductions and be prepared with receipts.
- If you're eligible for tax credits, check guidelines for information on the documents you'll need to support the credit.
How Long Should You Keep Tax Returns?
The IRS recommends keeping your tax return and any supporting documents you've used to prepare your taxes on file for at least three years. Supporting documents include receipts, mileage logs and proof of payments related to deductions or credits you claim on your tax return.
The IRS recommends keeping documents from home sales or purchases, stock transactions, retirement accounts, business income and expenses, and rental properties for longer. They may be helpful if you're selected for an audit. Although audits typically take place within three years of filing your tax return, a "substantial error" could trigger an IRS audit even after three years are up. If you didn't file taxes, or if you think information in your tax return could be disputed as fraudulent, save your documentation indefinitely, just in case.
Although having your past tax returns on hand is helpful for reference when completing future returns or to document your income on loan applications, you can also download a transcript of a prior year's tax return on the IRS website if you haven't kept your past returns.
The Bottom Line
If you're not much for math and accounting, don't be afraid to get help. Tax preparation software can walk you through the process step by step with helpful instructions that clarify IRS rules and terminology. Many taxpayers can qualify for free access to tax prep software through IRS Free File. And for a fee, a qualified tax preparer can be hired to answer your questions and help you complete your return correctly while maximizing your deductions and credits.
Between the specialized terminology, the paperwork and fear of running afoul of the IRS, filing a tax return can seem daunting. But the basic elements of a tax return are fairly simple. Complete the form honestly and accurately, save your documents, double check your math and file on time, and you're good to go until next tax season.