This article was fact-checked by our editors and Jennifer Samuel, senior product specialist for Credit Karma. It has been updated for the 2020 tax year.
Federal income tax rules in the United States are very complicated.
This is true whether you’re filing taxes for the first time or are a practicing tax attorney with decades of experience. In fact, even the IRS Taxpayer Advocate Service acknowledges that the most serious problem that taxpayers face is the tax code’s complexity.
To help you navigate your own tax filing, we’ve got answers to some of the most-common tax questions right here.
- How do I know if I have to file a tax return?
- What income do I have to pay taxes on?
- What filing status should I choose?
- Do I have any dependents?
- How do I know my tax bracket and tax rate?
- What tax form should I use?
- Should I take the standard deduction or itemize?
- What’s the difference between a tax credit and a tax deduction?
- What are some deductions and credits I can claim?
- When are taxes due?
- How do I file a tax return?
- When will I get my refund?
- What if I can’t afford to pay the tax I owe?
Whether you’re required to file a tax return will depend on several factors, including your gross income, filing status, age, and whether you’re a dependent on someone else’s federal income tax return. And you may have to file even if you don’t owe any tax.
To get more specific information on who must file, check out IRS Publication 501. For most people, gross income is the main trigger for filing requirements. For example, in 2020, the filing threshold for single people younger than 65 was $12,400. For married couples filing jointly, it was $24,800 if both spouses were younger than 65.
If you were named as a dependent on someone else’s return and had income, you might also have to file, even if your income was much lower than the general threshold. Publication 501 has more detailed information on when dependents must file.
You’ll also need to file a return if you had at least $400 in self-employment earnings or meet other specific requirements, such as earning untaxed tips, receiving money from tax-exempt churches, or owing alternative minimum tax. IRS Publication 501 goes into details about these and other special situations.Learn about who has to file a federal tax return
According to the IRS, income includes money, property or services. Any income is taxable unless the law specifically exempts it, and all taxable income must be reported on your tax return. Some nontaxable income must be reported, too, even though you won’t pay taxes on it.
IRS Publication 525 has details on what counts as taxable income and what doesn’t, and it’s a lengthy list. Not all taxable income is treated the same. Earned income, like your wages, is taxed differently because you pay Social Security tax, Medicare tax, and state and federal income taxes on it.
Unearned income, like child support or Social Security benefits, isn’t subject to payroll taxes, but you do pay federal and sometimes state income tax on it. And some types of unearned income are taxed at a lower capital gains rate, rather than your normal tax rate.
Tax filers are treated differently based on household status. To inform the IRS of which rules apply to you, you’ll have to choose a filing status. There are five: single, married filing jointly, married filing separately, head of household and qualifying widow(er) with dependent child.
A dependent is a person you’re responsible for supporting. If you can claim a dependent, you can become eligible for certain tax breaks, including the child tax credit. You may also qualify for head-of-household status.
You may have a dependent if …
- You have a qualifying child younger than 19, or under 24 if they’re attending school full time. Your child must either live with you for more than half the year — or qualify for an exception — and must not provide more than half their own support. Your child also can’t file a joint tax return, except to claim a refund.
- You have a qualifying relative. Your qualifying relative either has to share a specific family relationship with you or must live with you all year long. You must provide more than half their support, they must earn very little, and they can’t be claimed as a dependent by anyone else.
The IRS provides an Interactive Tax Assistant Tool to help you determine if you have a dependent.
The U.S. has a progressive tax system, so not all your income is necessarily taxed at the same rate. Tax brackets refer to the range of incomes taxed at specific rates, while your marginal tax rate is the highest tax bracket applicable to your income.
There are seven tax brackets under current tax law. To find out which one you fall into — and what your tax rate is — you’ll need to know your income. You can then use IRS Tax Rate Schedules for the taxable year to determine your bracket, what your marginal tax rate is, and how much tax you might owe.What are the 2020 federal income tax brackets?
Beginning with the 2018 tax year, a single Form 1040 replaced the previous three versions — Forms 1040, 1040EZ and 1040A.
The simplified 1040 form, which you’ll use to file your 2020 individual federal income taxes, is half the size of recent forms and uses a “building block” approach to simplify the filing process. Taxpayers with more-complex tax situations may need to submit additional forms (called “schedules”), but all 150 million individual U.S. taxpayers start with the same basic form.
Deductions reduce taxable income. You have a choice between taking a standard deduction or itemizing your deductions. When you itemize, you reduce taxable income by the value of certain expenses deductible under U.S. tax law. For example, if you pay mortgage interest, you can deduct the interest paid — but only if you itemize.
To decide which deductions to take, compare the value of the standard deduction versus the total value of your itemized deductions. For 2020, the standard deduction amounts are:
- $12,400 if you file as single or married filing separately
- $18,650 if you file as head of household
- $24,800 if you file as married filing jointly
Because tax reform significantly increased the standard deduction, you may find your itemized deductions don’t exceed the standard deduction amount for your filing status.
Both tax credits and tax deductions can reduce the amount of tax you must pay. Deductions reduce the amount of income you pay taxes on, which in turn can reduce your tax. Credits are a dollar-for-dollar reduction in the amount of tax you owe.
If you had an income of $30,000 and took a $1,000 deduction, you don’t have to pay tax on that $1,000 of income. The deduction could save you $200 (assuming a 20% tax rate on that $1,000).
By contrast, a $1,000 credit would reduce the actual amount of tax you owe by that $1,000. So if you owed $3,000 in taxes, you’d now owe $2,000 and save $1,000.
The deductions and credits you’re eligible to claim vary depending upon your situation. Here are some deductions that you can claim even if you don’t itemize.
- Contributions to individual retirement arrangements, including IRAs, SEP-IRAs, Simple IRAs and solo 401(k)s (these phase out at higher incomes)
- 50% of self-employment taxes
- Student loan interest up to $2,500
- Tuition and fees for higher education up to $4,000 if you fall within income limits
- Health savings account contributions made with personal funds
Deductions you may be eligible to claim only if you itemize:
- $10,000 maximum for the aggregate of state and local taxes paid (SALT taxes)
- Interest on up to $1 million of eligible home mortgage debt for loans taken out before Dec. 15, 2017, and up to $750,000 of eligible home mortgage debt for loans taken out after that
- A deduction for medical expenses, but only if they cost at least 7.5% of your income
- A deduction for charitable contributions that don’t exceed a set percentage of income
And finally, here are credits you may be eligible to claim.
- The earned income tax credit provides a credit for lower-income Americans. The IRS EITC Assistant can help you determine if you qualify.
- The child tax credit provides a credit of up to $2,000 per qualifying child for tax years 2018 to 2024. As much as $1,400 of this credit is refundable. Eligibility begins phasing out at $200,000 in income for single filers and $400,000 in income for married couples filing jointly.
- The child and dependent care tax credit is valued at 20%–35% of the costs of allowable care expenses, up to $3,000 in expenses for the care of one qualifying person. A taxpayer caring for two or more dependents could claim a maximum credit of $6,000.
- The American opportunity tax credit provides a maximum credit of $2,500 for qualifying educational expenses paid for eligible students. The credit is available only for tuition paid for the first four years of post-secondary education and there are income limits.
- The lifetime learning credit provides a maximum credit of $2,000 per year for postsecondary educational costs. There are also income limits, and the credit is worth only 20% of qualifying expenses, up to a $10,000 maximum.
Depending on your situation, there are probably other deductions and credits you can claim.
Each year, you’re required to file your federal income tax return for the previous calendar year by Tax Day. Usually, the filing deadline is on or around April 15, though if the 15th falls on a weekend or holiday the deadline can be bumped to the next business day.
How do you get a filing extension?
You can request a six-month extension for filing your federal income tax return. In most cases, the IRS can grant an automatic filing extension.
Note that a filing extension doesn’t give you more time to pay any tax you owe. Your tax payment is due on Tax Day, and not paying on time could mean you face interest and penalties on the unpaid amount. Learn more about filing extensions here.
You have multiple options to file your return.
- Mail: The address to mail in your return will depend on the state you live in (the IRS offers a list of addresses)
- IRS e-file: The e-file system is free if your income is $72,000 or less
- Free online tax filing: With a service such as Credit Karma
- DIY: With fee-based tax-preparation software
- Paid tax professional: If your situation is more complex
However you choose to file, be aware that submitting your return electronically has several advantages. If you’re owed a refund, you could get it sooner via e-file, since the IRS processes e-filed returns more quickly than paper returns.
According to the IRS, most refunds are issued within 21 days for taxpayers who e-filed and who are having their refund directly deposited. Refunds take up to six weeks if you submitted paper returns. Claiming certain credits or deductions might delay your refund. You can check the status of your refund on the IRS “Where’s My Refund” website.
If you can’t afford to pay your taxes, it’s imperative you still file tax a return and make arrangements to pay what you owe. Failing to file and/or pay your taxes on time will result in interest and penalties.
If you can’t afford to pay the full amount you owe by the deadline, the IRS has multiple payment options that could help, including installment agreements. Keep in mind that you’ll still owe interest, and possibly penalties, even if you enter into a payment arrangement.
Costs and fees of payment plans vary depending upon the duration of your plan and whether you apply by mail or online.
While these answers to top tax questions might help you get started in fulfilling your tax obligations, you may still have questions as you go through the process of filing a return. You can find more answers from Credit Karma about a wide array of issues, from how a car lease affects your taxes to forms you may need to use if you suspect a fraudulent tax return has been filed in your name.
Jennifer Samuel, senior tax product specialist for Credit Karma, has more than a decade of experience in the tax preparation industry, including work as a tax analyst and tax preparation professional. She holds a bachelor’s degree in accounting from Saint Leo University. You can find her on LinkedIn.