7.4 Filing Basics

Notes

Most workers file a yearly tax return to report income and settle up with the government.

• Use your W-2 (and 1099 forms for other income) to fill out the return.
• Steps: add up income, subtract deductions to find taxable income, compute the tax, subtract tax already withheld or paid.
• If withholding is more than the tax owed, you get a refund. If less, you pay the balance due.
• A standard deduction is a fixed amount anyone can subtract. Example (made-up): income $30,000 minus a $8,000 standard deduction gives taxable income of $22,000.
• File by the deadline (in the U.S., usually in April). Free filing help is available, and you should keep records.