Can I File My Own Taxes? How the Process Works

Many individuals can file their own tax returns, and the process is often straightforward with the variety of user-friendly tools available. The ability to do so successfully depends on the complexity of your financial situation and your comfort level with organizing financial records. Assessing the nature and variety of your financial activities is the first step in deciding whether to file on your own or seek professional assistance.

Assessing Your Tax Situation

Common Scenarios Suited for DIY Filing

Many financial situations are well-suited for individuals who prepare their own tax returns. If your income came exclusively from a job where you received a Form W-2, your return can be straightforward, especially if you claim the standard deduction rather than itemizing. The standard deduction simplifies the process for a large number of people.

Other common life events can also be managed without professional help, such as deducting student loan interest (Form 1098-E) or reporting unemployment compensation (Form 1099-G). Having some interest and dividend income (Forms 1099-INT and 1099-DIV) or making contributions to a traditional IRA also does not add significant complexity.

Scenarios That May Warrant Professional Help

Certain financial circumstances introduce complexities that may warrant professional assistance. This is often the case if you are self-employed or an independent contractor, as you must track and deduct business expenses on Schedule C. Accurately categorizing expenses and calculating depreciation can be challenging. Other situations that add complexity include:

• Owning rental property, which requires reporting income and expenses on Schedule E.
• Selling stocks or other investments, which requires reporting capital gains or losses on Schedule D.
• Receiving income from a foreign source.
• Being a partner in a business.
• Having to account for the alternative minimum tax.

Required Information and Documents

Personal Information

Before preparing your tax return, gather the personal details for yourself, your spouse, and any dependents. This includes the full legal name, date of birth, and Social Security Number (SSN) for each individual. An accurate SSN is required, as a mismatch can lead to the IRS rejecting your return. If you or a dependent do not have an SSN, you will need an Individual Taxpayer Identification Number (ITIN).

Income Documents

Next, collect all documents that report your income from the tax year. These forms detail the money you received and any taxes that were already withheld. Common income documents include:

• Form W-2 for wages from an employer.
• Form 1099-NEC for income as an independent contractor.
• Form 1099-MISC for miscellaneous income like rent or prizes.
• Form 1099-INT for interest income.
• Form 1099-DIV for dividends and distributions.
• Form 1099-G for unemployment benefits or a state tax refund.
• Form 1099-R for distributions from a retirement account, pension, or annuity.
• Form SSA-1099 for Social Security benefits.

Records for Adjustments, Deductions, and Credits

To reduce your taxable income, gather records for potential adjustments, deductions, and credits. For adjustments that lower your gross income, you may need Form 1098-E for student loan interest or Form 5498-SA for Health Savings Account (HSA) contributions. If you plan to itemize deductions instead of taking the standard deduction, you will need more extensive documentation. This can include:

• Form 1098 for mortgage interest paid.
• Records of property taxes paid.
• Receipts or bank records for charitable contributions.
• Records of significant medical expenses.
• Records of childcare expenses for the Child and Dependent Care Credit, including the provider’s taxpayer identification number.

Choosing Your Filing Method

After gathering your documents, you must select a filing method. One of the most popular options is commercial tax preparation software. These programs are user-friendly, guiding you through the process with a series of questions about your income and expenses. The software uses your answers to fill out the necessary forms, performs all calculations, and allows you to file electronically, which is the fastest and most secure way to submit to the IRS.

The IRS offers free filing options through its Free File program. If your Adjusted Gross Income (AGI) is below a certain threshold (which changes annually), you can use Guided Tax Software from partner companies at no cost. This provides a similar experience to paid software. If your income exceeds the threshold, you can use Free File Fillable Forms. These are electronic versions of paper IRS forms with basic calculation capabilities but offer limited guidance.

The traditional method of filing by mail with paper forms remains an option. This requires you to download the correct forms and instructions from the IRS website, fill them out by hand, and perform all calculations manually. This method is the most labor-intensive and has the longest processing time. You must ensure you are using the correct forms for the specific tax year.

The Filing Process Step-by-Step

For those e-filing with tax software, the process concludes with a final review. The software will provide a summary of your return, highlighting your AGI, total tax, and the refund or payment amount. You will be prompted to provide your bank account information—a routing and account number—for direct deposit of a refund or direct debit of a payment. After a final check, you electronically sign and transmit the return, and should receive an email confirmation within a day or two indicating whether the IRS has accepted it.

If you are filing a paper return by mail, the final steps require careful assembly. You must sign and date your return; if filing jointly, both spouses must sign. Attach a copy of your Form W-2 and any other forms showing federal tax withholding to the front of your Form 1040. You can find the correct IRS mailing address on the IRS website, which varies based on your location and whether you are including a payment. For proof of filing, it is advisable to use certified mail.