Preparing your taxes comes down to three things: gathering the right documents, choosing how you want to file, and claiming every deduction and credit you qualify for. Whether your situation is straightforward (a single W-2 and no major life changes) or more complex (freelance income, investments, a mortgage), the process follows the same basic steps. Here’s how to work through each one.
Gather Your Documents First
The biggest time sink in tax preparation is hunting for paperwork mid-return. Collect everything before you sit down to file. You’ll need your Social Security number (or ITIN), last year’s adjusted gross income and refund amount if you e-filed, and your bank account and routing numbers for direct deposit.
Your income documents should start arriving by late January. The most common ones include:
- Form W-2 from each employer, showing wages and taxes withheld
- Form 1099-NEC for freelance or independent contractor income
- Form 1099-INT for bank interest
- Form 1099-DIV for stock dividends
- Form 1099-R for retirement distributions or pensions
- Form 1099-G for unemployment benefits or state tax refunds
- Form 1099-K for payments received through online marketplaces or payment apps
- Form SSA-1099 for Social Security benefits
- Form W-2G for gambling or lottery winnings
If you bought health insurance through the marketplace, look for Form 1095-A, which you’ll need to reconcile any premium tax credits. And if you sold cryptocurrency or other digital assets, keep records of those transactions even if you didn’t receive a formal tax form.
For deductions and credits, hold onto receipts and statements for mortgage interest, property taxes, charitable donations, childcare expenses, education costs, health savings account contributions, and retirement contributions. Self-employed filers should also have records of business expenses, mileage logs, and any estimated tax payments made during the year.
Decide: Standard Deduction or Itemized
Every filer chooses between the standard deduction, a flat amount the IRS lets you subtract from your income, and itemized deductions, where you list and total your actual qualifying expenses. You pick whichever one is larger, because a bigger deduction means less taxable income.
For the 2025 tax year (filed in 2026), the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for head of household. If your combined mortgage interest, state and local taxes (capped at $10,000), charitable gifts, and medical expenses above a certain threshold don’t exceed those amounts, the standard deduction saves you more. Roughly 90% of filers take the standard deduction.
Even if you take the standard deduction, you can still claim certain tax credits and “above the line” deductions like student loan interest or contributions to a traditional IRA. These reduce your taxable income on top of the standard deduction, not instead of it.
Choose How to File
You have three main options: do it yourself with software, use a free filing program, or hire a professional. The right choice depends on how complex your return is and how comfortable you are navigating tax forms.
Free Filing Options
If your adjusted gross income is $89,000 or less, IRS Free File gives you access to brand-name tax software at no cost. You access it through irs.gov, and each participating software company sets additional eligibility criteria like age or state residency. For filers above that income threshold, IRS Free File Fillable Forms lets anyone fill out and e-file federal forms directly, though you won’t get the guided interview experience that walks you through questions step by step.
Two other free options serve specific groups. The Volunteer Income Tax Assistance (VITA) program offers in-person help for lower-income filers, people with disabilities, and those with limited English. Tax Counseling for the Elderly (TCE) serves taxpayers age 60 and older. Both are staffed by trained volunteers who prepare and file your return at no charge. Active-duty military members and their families can use MilTax, a Department of Defense program that covers one federal return and up to three state returns for free.
Paid Tax Software
Commercial software like TurboTax, H&R Block, and TaxAct typically ranges from free for the simplest returns to about $125 for self-employed filers, plus an additional fee per state return. Premium tiers that include a professional review of your completed return can push the total to around $200. These programs walk you through your return with a question-and-answer format, flag potential deductions, and handle the math automatically. For a W-2 employee with straightforward finances, even a basic paid tier is usually more than enough.
Hiring a Tax Professional
A simple Form 1040 with the standard deduction and a state return costs around $220 on average when prepared by a professional. More complex situations, like itemized deductions, small business income reported on Schedule C, or rental properties, typically run $400 to over $1,500. Some CPAs and enrolled agents charge hourly rates between $100 and $400. National chains like H&R Block start at $99 for a federal return, with added charges for state filing and complex forms.
Professional help tends to pay for itself when you have multiple income streams, own a business, went through a major life event like a divorce or inheritance, or simply feel uncertain about what you’re doing. For a single-income household taking the standard deduction, software handles the job well.
Walk Through Your Return Step by Step
Whether you’re using software or filling out forms yourself, the return follows the same logical flow. Understanding it helps you catch errors and feel confident in the result.
Start with your filing status. Your options are single, married filing jointly, married filing separately, head of household, or qualifying surviving spouse. Filing status affects your tax brackets and standard deduction amount, so choosing correctly matters. Head of household, for example, gives you a larger standard deduction than single, but you must have paid more than half the cost of keeping up a home for a qualifying dependent.
Next, report all your income. Your W-2s, 1099s, and other forms feed into this section. Don’t skip income just because you didn’t receive a form for it. The IRS gets copies of most information returns, and unreported income is one of the fastest ways to trigger a notice. Side hustle earnings, cash payments, and digital asset sales all count.
Then apply your deductions (standard or itemized) to arrive at your taxable income. After that, calculate your tax using the appropriate bracket, then subtract any credits you qualify for. Credits like the Child Tax Credit, Earned Income Tax Credit, and education credits (the American Opportunity Credit and Lifetime Learning Credit) reduce your tax bill dollar for dollar, making them more valuable than deductions.
Finally, compare your total tax to what you’ve already paid through withholding and estimated payments. If you’ve overpaid, you get a refund. If you’ve underpaid, you owe the difference.
Key Deadlines to Know
The federal filing deadline is April 15. If that date falls on a weekend or holiday, the deadline shifts to the next business day. You can request an automatic six-month extension by filing Form 4868 before the deadline, which gives you until October 15 to submit your return. An extension gives you more time to file, not more time to pay. If you owe taxes, interest and penalties start accruing after April 15 regardless of an extension.
If you’re self-employed or have significant income without withholding, you’re expected to make estimated tax payments quarterly (typically due in April, June, September, and January of the following year). Missing these can result in an underpayment penalty even if you pay in full by April 15.
After You File
E-filed returns are typically processed within 21 days, and refunds sent via direct deposit arrive fastest. Paper returns take significantly longer, often six weeks or more. You can track your refund status using the IRS “Where’s My Refund?” tool on irs.gov or the IRS2Go mobile app, usually within 24 hours of e-filing.
Keep a copy of your completed return and all supporting documents for at least three years, which is the standard window the IRS has to audit most returns. If you underreported income by more than 25%, the IRS has six years. Store your records digitally or in a safe place so you can reference them if questions come up or if you need last year’s AGI to verify your identity when filing next year.