Most U.S. citizens and permanent residents who work in the United States need to file a tax return if they make more than a certain amount for the year.
The IRS has a variety of information available on IRS.gov to help taxpayers, including a special “free help” page. Here are some specific details to help people if they need to file a tax return.
Factors that affect whether someone needs to file a tax return
Here are some of the things that affect whether someone must file a tax return.
Gross income. Gross income means all income a person received in the form of money, goods, property and services that aren’t exempt from tax. This includes any income from sources outside the United States or from the sale of a main home, even if you can exclude part or all of it.
Required filing threshold. People need to see if their gross income is over the required filing threshold. Filing statuses have different income thresholds, so individuals may need to consider their potential filing status as well.
Self-employment status.Self-employed individuals must file an annual return and pay estimated tax quarterly if they had net earnings from self-employment of $400 or more.
Status as a dependent. A person claimed as a dependent may still have to file a return. It depends on their gross income, including:
Earned income. This includes salaries, wages, tips, professional fees and other amounts received as pay for work performed.
Unearned income. This is investment-type income and includes interest, dividends and capital gains, rents, royalties, etc. Distributions of interest, dividends, capital gains and other unearned income from a trust are also unearned income to a beneficiary of the trust.
A parent or guardian must file a tax return for dependents who need to file but aren’t able to file for themselves.
Potential benefits when people file a tax return
Get money back. In some cases, people may get money back when they file a tax return. For example, if their employer withheld taxes from their paycheck, the person may be due a refund.
Avoid interest and penalties. People can avoid interest and penalties by filing an accurate tax return on time and paying any tax they owe before the deadline. They should file on time or request an extension to avoid some penalties. If they owe a tax debt and can’t pay all or part of it, the IRS can help.
Build Social Security benefits. Reporting income on a tax return is important for self-employed people because this information is used to calculate their Social Security benefit. Unreported income can lead to an incorrect calculation.
Get an accurate picture of income. When people report all their income, they give lenders an accurate financial picture to determine the loan amounts and rates they may receive.
Get peace of mind. When people file an accurate tax return and pay their taxes on time, they know that they’re doing the right thing to follow the law.
Some people should consider filing even if they aren’t required
People may want to file even if they make less than the filing threshold because they may get money back. This could apply to them if they:
Have had federal income tax withheld from their pay
The Interactive Tax Assistant is an online tool that provides answers to common tax law questions based on an individual’s specific circumstances. Based on a user’s input, it can determine if they should file a tax return. It can also help them understand:
Their filing status
If they can claim a dependent
If the type of income they have is taxable
If they’re eligible to claim a credit
If they can deduct expenses
The information is anonymous and only used to help answer the person’s question. The tool will not share, store or use information in any other way, and it can’t identify the individual using it. The system discards the information the user provides when they exit a topic.
IRS: Take care when choosing a tax return professional
WASHINGTON –The Internal Revenue Service today reminded taxpayers that carefully choosing a tax professional to prepare a tax return is vital to ensuring that their personal and financial information is safe and secure and treated with care.
Most tax return preparers provide honest, high-quality service. But some may cause harm through fraud, identity theft and other scams.
It is important for taxpayers to understand who they’re choosing and what important questions to ask when hiring an individual or firm to prepare their tax return.
Another reason to choose a tax preparer carefully is because taxpayers are ultimately legally responsible for all the information on their income tax return, regardless of who prepares it.
Red flags to watch out for There are warning signs that can help steer taxpayers away from unscrupulous tax return preparers. For instance, not signing a tax return is a red flag that a paid preparer is likely not to be trusted. They may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund.
These unscrupulous “ghost” preparers often print the return and have the taxpayer sign and mail it to the IRS. For electronically filed returns, a ghost preparer will prepare the tax return but refuse to digitally sign it as the paid preparer. Taxpayers should avoid this type of unethical preparer.
In addition, taxpayers should always choose a tax professional with a valid Preparer Tax Identification Number. By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid PTIN. Paid preparers must sign and include their PTIN on any tax return they prepare.
Other tips Here are a few other tips to consider when choosing a tax return preparer:
Look for a preparer who’s available year-round. If questions come up about a tax return, taxpayers may need to contact the preparer after the filing season is over.
Review the preparer’s history. Check the Better Business Bureau website for information about the preparer. Look for disciplinary actions and the license status for credentialed preparers. For CPAs, check the State Board of Accountancy’s website, and for attorneys check with the State Bar Association. For enrolled agents go to IRS.gov and search for “verify enrolled agent status” or check the IRS Directory of Federal Tax Return Preparers.
Ask about service fees. Taxpayers should avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own financial accounts. Be wary of tax return preparers who claim they can get larger refunds than their competitors.
Find an authorized IRS e-file provider. They are qualified to prepare, transmit and process e-filed returns. The IRS issues most refunds in fewer than 21 days for taxpayers who file electronically and choose direct deposit.
Provide records and receipts. Good preparers ask to see these documents. They’ll also ask questions to determine the client’s total income, deductions, tax credits and other items. Do not hire a preparer who e-files a tax return using a pay stub instead of a Form W-2. This is against IRS e-file rules.
Understand the preparer’s credentials and qualifications. Attorneys, CPAs and enrolled agents can represent any client before the IRS in any situation. Annual Filing Season Program participants may represent taxpayers in limited situations if they prepared and signed the tax return.
Never sign a blank or incomplete return. Taxpayers are responsible for filing a complete and correct tax return.
Review the tax return before signing it. Be sure to ask questions if something is not clear or appears inaccurate. Any refund should go directly to the taxpayer – not into the preparer’s bank account. Review the routing and bank account number on the completed return and make sure it’s accurate.
IRS offering additional time at Taxpayer Assistance Centers for face-to-face help
Helped by Inflation Reduction Act funding, nearly 250 IRS Taxpayer Assistance Centers nationwide will have extended operating hours Tuesdays and Thursdays during the tax filing season
IR-2024-25, Jan. 29, 2024
WASHINGTON — The Internal Revenue Service today announced nearly 250 IRS Taxpayer Assistance Centers (TACs) around the country will extend their weekly office hours to give taxpayers additional time to get the help they need during the filing season.
The extended office hours will continue through Tuesday, April 16. To see if a nearby TAC is offering extended hours, taxpayers can visit Contact your local office to access the IRS.gov TAC Locator tool. The site lists services offered, including extended hours and directions to each office. Taxpayers can call 844-545-5640 to make an appointment or walk in to get help at designated TACs offering the additional time. Normally, TACs are open from 8:30 a.m. to 4:30 p.m., Monday through Friday, and operate by appointment.
The expanded hours at the assistance centers reflect funding and staffing made possible under the Inflation Reduction Act, which is being used across the IRS to improve taxpayer service, add new technology and tools as well as help tax compliance efforts.
“This is another example of how additional IRS resources are helping taxpayers across the country,” said IRS Commissioner Danny Werfel. “Adding extra hours provide more options for hard-working taxpayers to get help with their tax issues. The IRS is continuing to work hard both during the upcoming tax season and throughout the year to find ways to make it easier for people to interact with us.”
“We’re inviting anyone who wants or needs some assistance to stop by,” added IRS Wage & Investment Division Commissioner and Taxpayer Experience Officer Ken Corbin. “This is one more way the IRS is delivering expanded services to help visitors resolve their tax issues, make a payment or answer general tax-related questions. Whatever the case, we’re offering additional time for taxpayers to get the face-to-face help they may need.”
During these additional office hours, TACs will offer all regular services, however for cash payments, taxpayers must have an appointment. If a taxpayer needs in-person identity verification services, they must bring two forms of identification, and one must be a current government-issued photo ID. They should also bring a copy or digital image of the tax return in question if one was filed. Tax return preparation is not a service provided at any IRS TAC.
If a taxpayer needs a sign language interpreter or help with foreign language interpretation, the IRS encourages them to make an appointment. Deaf or hard of hearing individuals who need sign language interpreter services, can call TTY/TDD 800-829-4059 to make an appointment. IRS can also arrange for language interpretation in many languages through an over-the-phone professional translation service.
Tax return preparation options
While tax return preparation is not a service offered at IRS TACs, qualified taxpayers can get help using the following free services:
• Eligible individuals or families can get free help preparing their tax return at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites. To find the closest free tax return preparation help, use the VITA Locator Toolor call 800-906-9887. • To find an AARP Tax-Aide site, use the AARP Site Locator Tool or call 1-888-227-7669. • Any individual or family earning $79,000 adjusted gross income (AGI) or less in 2023 can use IRS Free File’s Guided Tax Software at no cost. There are products in English and Spanish. • Free File Fillable Forms are electronic federal tax forms, equivalent to a paper 1040 form. Taxpayers should know how to prepare their own tax return using form instructions and IRS publications, if needed. Anyone, regardless of income, can use the forms. It provides a free option to taxpayers whose AGI is greater than $79,000. • MilTax, a Department of Defense program, offers free return preparation software and electronic filing for federal tax returns and up to three state income tax returns. It’s available for all military members, and some veterans, with no income limit. • The IRS is piloting a new tax filing service during the upcoming filing season called Direct File that gives eligible taxpayers a new choice to file their 2023 federal tax returns online, for free, directly with the IRS. Find more information on Direct File about Direct File pilot eligibility, scope and the participating states.
Help available 24/7 at IRS.gov The fastest and easiest way for people to get the help they need is through IRS.gov. Go to www.irs.govfor more information. Available resources include: •IRS Online Account: Taxpayers can securely access their individual account information. • Where’s My Refund?: Taxpayers can check their refund status and estimated delivery date. • Identity Protection Pin (IP PIN): Taxpayers can prevent someone from using their information to file a fraudulent tax return. • Get Transcript: Taxpayers can view and print a tax transcript online. • Direct Pay: Taxpayers can make tax payments or estimated tax payments from their checking or savings account. • Electronic Federal Tax Payment System: Individuals or businesses can make all types of federal tax payments. • Online Payment Agreement: Taxpayers can set up installment payments to pay taxes they owe. • Where’s My Amended Return?: Taxpayers can track the status of their amended return. • Interactive Tax Law Assistant: Individuals can get answers to many tax questions. • All IRS Forms and Publications: Individuals can find and download current tax forms, instructions and publications. Those who do not have access to the internet can call 800-829-3676 to order tax forms by mail.
If a taxpayer sold goods or services in 2023 and received payments through certain payment apps or online marketplaces or accepted payment cards, they could have received a third party reporting document Form 1099-K, Payment Card and Third Party Network Transactions.
Following feedback from taxpayers, tax professionals and payment processors, and to reduce taxpayer confusion, the IRS announced Notice 2023-74, which delayed the new federal law $600 reporting threshold for tax year 2023 on Form 1099-K, Payment Card and Third Party Network Transactions. The previous reporting thresholds remained in place for 2023, which are more than $20,000 in payments and over 200 transactions. Taxpayers could have still received forms below the threshold.
It’s important to know that regardless of if a taxpayer received a Form 1099-K or not, they must report their income. This includes payments they receive in cash, property, goods, digital assets or foreign sources or assets.
The Form 1099-K should not report personal payments like gifts and reimbursements.
What to do when filing taxes
It’s important to understand why an individual received a Form 1099-K. Taxpayers can then use it with their other tax records when it’s time to file their return. The form provides the gross amount of payment card/third party network transactions and may include a combination of different kinds of total payments received.
It’s important to note, just because a payment is reported on a Form 1099-K does not mean it’s taxable.
Taxpayers should review the form or forms, determine if the amount is correct, and determine any deductible expenses associated with the payment they may be able to claim when they file their taxes.
Selling personal items at a loss
If an individual sold items at a loss, which means they paid more for the items than for what they sold them, there is not a tax liability. They’ll be able to zero out the payment on their tax return by reporting both the payment and an offsetting adjustment on a Form 1040, Schedule 1. This will ensure if they received these forms, they don’t have to pay taxes they don’t owe.
Selling personal items at a gain
If an individual sold items at a gain, which means they paid less than for what they sold it, they will have to report that gain as income, and it’s taxable.
If the payee Taxpayer Identification Number (TIN) or gross payment amount is incorrect taxpayers should request a corrected form from the issuer.
See “Filer” on the top left corner of Form 1099-K to find the name and contact information of the issuer. If a taxpayer doesn’t recognize the issuer, they should contact the Payment Settlement Entity (PSE) identified on the bottom left corner of the form above their account number.
Keep a copy of the corrected Form 1099-K with other tax records, along with any correspondence from the issuer or PSE.
Don’t contact the IRS. The IRS can’t correct a Form 1099-K from an issuer.
Don’t wait to file taxes. To file a tax return, take these steps:
If the Payee Taxpayer Identification Number (TIN) is incorrect report payments from the Form 1099-K and any sources of income on the appropriate tax return you normally file.
If you use any of the available cash apps receive payments, you may have received a Form 1099-K from any of the Third Party Networks. In 2022 the IRS originally set the threshold at requiring the issuance of Form 1099-K at $600.00. The IRA subsequently revised this low threshold pending “further studies” to determine a fair threshold.
Here is a recent release notice from the IRS with some new information and frequently asked questions for taxpayers:
Issue Number: IR-2024-33
IRS revises and updates frequently asked questions about Form 1099-K
WASHINGTON — In an effort to provide more resources for taxpayers during this filing season, the Internal Revenue Service today revised frequently asked questions (FAQs) for Form 1099-K, Payment Card and Third Party Network Transactions in Fact Sheet FS-2024-03.
The revised FAQs provide more general information for taxpayers, including common situations, along with more clarity for industry and what organizations should send Forms 1099-K. The FAQs are in addition to a recently updated Understanding your Form 1099-K on IRS.gov page and other communications resources.
Following feedback from taxpayers, tax professionals and payment processors, and to reduce taxpayer confusion, the IRS announced on Nov. 21, 2023, Notice 2023-74 to delay the new $600 Form 1099-K reporting threshold for third party settlement organizations for calendar year 2023.
As the IRS continues to work to implement the new law, the agency is treating 2023 as an additional transition year, which applies to taxes filed this year. As a result, reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023, although taxpayers may still receive a form for amounts less than the required reporting amount.
The updates to the FAQs contain substantial changes within each section:
General Information
What to Do If You Receive a Form 1099-K
Common Situations
Third Party Filers of Form 1099-K
Should My Organization Be Preparing, Filing and Furnishing Form 1099-K?
More information about taxpayer reliance on guidance published in the Internal Revenue Bulletin and FAQs is available.
