University of Florida

Taxes: Filing and Information

Written Dec. 2006; edited April 2013.

Paying taxes is required by law to fund federal initiatives and services. The U.S. government spends money on many areas, such as city improvement, education and maintenance in schools, environmental protection, and national defense.

The revenue that funds these programs comes primarily fromtaxes — sales, property, income, and others. The federal income tax is a major source of revenue.


Ideally, your employer will withhold enough taxes during the year to meet your tax due. If you owe additional taxes, you will have to pay them when you file taxes. Check with your employer if you have questions about your withholding.

Filing taxes is easier when you keep financial records. If the Internal Revenue Service (IRS) audits your return, you must be able to prove that your math is correct. The most acceptable forms of proof are your records and account statements and receipts. If you cannot back up your figures, you may be required to pay more taxes, as well as penalties and interest.

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Who Must File a Return?

Your filing status, age, and gross income determine if you must file a return. For more information, check the 1040EZ, 1040A, and 1040 forms and instruction booklets.

Common Tax Forms

Forms 1040EZ and 1040A — intended for people making low to moderate incomes — are simpler than the 1040 form and can be completed in less time with fewer calculations. You can use these forms if you meet the specified guidelines found in the instruction pages.

You must use the 1040 form if you have to repay the first-time homebuyer credit, you have self-employed income, or are itemizing deductions. (There are other instances where you may have to file a 1040 form. Check your form instruction booklet.)

Advantages of Filing

If your income is very low, you may not have to file an income tax return. However, you may benefit from filing. If an employer has withheld more taxes from your wages than you owe, you must file a return to get that money refunded.

Even if you normally file a 1040EZ, you may benefit from filing a 1040 or 1040A. These forms let you claim tax credits you may eligible for.

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Tax Terms to Know

Filing Status

A taxpayer's filing status is determined by his or her marital status on December 31 of the tax year. Married people can file one joint return or they may each file separately. Depending on specific circumstances, unmarried taxpayers may be classified as Single, Head of Household, or Qualifying Widow(er).

  • Single. A person who has never married; had a finalized divorce by end of the tax year; or was widowed before the start of the tax year and not remarried before the end of the tax year.
  • Head of Household. An unmarried person who paid over half of the cost of keeping up a home for qualified live-in dependents, such as minor children or elderly parents.
  • Qualifying Widow(er). A person whose spouse has died before the start of the tax year and who has a child living with her or him that can be claimed as a dependent.
  • Dependent. Generally, a child or relative who lived with you for the tax year and did not provide more than half of their support (see your tax form instructions for information on determining dependent status). A dependent cannot be claimed by more than one person.

Gross Income

It is important to know what is included in or excluded from gross income.

Taxable Income

Taxable annual income includes the following:

  • Wage/salary. Wages, salaries, commissions, bonuses, tips, and income from second jobs make up the gross income reported on your W-2 form. Your employer must give you a W-2 showing your total earnings for the previous year and the amounts withheld for taxes and other purposes. If you are paid on a commission basis, your employer will send you a 1099 form.
  • Unemployment compensation. All unemployment benefits are taxable.
  • Interest income. Most interest earned must be reported as income. The bank or other institution that holds your savings account will send you a 1099 form showing your earned interest for the year.
  • Dividends. If you own stocks, you will receive a year-end statement of dividends paid to you either from your brokerage firm (if it holds your stock) or directly from the issuing company (if you hold the stock yourself).
  • Capital gains and losses. Capital gains or losses come from the sale of any property that you own and use for personal purposes or investments.
  • Rents. All income and expense records for rental property that you own should be kept separate from records for property that you use yourself.
  • Pensions. Your pension fund trustee will send you copies of the W-2P form for pension and periodic payments, the 1099-R form for lump sum distributions, or both. Your former employer will send you annual statements breaking down benefits paid to you into taxable and non-taxable portions.
  • Alimony. Alimony received is taxable as regular income.
  • Social Security. A portion of your Social Security benefits may be taxable. Check the instructions on the 1040 form for details.
Non-Taxable Income

Non-taxable income does not have to be reported. Examples include the following:

  • Child support payments received (Child support is also not deductible if paid.)
  • Life insurance benefits
  • Divorce settlements (lump sum)
  • Money from lawsuits for accidents
  • Gifts and inheritances
  • Workers compensation
  • Proceeds from sale of personal items sold for less than purchase price, such as in garage sales
  • Veteran benefits
  • Part of Social Security benefits
  • Employer-provided benefits, up to specific limits
Adjusted Gross Income

You can subtract some expense items from your income. These are called adjustments to gross income. Check the instructions on your tax form to see what gross income adjustments you qualify for.

Examples of adjustments include those listed here:

  • Educator expenses
  • Contributions to qualified retirement plans such as IRAs, Keogh, or SEP
  • Moving expenses (restricted)
  • Alimony paid
  • Student loan interest payments
  • Tuition fees for yourself, spouse, or dependents (You may be able to take an educational expense credit rather than a deduction — see your tax form instructions.)
  • Health Savings Account contributions
  • Self-employed health insurance coverage of yourself, spouse, and dependents (As of March 30, 2010, the insurance can also cover your child under 27, even if he or she is not your dependent.)


Deductions are expendituresyou made during the year that can be subtracted from your adjusted gross income.

Some examples of tax-deductible expenses are listed below:

  • Mortgage interest
  • Gifts to charity
  • State and local income taxes
  • Property taxes
  • Job expenses (restricted)
  • Medical expenses (restricted)
  • Casualty and theft losses (restricted)
Standard Deduction

If you do not have a large amount of deductible expenses, you can use the standard deduction shown on each tax form. The amount of the standard deduction depends on your filing status.

Although it may seem time-consuming, it is worth finding out if using the standard deduction or itemizing your deductible expenses results in a greater deduction. (If you itemize deductions you must use the 1040 form.)

Personal Exemptions

You can deduct a personal exemption for every person in your household who can be claimed as a dependent, including you and your spouse. If you are a dependent on someone else's return, you cannot take a personal exemption on your own return. The same dependent cannot be claimed on more than one return.

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Calculating Taxes

Tax Brackets

You are taxed at basic income tax rates, or tax brackets. Your tax bracket is determined based on your taxable income and filing status.

Tax brackets are often misunderstood. An increase in your taxable income that pushes you into a higher tax bracket does not result in all your income being taxed at a higher rate. Only the additional income is taxed in the higher bracket, while the lower part of your earnings is still taxed at the lower rate. There is no loss of "take-home" pay.

Most people do not have to compute taxes themselves. Instead, they can use the tax tables listed on the tax forms to determine how much they owe.


After determining your taxes, you may find that you qualify for additional credits, such as the child tax credit, credit for the elderly or disabled, or education credit. Credits are deducted dollar for dollar from taxes due.

Note that if you took the first-time homebuyer credit in 2008, 2009, or 2010, you may be paying it back on this year’s return. See the IRS's instructions on first-time homebuyer credit repayments.

Other Taxes

Depending on your situation, other taxes may be added. These taxes may include self-employment tax, Social Security and Medicare, unreported tip income, tax on qualified retirement plans, advanced Earned Income Credit payments, and household employment taxes.

Final Calculations

After you deduct any credits and add any other applicable taxes to the calculated tax amount, deduct the withholding payments found on your W-2 form(s) and Earned Income Tax Credits (if you qualify) to calculate the amount of the tax owed or refund.

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Minimizing Your Taxes

  • Take advantage of the Earned Income Tax Credit if you qualify.
  • Take advantage of employer-provided benefits.
  • For home owners, interest paid on a mortgage and real estate taxes is deductible.
  • Contribute to your retirement through an Individual Retirement Account. Contributions may qualify as adjustments to income. Remember, ROTH IRA earnings are tax-free.
  • Look over the IRS’s list of available tax credits to see if you qualify.

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Preparing Your Return

You can easily complete your return yourself if you keep good records and your financial activities are not complicated. If you do need help, free assistance is available.

Do It Yourself

The IRS provides many free resources:

  • IRS Office. Advice, forms, instructions, and help filling out forms.
  • IRS Website. Forms, instructions, publications, and educational material.
  • Free File. If your income is less than $58,000, you’re eligible for free tax preparation and e-filing.
  • Tax Help. Many types of free tax help from the IRS.
  • IRS Advice Hotline. 1-800-829-1040.

Libraries can provide forms, instructions, and publications. You may also be able to photocopy or print many other publications or forms from a CD-ROM or the Internet. In some communities, free help may be available from trained volunteer groups such as the AARP Tax-Aide group.

Tax preparation software is available at local computer retailers, discount stores, and various websites. Some sites may offer software or online programs for free or at very low rates. Be sure you are using a trustworthy service recommended by the IRS.

Free Tax Preparation

The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs offer free tax help for taxpayers who qualify.

There are hundreds of VITA sites, many of which involve UF/IFAS Extension agents. Contact your local Extension office or use the IRS tool to find a local VITA site.

Commercial Tax Services

If you decide you do not want to prepare the return yourself, commercial tax services are available. Verify that the preparers are licensed to fill out the return. Tax preparation fees may range from $30 to $150 or more, depending on the complexity of the return and the qualifications of the preparers.

Be sure to ask what liability the tax preparers will assume. For example, find out if they will pay any penalties and interest if they make mistakes.

Be wary of tax preparation services that promise a quick refund. The fee that you pay for this service can be substantial. The quick refund is often a loan made to you secured by your tax refund.

Also be wary of firms that guarantee a refund. No reputable tax preparer can promise a refund before they have looked at your individual records. If a tax preparer cheats on your behalf, you are still responsible! Having someone else — even the IRS — complete your return does not relieve you of the responsibility for the accuracy of your return.

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Ways to File

You can file your taxes as soon as you have all the necessary documents.


Complete your return and mail it to the address for your state found in the form’s instruction manual.

Electronic Filing

If you have access to a computer with web access, you can file your return online. The IRS provides free e-filing regardless of income. Those with lower incomes may even qualify for free tax preparation.

Some employers or financial institutions offer e-file services to their employees or customers for free or a small fee.

You can have a professional prepare and transmit your return electronically, or you can prepare your own return with commercial tax software and send it in electronically. Look for the "Authorized IRS e-File Provider" sign. Fees and prices vary depending on services. Be sure to ask what the fee is before you request the service.

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Tax Refunds

Taxpayers can choose to have their refund deposited directly into a checking or savings account or receive a paper check in the mail.

Direct deposit refunds can be split between a maximum of three different accounts. To take advantage of the split-refund option, you must file Form 8888. This simple form allows you to indicate how you would like your refund split and the account numbers where the funds should be deposited.

Form 8888 is then attached to your 1040 form. If you do not want to split your refund, you do not need to file Form 8888.

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Keeping Records

Be sure to keep all the records that you used to file your income tax return. If the IRS audits a return, they will ask to see these records.

Income Records

  • Copies of all W-2 or 1099 forms you and your spouse received from employers for earned income
  • Unemployment compensation statements or check stubs
  • 1099 forms for interest or dividend income received
  • All records to verify capital gains or losses
  • Records of income and expense for rental properties (Keep these separate from your personal records.)
  • Annual statements from pensions and/or Social Security
  • Statement of alimony received

Expense Records

  • Year-end statements that show interest paid on your mortgage
  • Receipts and canceled checks for charitable contributions
  • Receipts for taxes paid — real estate, state, and local income taxes
  • Receipts for qualified medical expenses, job-related expenses, and casualty and theft losses

How Long to Keep Records

Keep a copy of your records until the statute of limitations for the return expires — three to ten years from the date the return was filed or due. There is no limitation for fraudulent or unfiled returns.

Save canceled checks, insurance claims, travel diaries, receipts, sales slips, invoices, and medical bills for three years.

Some records should be kept permanently. These include complete copies of previous tax returns, proof of when you bought and sold investments, all records of real estate or personal property, and divorce decrees or separation agreements that justify alimony or child-support payments.

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IRS Resources & Features

  • 1040 Central. Find the forms, tools and publications you will need to prepare taxes this year.
  • Free File. Everyone can file their taxes online, and you may even be eligible for free tax preparation.
  • AMT Assistant. If you are not using software to complete your taxes, this handy calculator will help you determine if you will have to pay the alternative minimum tax (AMT).
  • EITC Assistant. This tool assists you in finding out if you are eligible for this valuable tax credit.
  • Where's My Refund. If you are waiting on a refund, you can track it online.

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Adapted and excerpted from:

Josephine Turner, et al., Federal Income Tax Management (FCS7026), Department of Family, Youth and Community Sciences (rev. 3/2009).

Josephine Turner, “Split Tax Refunds,” Department of Family, Youth and Community Sciences (1/2007).

1040 Instructions,” Internal Revenue Service (retrieved 04/2013).


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