If your taxes are simple or you have a commercial tax-filing service, then you can file using the instructions in the back of the 1040 instruction booklet.
If your taxes are more complicated, you may need to pay a tax preparer or use a special product. The IRS offers a list of free products and services available for individuals with low incomes. If you have a low income and your tax situation is not too complicated, you may qualify for free help from a Volunteer Income Tax Assistance program. Or you can use one of several commercial tax-preparation products, such as TurboTax Federal & State, that offer free federal filing for taxpayers with simple returns and an adjusted gross income of $64,000 or less.
You can also visit the IRS website for other options designed for taxpayers who cannot pay the full cost up front.
The IRS has information on how to find free assistance with filing your federal taxes on its website at www.irs.gov/individuals/article/0,,id=103671,00.html .
If you made less than $67,000 in 2014, you qualify for free assistance with your taxes. That doesn’t mean they’re free. If you have to pay someone to do your taxes, the IRS calls it a “frivolous return penalty.” But if you can’t afford to pay someone to do your taxes, there are places that will help out.
The IRS has a way for people to find help. You can call 800-906-9887 or go to irs.gov/Individuals/Contact-Your-Local-IRS-Office. When it’s tax season, some libraries and community organizations also offer help.
If you’re working on your taxes yourself and having trouble with the forms—or if you’re just not comfortable doing them yourself—you can get live help at irs.gov or by calling 800-829-1040 (TTY/TDD 800-829-4059).
I’ve never seen a mention of this anywhere else. When I was getting ready to do my taxes this year, I was worried about the prospect of writing the cheque for all that money. I asked around and discovered that there is an option available for people like me — low-income earners — that means you don’t end up paying at the end of the year.
The way it works is that you file your income tax return every month, not once a year. You can even file online at no charge through the government’s website. What you do is set up an account with the Canada Revenue Agency (CRA), using your social insurance number as your account number. When you receive your paycheque, you log into your account and record what you’ve been paid. At the end of each month, you enter all your expenses and calculate how much tax you owe for that month. And then rather than paying it, you just transfer it from your bank account to CRA’s bank account on line.
The biggest mistake most people make with their taxes is to wait until the last minute. If you’re owed a refund, you might as well get your money back as soon as possible. If you owe money, you want to have it out of the way. Waiting can be dangerous, too: if you owe any interest or penalties because you paid your taxes late, those charges can add up fast.
If you have a job, your employer will do all the hard work for you and take out the correct amount of tax. You just have to fill in a form telling them how much tax-free income you had during the year, and they will pay the right amount of tax from your salary each month.
Up to a point this is easier than filing a tax return yourself, but there are some things employers don’t do for you. They can’t help with any tax-free income from investments or pensions or benefits from previous jobs, and they won’t fill in all those annoying forms for tax credits. And they won’t help out if you’ve missed out on a tax break because you didn’t claim enough allowances or didn’t realize that a benefit was taxable
The government says your personal tax account is a unique number to identify you. That sounds reassuringly high-tech. But don’t let it fool you. It’s just a number.
Your personal tax account number is the same as the Social Security number in the United States, and many other countries use personal tax accounts too, including the United Kingdom, Germany, and Canada. Your country almost certainly has a different name for it; in Australia, it’s your Australian tax file number; in Brazil, your Cadastro de Pessoa Fisica (CPF).
The government will assign you this special number when you start working: that is, if you’re an employee of a company or of the government itself. If you’re self-employed or unemployed or work for a private firm that does not pay taxes to the government on your behalf, you can still get one if you need it: they’ll assign it to you during filing season.
If you have an account with a bank or lending institution, they may also ask for this number so they know who owns your account and can file tax information on your behalf.*
There is a standard story we tell about taxes: they’re just money the government takes from you. If only we could cut taxes and “let the economy grow,” then all would be well.
This is wrong. Let’s say you’re an employee earning $50,000 a year. You file your taxes and notice that $3200 has been taken out of your paychecks all year for income taxes. But what does that mean? It means you got $3200 worth of services from the government—social security, highways, military protection and so on. That’s what taxes are: the government’s way of buying stuff. If you want less, you can refuse to buy as much; if you want more, you can pay more.
When you do something as big as change the US tax system, you’d think it would be important to know what those services cost. But in fact (the parable of) Simpson’s paradox suggests we may not know what we’re doing: we don’t know whether to ask how much services cost or how much they’re worth, and we don’t even know whether there’s a difference between the two questions.