DIY: File Your Own Taxes Online in 3 Simple Steps

“Two things in life are certain: death and tax.” 

Ben Franklin’s famous statement is true in the United States. As my two kids started earning, I thought it would be good for them to learn how to file their own taxes. Hence, this writing is mainly for those unfamiliar with how to file U.S. income taxes.

1. Know Yourself: Do you need to file U.S. tax returns on your income?

By saying “know thyself,” the Ancient Greek philosopher Socrates awakened that the unexamined life was not worth living. Filing the annual personal income tax is a good way to examine and understand your financial status in life. It is January 2023. January is the month to plan a new year and to prepare tax filing for the past year. 

First, you need to know whether tax filing is required and if so, what would be your filing status. 

(Table1) Minimum Gross Income Thresholds with Factors That Impact Income Thresholds for Taxes

Age	Under age 65	Age 65 or older	If only one spouse is age 65 or older
Filing status
Single	$12,950	$14,700
Married filing separately	$12,950	$12,950
Married filing jointly	$25,900	$28,700	$27,300
Head of Household	$19,400	$20,800
Qualifying Widow(er)	$25,900	$27,300

Even if your income is lower than the threshold, you’d better file your tax return not only to get back your withheld taxes but also to accumulate credits for future medicare and social security. In the United States, you must earn at least 40 Social Security credits to qualify for Social Security benefits in retirement. You can earn up to a maximum of 4 credits per year. The amount of earnings it takes to earn a credit may change each year. In 2022, you earn 1 Social Security and Medicare credit for every $1,510 in covered earnings each year. You must earn $6,040 to get the maximum 4 credits for the year.

More resources> https://www.usa.gov/who-needs-to-file-taxes 

https://www.irs.gov/help/ita/do-i-need-to-file-a-tax-return 

How You Earn Credits: https://www.ssa.gov/pubs/EN-05-10072.pdf 

https://www.thebalancemoney.com/are-you-required-to-file-a-tax-return-3192868 

2. Collect Your Documentation

It would be good to understand the basic structure related to the documents you receive. Below is the summary of the U.S. Individual Income Tax Return with common items:

Income	Salary - W2 Freelance - 1099 Interests Dividends Business income, if applicable
Deductions	Local & Property taxes Mortgage interest - 1098 Medical expenses -1095-B Child care receipts Charitable donations Business expenses, if applicable
C. Taxable income = A. Income (which is AGI: Adjusted Gross Income) - B. Deductions  D. Tax = C. Taxable income * Tax rate
E. Tax credits
F. Total tax = D. Tax - E. Tax credits

You should keep all of your documentation safe and conveniently accessible. You might need them when you prepare taxes for future years or for other reasons like applying for a loan.

More resources> 2022 Form 1040: https://www.irs.gov/pub/irs-pdf/f1040.pdf 

2022 1040 Instructions: https://www.irs.gov/pub/irs-pdf/i1040gi.pdf 

Tax Prep Checklist: https://www.taxslayer.com/blog/tax-prep-checklist-everything-need-file-taxes/ 

3. Find a Right Tax Software and File

If your AGI is less than $73,000, you have a few options to file your income taxes online free. You can check out here: https://apps.irs.gov/app/freeFile/browse-all-offers/ 

Out of many tax software reviews, I found this best: https://money.com/best-tax-prep-software/ 

Personally I have used TurboTax, TaxAct, TaxSlayer, and FreeTaxUSA. I recommend FreeTaxUSA. Tax Softwares for the self-employed, such as gigs and freelancers, are costly (TurboTax and TaxAct over $150, H&R over $130 and TaxSlayer $100) while FreeTaxUSA will do it for $15. You may check out other reviews: https://www.cnet.com/personal-finance/taxes/freetaxusa-review/ or review for small business owners.

More resources> https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free