Filing Taxes (The 1040)

Many people think “filing taxes” means “paying taxes.” But in reality, you have been paying taxes all year if you are working as an employee (every time you get a paycheck, taxes are being withheld).

Filing your return (Form 1040) is just a reconciliation process. It means you and the government compare notes to see if you paid the correct amount. The entire process comes down to one simple equation:

Total Tax Owed − Taxes Already Paid = Final Result (Refund or Due)

• The Refund: If you paid more during the year than you actually owed, the government (IRS) sends you the difference as a refund check.
• Amount Due: If you paid less during the year than you owed, you must write the IRS a check for the difference, which may also include an underpayment penalty.

Even if you owe nothing or are owed a refund, you have to file a return to settle the account. For the IRS to send you a refund, you have to ask (file) for it.

The cleanest way to make the refund vs. due equation zero out is to fill out your W-4 as accurately as possible when you start a new job.