Wow, it’s April 15. Tax returns are due and what a beautiful spring day outside! Want to spend a few minutes learning how you could do it yourself?
The unfortunate complexity of tax law is why so many people with simple tax situations choose to hire a professional. But if you’re willing to put in some effort, you may not need to. For a quick overview of tax basics, check out this post. We’re moving on to more practical stuff here.
First steps
W-4
Income tax starts at work: when you onboard to a new job, they direct you to fill out IRS Form W-4. You probably won’t see the clunky form itself, but you’ll answer questions that help some HR software fill it out for you. This form is straightforward for most people, but if you have multiple sources of income, you can use the IRS tax withholding calculator for help. If your circumstances change, like getting married or divorced, you may want to adjust your tax withholding by submitting a new W-4.
IP PIN
Apply for an Identity Protection PIN from the IRS, if you haven’t already. Generating your IP PIN prevents anyone else from filing a fraudulent tax return in your name to collect a refund. According to this Wall Street Journal article, tax identity theft is a rapidly increasing problem and takes a painfully long time to resolve.
You can create an IP PIN at this link, and see the FAQs about IP PINs here. You don’t need to ask again every year: if you choose “continuous enrollment”, the IRS will automatically generate a new PIN for you each year. Your tax software will ask if you have an IP PIN, and that’s where you’ll enter the six-digit number. Or if you use a tax preparer, you’ll send it to them.
You can skip this step if you want, but it’s pretty easy and could save you from an extended headache.
Organize your tax info
Most people receive all the tax forms they need in January and February. You don’t need to memorize all the form names, but it’s good to have a passing familiarity. Some of the most common forms are:
Form W-2 for income from your employer
Form 1099-NEC or 1099-MISC for other income
Form 1099-INT for interest from your bank or credit union
Form 1099-Composite from your brokerage, which contains forms like 1099-DIV for dividends, 1099-INT for interest, and 1099-B for realized gains and losses
Form 1098-E for student loan interest
Form 1098-T for educational expenses
Form 1099-R for retirement income
Form SSA-1099 for Social Security benefits
Form 1099-G for unemployment benefits
Until recently, many people passively received all the forms they needed in the mail. Now that tax reporting has become increasingly paperless, you have to put a little effort into logging into the right accounts and downloading the forms. If you have self-employment income, you may have to track it and pay tax on it even if no form was issued.
To remember all the forms I’ll need, I like to keep a list of all the institutions from which I expect to receive a tax form. At the beginning of the year I add my employer, my brokerage firm, and anything else I already know about. If I change jobs or earn interest outside my brokerage account or whatever else, I add it to the list.
To validate your identity, you’ll either need an IP PIN or your adjusted gross income (AGI) from the prior year. If you can’t access your prior returns, you can download your return transcripts from prior years on the IRS website. If you’re a first-time filer, you can enter zero for your prior year AGI.
Once you have all your tax info, you’re ready to start your return.
Tax software
The Free File Alliance is a group of companies that offer free returns to those who meet income-based requirements. You can see the options on the IRS website here. If you qualify for free filing, use that webpage to navigate to the company’s website. If you don’t qualify, you can still use any of those companies — you just have to pay.
Two of the most widely used tax software companies are TurboTax and H&R Block. They exited the Free File Alliance several years ago, and the amounts they charge for many people’s simple returns are not what I would call “reasonable”.
Personally I use FreeTaxUSA. They’re part of the Free File Alliance, and if you don’t qualify for a free return, they charge $0 for a federal return and $15 per state return.
If your income is too high for a free return but you still desperately want to file for free, you could use the Fillable Forms. I would part with my last $15 before condemning myself to that 20th-century nightmare. Direct File is a new program to file directly with the IRS for free, but it’s currently not available in all states and doesn’t support everyone’s return.
Take it easy
Filing a tax return on paper for the first time would be daunting. The boorish onslaught of instructions and tiny black-and-white font in Form 1040 is enough to crumple the will of a usually-persistent DIYer. But with modern tax software, you don’t even have to know that Form 1040 is the form you fill out for a personal income tax return. You don’t have to lay eyes on that monstrosity.

Most of the time involved in “doing” a tax return is now copying the numbers on your tax forms — like a W-2 from your employer — into labeled boxes within a friendly user interface. Or, with some software, you can upload the PDF and it’ll populate the boxes automatically.
Let’s run through a quick example. Pumpkinhead is a 30-year-old single filer with a gross income of about $70K. She has a full-time job (W-2), a savings account (1099-INT), a brokerage account (1099-Composite), student loans (1098-E), and makes tax-deductible contributions to a 401(k) account at work. She uses FreeTaxUSA to do her return.
Pumpkinhead starts by uploading the W-2 from her employer. It contains all the info about her 401(k) contributions in 2024, so that form accounts for her earned income and her retirement account contributions.
Next, she enters info from the 1099-INT about her savings account interest, which is only a single box. (If a given bank or credit union paid you less than $10 in a year, they won’t generate a 1099-INT and you can safely forget about it.) By now, Pumpkinhead has noticed that when she enters the values, each box is rounded to the nearest dollar, so she starts rounding the values herself before entering them.
Her 1099-Composite from her taxable brokerage account contains a couple forms. She starts by entering the info from her 1099-DIV. She copies the numbers in boxes 1a and 1b from her 1099-DIV into the corresponding boxes in the tax software. That’s not quite all: the software asks if any of this income was from the US Government. As we learned in another post, US Treasury bond income is state tax-exempt.
Pumpkinhead used the Treasury fund SGOV for some of her risk-free savings. Since that fund is managed by BlackRock, she has to check BlackRock’s tax reporting documents. Column 17 of this document shows that 97.53% of distributions from SGOV were direct federal obligations in 2024. So she multiplies her total dividend amount from SGOV by .9753, and enters that amount to claim it as exempt from state tax.
Still in the 1099-Composite, she moves to her 1099-B and enters the values for her short-term and long-term realized gains. She’s a long-term investor so there’s not much activity, and she enters the summary values anyway.
From her 1098-E, she enters the amount of student loan interest she paid in 2024. She can deduct all of her student loan interest (up to $2,500), because her modified adjusted gross income (MAGI) was less than $80K. But she doesn’t need to know how to calculate her MAGI; the software calculates it for her, informs her that she’s eligible for the deduction, and takes the deduction.
The hard part is over. She accepts the software’s recommendation to take the standard deduction, imports the same info into her state return, validates her identity, and enters her bank info. Her federal return is accepted in 26 minutes, and her state return is accepted the following day. A small refund from each return is deposited in her bank account. She downloads her returns so that she has copies.
Is that all?
Upload your forms, take the standard deduction like most people should, answer the questions posed by your tax software, and move on with your life. What’s so bad about this? Why do normal people need tax pros?
By reading the tax basics post and the words above, you could do many people’s tax returns correctly. But throw in a little complexity, and it can feel like pulling on a thread until a whole sweater unravels. Do you understand who should make estimated tax payments and how to avoid underpayment? What about wash sale rules, income restrictions on IRA contributions, the last month HSA rule, bond income with tax exemptions — like with the 1099-DIV above — or the significance of modified adjusted gross income? Would you know when to consider itemizing your deductions?
Very few people understand all that, of course. What everyone should understand is the following: it is not the IRS’s job to minimize your tax liability. That’s your tax preparer’s job. The IRS accepting your return doesn’t mean that you minimized your tax bill or maximized your refund. It is absolutely possible to make a mistake that costs you more money than hiring a tax pro would have. You may never even know about it.
Due to that, I can’t make a general recommendation that if your tax situation meets X and Y criteria for simplicity, you can feel free to file your own return. If your entire tax return is a W-2 from your job, can you probably take the standard deduction and file accurately on your own? Yes, it’s very likely that you can — but questions start creeping in with any addition of complexity.
Am I being too negative? Too discouraging? I certainly don’t want to stop anyone from trying to learn something on their own. You can take away one message or another. Taxes are complicated, and it’s totally justifiable to delegate to a professional. If you want to do it yourself, you need to know your stuff. It’s easy for mistakes to go unnoticed if you only do research on questions that arise as you’re doing your return. It helps so much to have a background of knowledge. You could start by reading the resources linked below. Or just keep reading here: before next year’s tax season, we’ll cover all the essentials in this Substack. See you next week!
Further resources
Every Money IRL post is organized in The Omni-Post, and all vocab terms are here.
Check out this Wall Street Journal article on tax identity theft and generating your Identity Protection PIN.
See the Free File Alliance options on the IRS website here.
Since I mentioned a bunch of concepts above to illustrate the complexity of tax law, it’s only fair that I link to resources to explain them: estimated tax payments, wash sale rules, income restrictions on IRA contributions here and here, and modified adjusted gross income (MAGI).
See our quick overview of tax basics for info on taking the standard deduction vs. itemizing your deductions, our HSA post for the last month rule, and our post on savings for bond income tax exemptions.
The IRS is pretty good at explaining taxes as well. For example, check out IRS Publication 550 to learn how dividends are taxed.
—
We love comments here. Tell us what you like or dislike, agree or disagree with. Recall a long story barely related to this post. Ask a question!
Please send photos of your pets if you’d like to see them in future posts. Or suggest a new topic, or say hi! You can email or tap the message button. Stay safe out there.
Email: bright.tulip711@simplelogin.com
—
Question: At what point do you think it's fiscally responsible to hire a professional tax preparer and and/or financial advisor? Do you think it's when someone meets a certain income threshold? Or is it more about the types of transactions they might be making (i.e. buying and selling property, short term stock trades, multiple sources of income, etc.)? Personally, I've always believed in the investment of a tax professional as well as financial advisers (I can trust).
Holy smokers! That was a lot of information that you made relatively easy to understand, especially for people like me that typically find this stuff really confusing! Good post!