Key Terms

Complying with Tax Laws

The United States income tax system is built on the idea that people will voluntarily choose to follow tax laws, or voluntary compliance with tax laws. Taxpayers voluntarily follow tax laws by obtaining forms and instructions, providing complete and correct information, declaring all their income and filing their income tax returns on time.

Following tax laws is part of living and working in the U.S. Typically, individuals who earn certain levels of income are required by law to file a tax return. There are also numerous practical reasons to file a tax return. You will need records of tax returns when you’re buying or financing a home or business and when you’re applying for federal aid for higher education.


Who must file a tax return?

Whether you are required to file a tax return depends on a number of factors, including your filing status, age and the type and amount of income you receive. Even if you do not have to file a return, there may be reasons why you would want to file. For example:

  • Earned Income Tax Credit (EITC) – EITC is a federal income tax credit for eligible low-income workers. The credit reduces the amount of tax an individual owes, and the rest may be sent to you in the form of a tax refund.
  • Additional Child Tax Credit – This credit may be available to you if you receive less than the full amount of the child tax credit and you have earned income that exceeds $3,000. The credit may give you a refund even if you do not owe any tax.
  • Health Coverage Tax Credit – This credit is limited to certain individuals with qualified health coverage who are receiving Trade Adjustment Assistance, Alternative Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation. You may claim this credit on your return if you have not elected to have the IRS pay the Health Coverage Tax Credit portion of your health care premiums on a monthly basis.

Check the IRS website at www.irs.gov or consult the instructions for Forms 1040, 1040A or Form 1040EZ for specific details that may affect whether you need to file a tax return with the IRS this year.

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When must I file?

Federal income taxes returns are due annually on April 15. If you do not file your return by the due date, you may have to pay a failure-to-file penalty, including interest.

To avoid the failure-to-file penalty, you should file your return on time even if you do not have the money to pay any taxes you may owe. You can work with the IRS on a payment plan that works for you.

If you cannot file your return by the due date, you may use Form 4868 to request a six-month extension. However, you should still pay the tax shown on your return by the original due date of the return (even if you requested an extension of time to file) in order to avoid a failure-to-pay penalty and interest on the unpaid balance. Your paper return is considered on time if it is in the mail on April 15 in a properly marked envelope with enough postage.

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Does my tax return have to be on paper?

No, you do not have to file a paper tax return on paper; you may be able to file a paperless return using IRS e-file (electronic filing). IRS
e-file
is easy. Benefits include:

  • Free File Options – Qualified taxpayers can prepare and e-file their return for free using commercially available online tax preparation software.
  • Fast Refunds – If you file electronically, you get your tax refund in half the time, even faster with direct deposit.
  • Security – Your privacy and security are assured with IRS e-file.
  • Accuracy – IRS computers quickly and automatically check for errors or other missing information on your e-file return.

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Should I keep records throughout the year to help me file my tax return?

Yes, you must keep records so you can prepare a complete and accurate income tax return. The law does not generally require any special form of records, however, you should keep all receipts, canceled checks or other proof of payment, and any other records to support any deductions or credits you claim.

Generally, you should keep records of income or a deduction appearing on your return for at least three years after you file your tax return. If you omitted income or need to establish basis for property, you will need to keep records even longer. In addition, you generally have three years from the date you file your return, or two years from the date you paid the tax, whichever is later, to file a claim for credit or refund and will need your records to support the claim.

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What happens if I don’t file a return?

If you are required to file but have not, the IRS may use information from its computer system to contact you and request that you file the appropriate tax return. If you owe money but fail to file and pay in a timely manner, you will usually owe penalties and interest if you owe money on your return. If you do not respond to IRS requests to file a tax return, the IRS may file a return on your behalf.

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What if I haven’t filed in a while?

If you haven’t filed in a while, you should immediately contact a tax professional or the IRS and file the past-due (delinquent) returns. The longer you wait, the more difficult it will be to resolve the issue and you will owe more fines and penalties. If you need assistance filing a delinquent return and your income is below a certain level, you may be eligible for assistance from a Low Income Taxpayer Clinic.

Even if you are not able to pay the taxes you owe, you should file a return as soon as possible. You may be able to work with the IRS to set up a payment plan for any taxes owed.

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