Taxes

How US Income Tax Works

The whole shape of a tax return on one page — the six-step flow every later lesson fills in, why a raise never costs you money, and why a refund is your own money coming back.

Form 1040 — Personal Information and Filing Status

The first section of Form 1040 contains the most consequential decision you'll make on the entire return. Every field has specific requirements and the wrong filing status can cost thousands of dollars.

Form 1040 — Dependents Section

Listing dependents drives the Child Tax Credit, the Credit for Other Dependents, and filing status eligibility. The form's table is simple — the rules behind it are not.

Form 1040 — Income Section (Lines 1 Through 9)

All eight income types on Form 1040 in one place — alphabetically organized so you read only the subsections that apply to your situation.

Adjustments to Income and Schedule 1-A Deductions

Above-the-line deductions that reduce AGI, plus the four new OBBBA deductions on Schedule 1-A

Standard Deduction vs. Itemized Deductions and Schedule A

The largest single reduction on most returns — how to calculate both sides and choose correctly for 2026

Tax Calculation

How Form 1040 line 16 converts taxable income into your federal tax bill using brackets, worksheets, and preferential rates

Credits

How tax credits reduce your bill — and when they generate refunds

Other Taxes (Schedule 2)

The additional taxes added on top of regular income tax — self-employment tax, NIIT, Additional Medicare Tax, and more

Payments, Refund, and Balance Due

The final section of Form 1040 — how withholding and estimated payments compare to total tax to produce your refund or amount owed

Withholding & Estimated Taxes

How you pay the IRS across the year — the W-4 paycheck dial, the 1040-ES for income without withholding, and the safe harbor that keeps a penalty away

State & Local Income Taxes

The federal return isn't the whole story — most Americans owe a state (and sometimes a city) income tax too. The good news: your state return starts from your federal numbers, and a few clear rules tell you exactly where you owe.

W-2 Employees: Career-Specific Considerations

Situational guidance for multi-job households, military service, stock compensation, tipped workers, and more

Retirees: Career-Specific Considerations

Coordinating multiple income sources, managing RMDs, executing Roth conversions, and optimizing withdrawal sequencing in retirement

Self-Employed and Gig Workers: Career-Specific Considerations

Schedule C, business expenses, home office, vehicle deductions, QBI, estimated payments, retirement plans, and gig-worker rules

Real Estate Investors

Passive activity rules, depreciation, REP status, short-term rentals, 1031 exchanges, and the full tax picture for rental property owners

Farmers and Ranchers

Schedule F, livestock treatment, income averaging, weather deferrals, farm depreciation, and the provisions unique to agricultural operations

Business Owners with S-Corporation Elections

S-corp elections, reasonable compensation requirements, payroll obligations, basis tracking, and when the S-corp strategy makes sense

Partners in Partnerships and Multi-Member LLCs

How K-1 income flows to your personal return, SE tax rules for general and limited partners, basis tracking, guaranteed payments, and partnership-specific considerations

Filers with International Tax Considerations

FEIE, Foreign Tax Credit, FBAR, and the full toolkit for US citizens abroad and residents with foreign income

Filers Going Through Major Life Changes

Marriage, divorce, new children, inheritance, retirement, disability — every major life event has specific tax implications that can create lasting consequences if handled incorrectly.

Filers with Disabilities and Their Caregivers

ABLE accounts, disability-related medical deductions, impairment-related work expenses, credits, caregiver tax issues, special needs trusts, and disability income taxation

ACA Premium Tax Credit in Depth

How the Premium Tax Credit works, MAGI calculation, APTC reconciliation, Form 8962, repayment caps, income management strategies, and the critical 2026 subsidy cliff return

Roth Conversion Mechanics and Strategy

The mechanics, pro-rata rule, five-year rules, backdoor strategies, bracket-filling, and when conversions help versus hurt

Students, Scholarships & Education Tax

Read the 1098-T, split a scholarship the right way, pick the education credit that pays — and end the year with money back

Investors: Capital Gains, Dividends & Schedule D

A stack of 1099-B, 1099-DIV, and 1099-INT forms just arrived, and Schedule D and “wash sale” sound like traps. Here is the calm truth: you owe tax only when you sell, long-term gains are taxed gently — sometimes at zero — and the forms already did most of the work.

Clergy & Ministers

The most misunderstood corner of the code, made simple — a minister is an employee for income tax but self-employed for Social Security, with a housing allowance that's free of one tax and not the other. Three rules explain almost all of it.

Household Employers (the Nanny Tax)

When you pay a nanny, housekeeper, or home aide, you may be their employer — the wage threshold that switches it on, the taxes you owe, and how Schedule H rolls it all onto your own 1040

Tax Planning & Projection

The legal art of owing less by controlling timing and brackets — plan at the margin, shift a dollar into a cheaper year, bunch deductions, fill a low bracket, and see next year before it arrives

Capital-Gain & Tax-Loss Harvesting

Two legal, deliberate moves that turn an ordinary brokerage account into a tax tool: harvest a long-term gain in the 0% bracket to reset your basis at no cost, and harvest a loss to cut this year's bill — both while staying fully invested, and without ever tripping the wash-sale rule.

Tax-Advantaged Accounts: the Tax Treatment

Every account is one deal about WHEN you pay tax — now, later, or never. The HSA, the IRA deduction, the 401(k), the Saver's Credit, and ABLE, seen through the tax bill (TY2026).

AMT, NIIT & the Additional Medicare Tax

The three "shadow taxes" that ambush higher earners — a parallel tax system (the AMT) and two surtaxes (the 3.8% Net Investment Income Tax and the 0.9% Additional Medicare Tax). Each sounds frightening and vague; each, in fact, has a clear, checkable threshold. By the end you'll know exactly whether any of them touches you — and what to do about it.

Recordkeeping & Substantiation

The shoebox of receipts and the fear of "getting audited without proof," answered: the right records turn an audit from terrifying into boring — and you only have to keep them for a knowable window. Learn the retention clock (3, 6, 7, and forever), what "adequate records" actually means, the mileage log and basis records that win or lose thousands of dollars, and a simple system that fits on a phone.

Amending a Return: Form 1040-X

You found a mistake on a return you already filed. Here is the one form that fixes it, the deadline that protects money you're owed, and why coming forward first is the cheapest thing you can do

Reading IRS Notices & Letters

An envelope from the IRS makes almost everyone's stomach drop — and almost none of them deserves it. Every notice carries a code that tells you exactly what it is, what clock is running, and what to do next. This lesson teaches you to decode the big ones — the CP2000 mismatch, the CP14 bill, the 90-day letter, the final levy notice — and to answer them so the paper never hardens into something worse.

Audits: Triggers, Types & Your Rights

"Audit" is the scariest word in tax — and almost everything the fear is made of is wrong. Audits are rare, most are a letter asking for one document, and you carry a written Bill of Rights the IRS is legally bound to honor. This lesson walks three real audits end to end — a Schedule C letter exam, an office appointment, and an EITC documentation audit — so that if an envelope ever comes, you've already lived it.

Penalties, Interest & How to Remove Them

A penalty at the bottom of an IRS notice reads like a verdict — and it almost never is. Penalties are fines with published price tags, most of them can be removed (one kind with a single phone call, and starting in 2026 sometimes automatically), and the biggest one shrinks tenfold the moment you file, even if you can't pay a dollar. This lesson prices every meter, then teaches you how to turn them off.

Owing the IRS: Payment Plans, OIC & Collections

You owe more than you can pay, and your head is full of garnished paychecks, liens on the house, and a debt that never dies. Here is what the system actually holds: payment plans that stop levies the day you apply, a hardship status that pauses everything when you truly can't pay, a real (and rare) way to settle for less — and a legal clock that ends every tax debt. This lesson walks all five doors on real numbers, and teaches you to spot the industry that charges thousands for the ones that are free.

Tax Identity Theft & Refund Fraud

"A return was already filed with your SSN" — what just happened, the recovery path that ends in your full refund, and the free six-digit IP PIN that makes sure it never happens again

Disputes & Appeals

The IRS said no, and it feels like the referee just ruled against you in a game the referee owns. It isn't so. Built into the law are an appeals office that is independent of the auditor by statute, a real court you can go to for $60 before paying a dollar, and a free advocate whose whole job is forcing a stuck system to move. This lesson walks all of them — on Gloria's second EITC fight, Marcus's appeal, and the roads back for anyone who thinks it's too late.

Choosing How to File & Vetting a Preparer

There's a free way to file for most people, and a sixty-second background check that screens out the preparer who could get you audited or robbed. The trouble arc ends where it should have started: knowing who to trust

Nonresidents, New Immigrants & ITIN Filers

The substantial presence test, Form 1040-NR, the ITIN that lets you file without an SSN, dual-status years, tax treaties — and why filing correctly protects you

Americans Abroad (Expats)

Why the US taxes its citizens on worldwide income wherever they live — and the two tools (the exclusion and the credit) that usually erase the double tax, plus the foreign-account reports and the calm road back if you never knew

Estates, Final Returns & Inheritances

Your parent died, and now there's tax paperwork on top of the grief. The gentle truth: the final return is simpler than it looks, most of what you inherit isn't taxed, and a rule called the step-up usually erases the gain. Here's the order to do it in.

Military Servicemembers & Veterans

Combat pay that isn't taxed, allowances that never touch your W-2, a state residence that follows you, deadlines that move for a deployment — the tax breaks you earned, and how to actually claim them

Crypto & Digital Assets

Crypto is property, not money — so every sale, swap, and purchase is a reportable gain or loss, staking and rewards are ordinary income, and the new Form 1099-DA plus a few 2026 rules finally make it all trackable and fixable

Equity Comp & Higher-Income Filers

You got RSUs or stock options and have no idea when they're taxed — or how a huge tax bill can arrive with no cash to pay it. The fix is one idea: each kind of equity has just one or two "taxable moments." Learn those, add the already-taxed amount to your basis so you never pay twice, and the surprises — even the AMT ambush on an ISO — stop being surprises.

The Cautionary Closer: Scams, Ghost Preparers & Doing It Right

The final lesson. Every tax scam reduces to five shared tells; the honest path reduces to six habits. Here is the whole course gathered into a posture — and the whole cast, sent off equipped, not afraid