Withholding and filing: W-4, W-2 and 1099
When you start a job, you fill out Form W-4. Based on your filing status, dependents and any other income or deductions you list, your employer withholds federal income tax from every paycheck. The 2020 redesign got rid of the old “allowances,” and you can submit a new W-4 at any time, for example after marriage, a new baby or a second job.
By January 31 your employer sends a W-2 showing a full year of wages and withholding. Freelance income arrives on a 1099-NEC, bank interest on a 1099-INT, dividends on a 1099-DIV and stock sales on a 1099-B. You use these forms to figure your income and tax for the year on Form 1040, then compare the result with what was already withheld: you either get a refund or have a balance due.
Because no one settles your account automatically, you have to file to get back withheld tax, even if your income was low.
2026 federal income tax brackets
The tax law enacted in July 2025 (the One Big Beautiful Bill Act, which the IRS now calls the Working Families Tax Cuts) made the seven brackets from 10% to 37% that had applied since 2018 permanent. The thresholds rise with inflation each year. The figures below are for tax year 2026 (returns filed in spring 2027) under IRS Rev. Proc. 2025-32.
Each higher rate applies only to the income inside that bracket. Moving into the next bracket after a raise does not push your whole income into the higher rate.
Example: single, $80,000 salary, standard deduction only Taxable income = 80,000 − 16,100 = $63,900 Tax = 12,400 × 10% + 38,000 × 12% + 13,500 × 22% = 1,240 + 4,560 + 2,970 = $8,770 Effective rate about 11.0%, marginal rate 22%
| Rate | Single | Married filing jointly |
|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 |
| 12% | $12,400 – $50,400 | $24,800 – $100,800 |
| 22% | $50,400 – $105,700 | $100,800 – $211,400 |
| 24% | $105,700 – $201,775 | $211,400 – $403,550 |
| 32% | $201,775 – $256,225 | $403,550 – $512,450 |
| 35% | $256,225 – $640,600 | $512,450 – $768,700 |
| 37% | Over $640,600 | Over $768,700 |
Applies to taxable income after deductions. Head of household and married filing separately have their own brackets.
Standard deduction vs. itemizing
You lower your taxable income in one of two ways: take the flat standard deduction, or itemize on Schedule A by adding up state and local taxes, mortgage interest, charitable gifts and large medical expenses. You pick whichever is larger, and because the standard deduction is generous, most households take it.
- 2026 standard deduction: $16,100 for single or married filing separately, $32,200 for married filing jointly and $24,150 for head of household. Taxpayers 65 or older or blind get an additional amount.
- SALT deduction cap: For itemizers, the cap on deducting state income and property taxes rose to $40,000 for 2025 and is $40,400 for 2026. It phases down once modified AGI exceeds $505,000 and is scheduled to return to $10,000 in 2030.
- Temporary deductions for 2025–2028: Qualified tips (up to $25,000), the premium portion of overtime pay (up to $12,500, or $25,000 for joint filers), an extra $6,000 per person age 65 or older, and interest on a loan for a new car with final assembly in the US (up to $10,000). You can claim them on top of the standard deduction, but they phase out at higher incomes.
- Charitable deduction for non-itemizers: Starting in 2026, people who take the standard deduction can also deduct cash gifts to charity of up to $1,000 (single) or $2,000 (married filing jointly).
Deductions vs. credits: the Child Tax Credit and EITC
A deduction lowers your taxable income; a credit lowers the tax itself. For someone in the 22% bracket, a $1,000 deduction saves $220, while a $1,000 credit saves the full $1,000. Some credits are refundable, which means you receive the excess as a refund if the credit is larger than your tax.
- Child Tax Credit (CTC): Up to $2,200 per child under 17, of which up to $1,700 is refundable. It phases out above modified AGI of $200,000 (single) or $400,000 (married filing jointly). The child and the taxpayer (at least one spouse on a joint return) need Social Security numbers.
- Earned Income Tax Credit (EITC): A refundable credit for workers with low to moderate income. For 2026 the maximum is $8,231 with three or more children; the amount depends on income and the number of children.
- Other credits: The Child and Dependent Care Credit, education credits (American Opportunity and Lifetime Learning) and the Saver’s Credit for retirement contributions, among others.
Deadlines, extensions and refunds
An extension only gives you six more months to file the paperwork; you still have to estimate and pay what you owe by April 15. Filing late costs 5% of the unpaid tax per month (up to 25%), and paying late costs 0.5% per month, plus interest.
If you e-file and choose direct deposit, most refunds arrive within three weeks. A big refund simply means you prepaid that much tax during the year, so if you consistently get a large refund or owe a lot, you can adjust your withholding with a new W-4.
| Date | What happens |
|---|---|
| January 31 | Employers send W-2s; payers send 1099-NECs |
| April 15 | Deadline to file and pay for the prior year (April 15, 2027 for tax year 2026) |
| October 15 | Filing deadline if you requested an extension with Form 4868 (the payment deadline is not extended) |
| April, June, September and the following January 15 | Quarterly estimated payments for people with little or no withholding |
Deadlines that fall on a weekend or holiday move to the next business day. The IRS often postpones deadlines for disaster areas.
State income tax and free ways to file
Most states require their own income tax return in addition to the federal one. Nine states do not tax wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming (Washington does tax some capital gains). Some cities, such as New York City, add a local income tax, and if you move during the year you usually file as a part-year resident in both states.
IRS Direct File, the agency’s own free e-filing tool, was not offered for the 2026 filing season (2025 returns), and as of October 2026 no plan to bring it back has been announced (to be confirmed). IRS Free File, run with private software companies, is available if your adjusted gross income is $89,000 or less (2026 filing season). Free File Fillable Forms have no income limit, and volunteer programs (VITA and TCE) offer free in-person help.
For Koreans in the US: nonresident returns and the tax treaty
US tax residency depends not on your visa type but on the green card test or the substantial presence test: you are a resident if you were present at least 31 days this year and the total of this year’s days, one-third of last year’s days and one-sixth of the days from the year before that is 183 or more. F and J students are usually exempt from counting days for five calendar years, and J researchers and professors generally for two.
Nonresident aliens file Form 1040-NR and report only US-source income; as a rule they cannot take the standard deduction or file jointly. Once you are a resident, you report worldwide income, including income from Korea, and can reduce double taxation with the foreign tax credit (Form 1116). If your foreign accounts, including Korean ones, together exceed $10,000 at any point in the year, you must file an FBAR (FinCEN Form 114).
The US–Korea income tax treaty (in force since 1979) exempts part of a student’s earnings ($2,000 a year for up to five years) and a teacher’s or researcher’s pay for a limited period. Check the conditions in IRS Publication 901, and claim the benefit by giving your employer Form 8233 or on your return.
FAQ
What happens if my W-4 is wrong?
There is no penalty for the form itself, but if too little is withheld you may owe a large amount plus an underpayment penalty, and if too much is withheld your money is tied up until your refund. Use the IRS Tax Withholding Estimator and submit a new W-4.
Do married couples have to file jointly?
No, it is a choice. Filing jointly usually produces less tax, and filing separately disqualifies or limits some credits such as the EITC. If one spouse is a nonresident alien, you can elect to treat that spouse as a resident and file jointly.
How are stock gains taxed?
Long-term gains on assets held more than a year get preferential rates of 0%, 15% or 20% (0% up to $49,450 of taxable income for single filers in 2026). Short-term gains are taxed as ordinary income. Report them on Form 8949 and Schedule D using the 1099-B from your broker.
Do I need to file if my income is low?
If your income is below the filing threshold (usually the standard deduction), you may not be required to file. But you must file to get back withheld tax or claim refundable credits, and refund claims generally have to be made within three years of the original due date.
Basis and sources
- IRS — Tax inflation adjustments for tax year 2026 (Rev. Proc. 2025-32)
- IRS — Working Families Tax Cuts: provisions for individuals and workers
- IRS — About Form W-4
- IRS — About Form 1040
- IRS — Child Tax Credit
- IRS — Earned Income Tax Credit (EITC)
- IRS — Get an extension to file (Form 4868)
- IRS — Free File
- IRS — Determining an individual’s tax residency status
- IRS Publication 901 — U.S. Tax Treaties
- FinCEN — Report of Foreign Bank and Financial Accounts (FBAR)