Many people think that Internal Revenue Service (IRS) publications are the definitive source of information about how to file your income taxes. Not so. The tax code, the Internal Revenue Code (IRC), is where the actual rules are published. Unfortunately, in addition to being thousands of pages long—as of 2024, the IRC page count was approximately 6,871—the average person can’t easily decipher the IRC.
To fill in the gaps, many secondary sources have been developed to help taxpayers make sense of the rules regarding their income taxes. These sources are intended to help you figure out how much income tax you owe and what tax credits and deductions you are entitled to.
Key Takeaways
- The rules governing how income is taxed in the U.S. are incredibly complex.
- Many information sources are available to help taxpayers understand the rules about what they are required to pay and what tax credits and tax deductions they may be eligible for.
- Two sources are the Internal Revenue Code (IRC) and IRS publications.
- You can also call the IRS, consult publications for tax professionals or those written for consumers, hire a tax professional, or get volunteer tax assistance through VITA.
The Internal Revenue Code (IRC) vs. Treasury Regulations vs. Revenue Rulings
The IRC contains the official, legally binding tax rules set forth by the U.S. Congress. Taxpayers can view the tax code online on the Office of the Law Revision Counsel’s website.
Treasury regulations—also referred to as tax regulations—are the U.S. Treasury Department’s official interpretation of the tax code. These are published in Title 26 of the Code of Federal Regulations (26 CFR) and are also available online on the website for the U.S. Government Publishing Office (GPO).
The advantage of consulting these sources is that the government provides them, so taxpayers can be assured that the information they contain is accurate. The disadvantage is that there is a vast amount of information, which can be difficult to understand. Unfortunately, if you don’t interpret a rule or regulation correctly and you make a decision regarding filing your income taxes based on your own misunderstanding, you will still be held liable for any mistakes you make on your taxes.
Revenue rulings are the IRS’s official interpretation of the code as it applies to specific situations. They may be easier for taxpayers to decipher, but they do not have the same legal bearing as the IRC–tax code itself—or the Treasury regulations.
Consult IRS Publications
IRS publications that provide interpretations of the tax code are available, summed up in printed booklets or online on the IRS website (click on “Find forms & instructions,” then check the menu on the left).
The publications are readily available, free, and relatively concise. They are also easier to understand than the tax code itself. However, for some people, the publications are still quite obtuse.
Make a Phone Call to the IRS
While calling the IRS might seem like an ideal solution, the IRS has this disclaimer for taxpayers: “If we should make an error in answering your question, you are still responsible for paying the correct tax.”
Essentially, if they provide the wrong information to you, you’ll still be held responsible. That means that if an audit after the fact determines that you paid less than you should have, even if you did so based on advice from a representative at the IRS, you will still have to pay back taxes and interest.
However, you will not be charged any penalty due to an IRS error. An IRS penalty is an additional amount the IRS sometimes charges to people who have underpaid their taxes. If you do call, take copious notes, including the representative’s name and title, and the time and date of your call.
Consult Texts for Tax Professionals
The publications that are published for an audience of certified public accountants (CPAs), accountants, and tax attorneys are some of the most detailed interpretations of the tax code available. Publishers include CCH and Tax Analysts.
However, these texts can be very expensive, and they are not written for a layperson audience. They are highly technical, and if you aren’t a CPA, accountant, or tax attorney, it may be hard to grasp the content in these expert sources.
Hire a Tax Professional
Most people who are experiencing difficulties with their tax returns will end up consulting a tax professional. Enrolled agents and CPAs are reliable and affordable sources of information. Hiring a professional may save you some time, even if it is an additional expense. To find a tax professional in your area, visit the National Association of Enrolled Agents or the Association of International Certified Public Accountants.
One possible disadvantage of hiring a professional is that if you don’t screen them carefully, you could end up with someone who applies a very liberal interpretation of the tax code to your financial situation. This can cost you dearly if you get audited. Keep in mind, however, that even among the most ethical and knowledgeable tax preparers, different professionals may prepare your returns differently based on their interpretations of the tax code.
The best way to guard against these discrepancies is to choose a professional whose interpretation of the tax code is most in line with your own philosophy of tax obligations. Are you the type who prefers to opt for deductions aggressively and hope for the best, or would you prefer to err on the side of caution? An experienced tax preparer will be able to articulate their stance so you can see if it matches up with your own vantage point. You may also want to ask how much experience the person has with preparing returns similar to yours, especially if your tax situation is unusual.
Seek Volunteer Income Tax Assistance
The IRS has a program for providing assistance to low-to-moderate-income individuals with their tax returns. This program is called Volunteer Income Tax Assistance (VITA). Volunteers trained by the IRS help taxpayers by answering their tax questions and preparing their tax returns. VITA has a special emphasis on helping low-income taxpayers understand any advantages the tax code may include for individuals specifically in their situation, like how to claim the earned income tax credit (EITC) and the child tax credit.
Help is available for free to qualified taxpayers. Individuals typically qualify based on their income; for tax year 2024, if your income does not exceed $67,000, you may qualify for assistance through VITA. The tax preparers that work for VITA are volunteers, and they may not have professional-level tax training, so it’s possible they may not always give correct advice. In addition, their training is typically only intended to help with relatively simple tax returns.
Consult Publications for a Consumer Audience
Numerous consumer publications exist that are intended to educate the average taxpayer about income tax issues and help them take advantage of all the credits and deductions they are entitled to. Some of the most reliable, up-to-date, and widely respected sources include books published by Nolo, J. K. Lasser, and Ernst & Young.
These books are affordable (generally $25 or less) and easy to find in local bookstores and online. While libraries may have copies, they may not be the most recent versions. Of all the credible sources that attempt to interpret the tax code for individual taxpayers, these books are probably the easiest to understand.
The Bottom Line
The rules governing how income is taxed in the U.S. are incredibly complex. In order to fully understand what you are required to pay (and what you aren’t), you should consult the most reliable source of information that you can understand and afford. Finally, if you are ever audited, there’s always a chance you may be required to pay more than you expected. This is yet another good reason for keeping some money in an emergency savings account.