Taxes Understanding tax strategies can potentially help you better manage your overall tax situation. How Income Taxes Work A quick look at how federal income taxes work. The Facts About Income Tax Millions faithfully file their 1040 forms each April. But some things about federal income taxes may surprise you. What If You Get Audited? The chances of an IRS audit aren't that high. And being audited does not necessarily imply that the IRS suspects wrongdoing.