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. You May Need to Make Estimated Tax Payments If… Have income that isn’t subject to tax withholding? Or insufficient withholdings? You may have to pay estimated taxes.