Now that you have determined your total tax liability, the next step is to apply against that liability the amount of all payments already made and other types of allowable credits. Tax Withheld

For most taxpayers, the most important of these "payments" -- perhaps the only one -- is the amount of federal income tax withheld from your wages by your employer. This amount is usually found in Box 9 of the Form W-2 you should have received from your employer in early January. If you worked at more than one job during the year, be sure to add the figures from all W-2s.

Enter the total tax withheld on line 57 of Form 1040, line 24a of Form 1040A or line 8 of the 1040EZ. Estimated Tax

On line 58 of Form 1040, enter the total of all estimated tax payments made against 1985 tax, including any fourth-quarter payment sent in January 1986. (If you paid estimated tax, you may not use either of the two short forms.) Include on this line any part of a 1984 tax refund you asked to be supplied against your 1985 tax.

If you're filing a delayed tax return, enter on line 60 of Form 1040 the amount of any preliminary payment you had enclosed with Form 4868 when you requested the extension. Earned Income Credit

Enter on line 59 of Form 1040 or line 24b of Form 1040A the amount of any earned income credit for which you qualify. A worksheet is provided in the applicable instruction booklet for computing this credit.

The earned income credit generally is limited to "family" taxpayers. You must be either married with a dependent child and filing a joint return or the head of a household to qualify. (You can qualify if your child lived with you for more than half the year and the right to a dependent exemption has been waived as a part of a divorce or separation agreement.)

As the name of the credit implies, you must have had some earned income in 1985 on which to base the credit. This may include wages or salary, tips, commissions and earnings from self-employment -- but does not include pension or retirement pay or income from investments.

For 1985, both the credit rates and the ceiling on earnings have been raised. The basic credit is equal to 11 percent of earned income up to $5,000. The rate declines as earned income goes up, until it reaches zero and phases out at the $11,000 figure. (If you are married, these numbers apply to the combined total for both spouses.)

Unlike the tax credits discussed earlier, if you qualify for an earned income credit that exceeds your tax liability, the difference will be sent to you in the form of an IRS refund check.

If you received advance payments from your employer in anticipation of qualifying for an earned income credit at tax time, do not subtract the amount of those advance payments from the credit to come up with a net amount. Instead, claim the full amount of the credit here, and report the advance payments received under "Other Taxes," as explained above. Excess FICA Payments

If you worked for more than one employer during 1985 and a total of more than $2,791.80 was withheld for Social Security (FICA) or Railroad Retirement (RRTA) tax, claim the overpayment on line 61 of Form 1040. The amount claimed must be supported by the W-2s attached.

In adding up the total FICA withheld, do not include more than $2,791.80 from any one employer. If a single employer withheld, by mistake, more than the 1985 ceiling, you must claim a refund from that employer rather than from the IRS by way of your tax return. Special Fuel Credit

If you bought a new diesel-powered car in 1985, you may claim a one-time tax credit of $102 as a "diesel fuel differential amount." Vans and trucks (up to a gross vehicle weight rating of 10,000 pounds) qualify for a credit of $198.

This credit is intended to compensate partially for an earlier increase in the diesel fuel tax from 9 to 15 cents. Use Form 4136 to document the credit, then transfer the appropriate amount to line 62 of Form 1040. Plus or Minus?

Add up all the payments and tax credits you have entered in this section, subtract the total from your total tax on line 56 and enter the difference on either line 65 (if your payments are larger than your tax) or on line 68 (if the tax exceeds the payments).

If you ended up on line 68, that's the amount you owe Uncle Sam; send a check or money order -- payable to Internal Revenue Service -- attached to the return. Be sure to write your Social Security number on the payment so it can be identified if it is inadvertently separated from the return.

If the balance due the IRS is $500 or more and that underpayment is more than 20 percent of your total tax liability, you should complete Form 2210 to determine if there is an interest penalty due on the shortfall. (Farmers and fishermen use Form 2210F.)

A penalty might be due because insufficient tax was withheld from your pay; or because you had substantial investment income, retirement pay or other income from which tax was not withheld, and you either failed to file an estimated tax return or filed but underpaid.

You will not have to complete form 2210 if you were a U.S. citizen or resident for all of 1984 and had no 1984 tax liability (based on a full 12-month tax year); or, of course, if your total tax liability for 1985 is less than $500.

There are several circumstances that will get you an exception to imposition of the penalty, explained in some detail on the reverse side of Form 2210. Additional information can be found in IRS Publication 505, "Tax Withholding and Estimated Tax."

The IRS may waive the penalty if the underpayment is due to a casualty or disaster or other unusual circumstance that would make imposition of a penalty patently unfair. The IRS also may waive the penalty for a taxpayer who retired (at age 62 or older) or became disabled in either 1983 or 1984.

If you attach Form 2210 to your return, check the box just under line 68 of Form 1040. (You may not use either short form with a 2210.) If you owe a penalty, write the amount in the space under line 68 and include it in the payment you send to the IRS.

Did you finish with a number on line 65 rather than line 68? Smile! You have a refund due, and the IRS will send you a check after a while. Or you may have all or part of the refund applied against your estimated tax for 1986 by entering an amount (not greater than the amount on line 65) on line 67.

If you owe additional tax, it is perfectly legal to wait until April 15 to mail the return and the payment. Unless the amount is small, it makes sense to hold onto your dollars, earning interest, as long as you can.

But if you're due a refund, send the return in as soon as it's completed. Not only will you get your refund sooner, but also the delay between filing and refund is shorter during the early part of the filing season, before the IRS is swamped with returns. (Contrary to popular belief, filing early does not increase the odds of being selected for an audit.)

Even if it's a large refund, however, don't let the thought of that Treasury check con you into carelessness. Take the time to review your work, and if possible have someone else check your arithmetic. Make sure you have attached all W-2 forms, and a payment -- with your Social Security number on it -- if one is required.

One final word: If you look at the various supporting forms and schedules, you will find a number directly under the year "1985." That number indicates the sequence in which they are to be collected. Make the job of the IRS a little easier by collecting the entire tax package in numerical sequence. Then sign and date the return -- two signatures on a joint return -- and send it off with a sigh of relief, knowing that you have rendered unto Caesar for another year.