Thursday, June 13, 2024

US Tax Filing by Individuals : 12 Must Know Points

us tax filing

Filing tax returns is a legal obligation for all US persons and non-resident aliens. The law regarding filing an income tax return is explicitly stated in sections 6011(a), 6012(a), and 6072(a) of the Internal revenue Code and corresponding. Under these provisions of the IRC, a taxpayer getting more than a specified amount of gross income in a tax year is required to file the tax return to the IRS for the year and pay tax on the income.

What is Tax Season? The term “Tax season” is a popular way to represent the period when the IRS begins accepting income tax returns. This date of acceptance of return is generally announced by IRS and usually falls in late January. For example, for accepting the tax year 2022, for which the due date falls on 18th April 2023, IRS may announce a date (that may be any date, usually in the middle of January) when you can say tax season started.

Who must file tax return?

Under the Internal Revenue Code, a person is required to file a tax return, not just on the basis of earnings during the year but also on the basis of various situations or kinds of earnings. Please read 7 reasons for filing tax returns compulsorily. It is also important to note that if you are claimed your children or relatives as dependent on your tax returns, they (your dependents ) must also file a tax return if they have earned income, unearned income, and gross income above a specified limit.

Is the dependent compulsorily required to file a tax return?

Anyone who qualifies as dependent on others’ tax returns may still have to file a return depending on his earned income, unearned income, and gross income. The monetary limit for filing a tax return by dependents is dependent upon the fact whether he is single or married. There are many conditions that make the decision regarding the filing of a tax return by dependents quite complex. You can use our calculator for dependent tax filing for an easy way to find if your dependent indeed needs to file a tax return.

When must a nonresident alien file a tax return with IRS?

Those who are not a “US Person”- US citizen or non-citizen who is a tax resident-must also file tax returns with IRS in certain situations. A nonresident alien – a non-citizen- who is not a tax resident (which means he/she failed the green card test or the substantial presence test) must also file a tax return in the following three circumstances:

  1. He/she carries on trade or business in the United States during the year even though they reside outside the USA, OR
  2. He/she has income from a source in the U.S. on which tax was not paid fully through the withholding of tax at the source.
  3. A nonresident alien must also file a tax return if he/she desires to take any benefit under the double taxation agreement with the US and his country or want to get a refund of excess taxes withheld.

US tax filing for expatriates and resident aliens

Expatriates are US citizens who live abroad for various reasons. Resident aliens are people who are not US citizens but have passed either the green card test or the substantial presence test. The tax filing rules are the same for them as well, but since they are outside the USA, some reliefs are granted to them as far as tax filing is concerned, like the automatic extension of two months from the normal due date for filing the tax return without requesting an extension. So, for the tax year 2022, the normal due date is 18th April 2023, but for expatriates and resident aliens, it is 18th June 2023.

Filing tax returns for a deceased person and his estate.

A person may die at any time, but his/her death does not end tax compliance! Internal Revenue Code provides that a legal representative of the deceased must file the deceased person’s tax return. The filing of a tax return is the legal intimation about the death of the person. The rule provides that the court appoints a legal representative as per the last will of the deceased to comply with various laws, including tax compliance. Read IRS Deceased Taxpayer Filing & Other Tax Obligations

How to amend tax returns with IRS?

If, for any reason, you desire to amend your tax return, you do so by filling out Form 1040-X, Amended U.S. Individual Income Tax Return.If you had filed the original tax return electronically, then you can amend it (file Form 1040-X) electronically up to three years. If you either filed the tax return manually or you are amending a tax return that is more than three years old, you can do so by filing paper Form 1040-X. The maximum number of amendments allowed by the IRS is three, and the last amended return that is accepted by IRS is the valid return. It should be noted that IRS also provides online status of amended tax return called Where’s My Amended Return?

What are various tax return forms for US tax filing?

Form 1040, U.S. Individual Income Tax Return, is the only form used for personal (individual) federal income tax returns filed with the IRS. But, in order to complete all its schedules, you may need to consult forms like Employee’s Withholding Certificate Form W-4 if you are employed in the US or 1099 series forms, etc. Visit this IRS page for complete information on forms & instructions.

What are the penalties for non-filing or late filing tax returns with IRS?

The law fixes a due date for filing a tax return. Generally, the due date is fixed in the middle of April, next to the tax year. For example, for the tax year 2022, which ends on 31st December, the due date for filing a tax return is 18th April 2023. If you do not file the tax return by the due date, there is failure to file the tax return, which is imposed only if there was tax due at the time of filing the tax return.

The failure to file penalty rate is 5% of the tax due per month. The aggregate penalty for failure to file can not exceed 25% of the total tax due on the date of filing a tax return. You can check our fastest failure to file penalty calculator.

Also, note that t, under the Internal revenue Code, the penalty is not imposed for failure for which there was a “reasonable cause”.

What are the US tax filing deadlines?

The due date or time limit for filing tax returns for all US persons is generally fixed in the middle of the month of April, next to the completed tax year. For example, the due date for filing taxes is 18th April 2023 for the tax year 2022. Please also note that if the due date falls on a Saturday or Sunday or on a public holiday in the District of Columbia, the due date automatically shifts to the next date when public offices are open.

For those US citizens or US expatriates who live abroad, the due date for filing their taxes is generally given two months more. For example, for the tax year 2022, US expatriates can file a tax return by 15th June 2023.

Law relating to the US tax filing extension.

26 U.S. Code § 6081 – Extension of time for filing returns lays down that a taxpayer may request for extension of time to file his/her return . If he/she files the Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return before the due date of filing tax return , a six month extension is automatically granted. This facility of seeking the extension is available to all kinds of taxpayer-resident ,us citizen and us expatriates or nonresident aliens.

You can file the form 4868 electronically . But , before filing an extension you must pay the estimated tax for the tax year , you are requesting the extanion. In fact , if you pay all or part of your estimated income tax due  Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit or debit card, you can indicate that you are paying tax for applying for an extension. In that case, you may not need to file Form 4868 for extension.

US tax filing mode- Electronically or on paper?

IRS accepts tax returns both way-electronically or paper returns. The electronically filed tax returns are processed faster , so you can expect refunds within 21 days if you ticked the refund credit in our bank account. In fact , IRS also provide facility for freefile program under which certain vendors provide free online filing of tax return .If you file paper form 1040, you must sign it properly following rules . Read this rule for signing tax return for others.

How to get the transcripts of returns and other forms filed earlier ?

There may be situations in which you need to consult past records of tax return , but the that is not available readily with you . Similaraly , there are various forms related to income or expenditures that are filed by third parties with IRS. You may require to consult those too. In such situation , you can request transcripts from IRS electronically or by mail.You can ask for following five types of records or transcripts .

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