Key Details to Help You Understand USA Taxation
With Valentineâ€™s Day and the love in the air coming to the practical life, Â the most Â important of the lot being, ARE YOU READY FOR THE TAX SEASON?
Itâ€™s been over, 40 days , the tax year has been ended, and the time to collect all your documents to bind for your Tax Filing.
Itâ€™s important to understand the key basics of taxation in the US. IRS or Internal Revenue Service is United States Federal Governmentâ€™s revenue service which falls directly under the control of the Internal Revenue Commissioner. This government agency is accountable for the administration of the Internal Revenue Code and collecting taxes.
United States tax code permits specific kinds of entities for utilizing pass-through taxation. It is basically done to efficiently shift the income tax liability from the given entity which earns the income to those who possess an interest in it. In this case, a schedule K-1 form is used for reporting the amounts. You too need to grab a K-1 form if youâ€™re in such a situation. On the other hand, if you want to report your income from self-employment profits made from your freelancing/contractual activity, dividends and interest then you got to opt for form 1099.
Individuals, partnerships, corporations, trusts and estates need to file annual tax return with the IRS. These income tax returns vary largely in complexity level depending entirely upon the complicatedness of their legal affairs. Other important forms which you have to submit for filing tax returns are:
- Form 1040NR
- Form 1040NR-EZ
- Form 8843
IRS Tax filing statuses
- Single â€“ The single status is the most basic one and you should file it in case you are not married on the last day of the financial year and you are not qualifying for any other status.
- Married (Jointly) â€“ You can file with a married status jointly with your spouse in case you were married on the last day of the financial year. It is important that you and your spouse both agree to the filing.
- Married (Separately) â€“ You can select this filing status in case you are married but you want to be independently accountable for your own tax liability. You can even choose this status in a situation when you feel that it might help you get a bigger refund.
- Householdâ€™s head â€“ You can qualify for the head of household status of filing returns in case you are not married and you paid more than half the expenses of keeping up a house.
- Qualifying/Succeeding Widow(er) that has a Dependent Child â€“ You can file for a return with this status if you are a qualifying widow or widower for the next 2 years that follow the year of your spouseâ€™s demise. There has to be a dependent child as well for you to qualify for filing tax returns with this status.
IRS e-file is a comprehensive system that allows you to submit taxation documents to the IRS through the internet, allowing you to skip the complicated paperwork. Tax preparation programs with e-filing capabilities comprise in official websites and standalone applications.
Tax filing deadlines
April 15th, is the regular income tax return filing deadline. However, this year due to the national holiday being observed on account of the Washington DC Emancipation Day, falls on April 15th. This is why the tax day will be observed on the subsequent Monday.
You got to plan for filing tax returns right before the start of every financial year. Treat tax filing as an important part of your life and you will never regret!
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