Since 1913, people who work in the United
States have given part of their paychecks
each year to the federal government when the states endorsed the 16th amendment
that gave Congress the authority to collect a federal income tax.
This tax is
known as the federal income tax, and it is vital to file a yearly tax return
that verifies that yours has been paid.
By means of Internal Revenue Service (IRS), a branch of the
Department of Treasury, which is the federal tax collection agency for our
government, you file your returns.
Who Pays Taxes?
There are four main categories of taxpayers:
- Small
businesses and the self-employed
- Tax
exempt and government entities: this includes charities and certain
government entities.
- Individual
taxpayers who pay on income from their wages and investments
- Large
and mid-size businesses (corporations with assets of more than $10
million)
When you are filing your tax, you will be most likely from
either first or second category above.
When Taxes are Due
Each year, taxes must be filed by midnight on April 15. You can request an extension from
the IRS by filing Form 4868 and then must file within four months, or by August
15th if you have a valid reason for not being able to file by then.
If
you get an extension, any tax payments due by April 15th will be due then,
along with interest.
Steps in Your Tax Filing
Find out your tax status
If you are a resident alien, nonresident alien, or are
exempt for tax purposes, this will vary.
Get the exact forms to submit to the IRS from your local
library, post office, or go online and download and print them.
- If you
are a resident alien, you would fill out Form 1040
- If you
are a nonresident you will file Form 1040 NR
- If you
are exempt, you will file Form 8843
Gather Together Documentation
Whatever the papers and documents you will require to do
your taxes, get together those papers and documents. When filling the papers
and documents, you will need the numbers for your visa, passport, and your
social security number or ITIN number.
During the year, most employers will
hold back the estimated taxes from your paycheck, and will send you a form (the
W-2 form) that shows your earned income for the past year, and from your pay, how
much tax was deducted. When you file your tax return, you will send in an
original of this W2 form.
Understand that this is only an
estimate of your taxes that was withheld, and in some cases, you may not have
paid adequate and could have to pay more. In other cases, surplus tax is
withheld and you may be eligible for a refund from the government.
You will need your 1099 tax form that shows your income if you
are self-employed. You will also require reporting this on the 1099-B if you
have income from investments and dividends. This is also reported on a 1099
form if you receive royalties or rental income.
You will be mailed a 1098 with this information if you paid
interest on your mortgage, or real estate taxes.
When you file your taxes (they
usually come in triplicate, with one copy for federal taxes, one for state
taxes, and one copy for your records), you will require sending in an original
of each of these forms when you file your taxes.
In case, you are ever audited or there is a question about
your taxes, ensure that you make a copy of each of these forms for your
permanent records.
During the year, it is important to report all income that
you receive, since the IRS also receives a duplicate of these documents. You
will be penalized if your tax return does not show your true wages.
Fill Out the Tax Forms
If you are a resident alien, you can fill the tax forms and
mail them in, or the IRS now has an online site where you can file your taxes.
If you are filing online, you require obtaining a PIN number first by following
instructions at the IRS site online. You will need to give your birth date,
social security number, and information from your previous year's tax return to
obtain a PIN.
For filing taxes online, the IRS will have designated efile
companies and software that are needed. Be aware that some of these are free
and others aren't, so check out whether there is a fee when filing. To know about free tax filing.
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