As a taxpayer, you must be aware of your responsibilities and file a tax return if required. Citizens and permanent inhabitants of the United States usually have to file a tax return and pay their tax liabilities. If the taxpayers fail to file their returns on the due date, penalties might wait for them. If they willfully refuse to file a return, they might face additional fines or criminal prosecution. So you must know about your tax liabilities and file your return on the deadlines to avoid severe punishments from Uncle Sam. This article will discuss the individuals who need to file returns and have tax liabilities.
A tax return form contains reports about income, expenses, and other related tax info filed with a tax authority. Taxpayers can calculate their tax liabilities, make plans for tax payments, and ask for refunds through tax returns. The annual filing of tax returns is a must-be in most countries, including the United States. Individuals and businesses must report their reportable income, which involves salaries, wages, dividends, and other gains. The returns are filed with the IRS in the US, and the required information to calculate the taxes is available on these returns. To file federal income taxes in the US, individuals use Form 1040, corporations use Form 1120, and partnerships will use Form 1065 to report their annual income.
Various factors determine who must file a tax return. Here are some of the essential elements that affect the filing process for different individuals:
Gross income is one of the most critical factors affecting the filing necessity, including all forms of income you receive during a year. It also includes the income sources outside the country or even gain from selling your primary home. Individuals with a gross income of more than a specific limit must file a return and report their income.
If your gross income exceeds the required filing threshold, you must file a tax return. Income thresholds differ according to the filing statuses, so taxpayers must consider their potential filing situation.
Are you a self-employed person? If yes, you must file your return yearly and make estimated quarterly payments. The net earning, in this case, must be $400 or more.
Individuals with dependent status might still need to file a return because, depending on the gross income from salaries, wages, investments, and more, they might be eligible for tax payments. Therefore, the parent or guardian must file returns for dependents who can’t do that themselves.
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If you file your tax return on its due date, numerous benefits will come to you. Here are some of them:
If you make less than the filing threshold, it is still better to file a tax return because you might get a refund. Issues like tax withholdings from the payments or estimated quarterly payments might lead to a tax refund for these individuals.
Fortunately, there is a helpful tool for individuals who have questions about their tax status. Interactive Tax Assistant, provided by the IRS, will answer your questions according to your specific circumstances. If you have to file a tax return, the tool will tell you according to your input. This tool can help you with your filing status, dependents, taxable income, credits, deductions, and other issues.
The good news is the user information will stay anonymous, and the tool will only clarify the issues according to your provided data. The assistant won’t disclose or share the data and can’t identify the person who uses that tool. Instead, the system no longer uses the information when the user exits a topic.
According to the IRS, taxpayers should keep their tax returns for at least 3 years. In some exceptional cases, you might need more prolonged retention. You might even need indefinite retention in some rare cases. Always be aware of the accuracy of your return, and in the case of any errors, submit the amended return immediately. Remember that you can’t avoid your taxes, so it is wise to file your return on its due date to stay away from later trouble. Tax regulations change regularly, and it is difficult for ordinary people to keep up with the changes; therefore, getting help from tax services is always helpful.
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