General info about USA tax structure:
In USA, there are two types of taxes applicable to all US residents, viz. Federal Tax and State Tax.
- Federal tax: It is a standard tax and is applicable to all.
- State tax: It varies from state to state. Few states are even tax free, for example Florida, Texas etc.
"A tax year is considered from January to December of every year".
Why to file tax?
All employers are liable to take care of their employee's tax liabilities. Your tax gets deducted automatically from your salary. However, you need to file your tax returns, at the end of each year, primarily to have a proof of fulfillment of your tax liabilities.
One advantage for doing this is, in case you are liable for some deductions than that much amount will be refunded to you. And if you owe some amount, then that will have to be paid.
What is the last date to file your tax returns?
Last due date is April 15th, of every year. A return delivered to the service by U.S. mail after the due date is considered timely filed, only if it was postmarked (postal stamped) on or before April 15th.
However you can file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to obtain an automatic 6-month extension to file your tax return.
Automatic 6-month extension. You can now use Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to obtain an automatic 6-month extension to file your tax return.
Can it be extended? If yes, then what are the conditions, and for how long can it be extended? Which form has to be filled for the extension?
What is required to file your taxes?
For working class people, all you need is your Form W-2, which your employer is supposed to provide you. This form contains a summery of your earnings for the present tax year.
What if you have more than one W2 forms? What if your employer doesn't give you W-2 form? What if your W-2 form has some errors?
What are the different status/categories?
Single, Married-Filing Jointly, Married-Filing Separately, etc.
Where to file the taxes?
There are various ways to file your taxes:
Self: You may file it yourself. Calculate your taxes by using tax rates and simple tax rules. Fill up the appropriate form and post it to IRS.
Online: You may use online tax filing web site, and e-file you taxes. It's easy and simple, and can be done with a very nominal fee, which is approximately 10-20$.
Note: You will need a printer, to print various filled forms during this process.
Tax experts: You can also take help of a authorized tax expert, to file your taxes. Organizations like HR block may charge you $50, whereas local tax experts may charge you $40-$100 etc.
For a salaried person, first two options are good, unless you have some complicated tax calculations. In that case you might want to take help of an expert. Otherwise, a person with little knowledge of tax rules should be able to file it without any problem.
There are plenty of online trial software to calculate and estimate your taxes. You may use them to get more accurate figures. These software have a list of pre-formatted set of question and answers, which takes you through the entire process and in between you need to supply the figures and details. Once you know what are the figures, you may file it online, or fill up the forms manually and mail them to IRS.
Which form has to be filled?
The most commonly used form is Form 1040 or Form 1040A.
What are the major "Tax Terms" one should be aware of?
- Standard deduction
- Personal Exemptions
- Taxable income: This is the amount on which the tax rate will be applicable.
- Tax credit: You may be able to take a credit of up to $600 for each of your qualifying children.
How to make a simple Federal tax calculation?
Taxes are applicable on your taxable income.
[Taxable amount = Total Earnings - (Standard deduction + Personal exemptions)].
What is itemizing?
Instead of standard deduction, you may choose to itemize your deductions. Itemizing is beneficial in case the itemized amount is greater than the standard deduction. Only certain items such as medical and dental care, home mortgage interest, and gifts to charity, etc. can be itemized.
For itemizing, use Form 1040-Schedule A.
Checkout more information at: Should I Itemize?
What can and what can't be deductible?
Checkout details at IRS Web site
Q:Which Form Should I Use?
Q: My spouse doesn't have a SSN. What should I do?
Dependent visa holders, are no longer issued SSN by SSA department. For filing purpose you need a ITIN (Individual taxpayer identification number) for your dependent spouse.
Q: I am married, but my spouse is not in USA. Can I take advantage of being married?
If your spouse has a valid visa to enter USA, but due to some reason he/she is unable to come here, then you can take advantage of being married. For this you have to get the ITIN number for your spouse, by filing a W7-form.
Q: I was in different state before, should I file state tax for both the states?
Q: My employer is not giving my W2 form, what should I do?
It's your employer's legal liability to provide you, and the IRS, a copy of your W-2 form.
Request him for it, if you still don't get it, then report it to the IRS.
Q: My W2 form has wrong SSN/name on it? what should I do?
Ask your employer to get it rectified, and provide the correct form to you, and the IRS.
Q: I recently got married, can I still file under Married category?
Yes! you may get the advantage only if you got married before 31st of Dec of the tax year.
Q: Where can I get State tax rates applicable for my state?
Checkout the State tax department web sites
Q: What if after filing my tax, I realize that I made some mistake?
- Most of the information asked in the forms for your tax filing is very simple. All standard rules, forms and comprehensive details are available on IRS web site as well as numerous other web sites. With a very basic knowledge you can file your tax yourself, which is more economical than filing through a tax consultant. But if you have some complex transactions or tax issues, you need an expert's advice.
- Online or e-filing is the best and faster way to file your taxes.
- Its good to understand the basic information about your taxes, how and why? Internet is the best media to get all such information.
- Before sending the W2 form, verify the validity of the information printed on it. Most important is the correct social security number. If anything is incorrect, inform the employer. Employer is supposed to send the correct information to IRS, and a copy to the employee.
- If you are providing your bank account details for refund, verify exact bank routing number and your account number.
- You can ask for your refund, either as a direct deposit to your bank account, or via check. In case of a direct deposit, you need to provide with your bank routing number, and your account number. Bank Routing number is a number printed on your check just before your account number.