Tax return (United States)

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Tax returns in the United States are reports filed with the Internal Revenue Service (IRS) or with the state or local tax collection agency (California Franchise Tax Board, for example) containing information used to calculate income tax or other taxes. Tax returns are generally prepared using forms prescribed by the IRS or other applicable taxing authority.

Internal Revenue Service revenue service of the United States federal government

The Internal Revenue Service (IRS) is the revenue service of the United States federal government. The government agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue, who is appointed to a five-year term by the President of the United States. The IRS is responsible for collecting taxes and administering the Internal Revenue Code, the main body of federal statutory tax law of the United States. The duties of the IRS include providing tax assistance to taxpayers and pursuing and resolving instances of erroneous or fraudulent tax filings. The IRS has also overseen various benefits programs, and enforces portions of the Affordable Care Act.

A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent.

The California Franchise Tax Board (FTB) collects state personal income tax and corporate income tax of California. It is part of the California Government Operations Agency.

Contents

Federal returns

Under the Internal Revenue Code returns can be classified as either tax returns or information returns, although the term "tax return" is sometimes used to describe both kinds of returns in a broad sense. Tax returns, in the more narrow sense, are reports of tax liabilities and payments, often including financial information used to compute the tax. A very common federal tax form is IRS Form 1040.

The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code (USC). It is organized topically, into subtitles and sections, covering income tax, payroll taxes, estate taxes, gift taxes, and excise taxes; as well as procedure and administration. Its implementing agency is the Internal Revenue Service.

Form 1040

Form 1040 is one of three IRS tax forms used for personal (individual) federal income tax returns filed with the Internal Revenue Service (IRS) by United States residents for tax purposes.

A tax return provides information so that the taxation authority can check on the taxpayer's calculations, or can determine the amount of tax owed if the taxpayer is not required to calculate that amount. [1] In contrast, an information return is a declaration by some person, such as a third party, providing economic information about one or more potential taxpayers. [1]

Information returns are reports used to transmit information about income, receipts or other matters that may affect tax liabilities. For example, Form W-2 and Form 1099 are used to report on the amount of income that an employer, independent contractor, broker, or other payer pays to a taxpayer. A company, employer, or party which has paid income (or, in a few cases, proceeds that may ultimately be determined not to be income) to a taxpayer is required to file the applicable information return directly with the IRS. A copy of the information return is also sent directly to the payee. These procedures enable the IRS to make reasonably sure that taxpayers report income correctly.

Form W-2 Internal Revenue Service tax form used in the United States

Form W-2 is an Internal Revenue Service (IRS) tax form used in the United States to report wages paid to employees and the taxes withheld from them. Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. An employer must mail out the Form W-2 to employees on or before January 31. This deadline gives these taxpayers about 2 months to prepare their returns before the April 15 income tax due date. The form is also used to report FICA taxes to the Social Security Administration. The Form W-2, along with Form W-3, generally must be filed by the employer with the Social Security Administration by the end of February. Relevant amounts on Form W-2 are reported by the Social Security Administration to the Internal Revenue Service. In territories, the W-2 is issued with a two letter code indicating which territory, such as W-2GU for Guam. If corrections are made, it can be done on a W-2c.

Form 1099 is one of several IRS tax forms used in the United States to prepare and file an information return to report various types of income other than wages, salaries, and tips. The term information return is used in contrast to the term tax return although the latter term is sometimes used colloquially to describe both kinds of returns.

Amended return

In the United States, taxpayers may file an amended return with the Internal Revenue Service to correct errors reported on a previous income tax return. Typically a taxpayer does not need to file an amended return if he or she has math errors as the IRS will make the necessary corrections. For individuals, amended returns are filed using Form 1040X, Amended U.S. Individual Income Tax Return. In some cases taxpayers may use Form 1045, for example, to carry back a Net Operating Loss to a prior tax period. Form 1045 is generally processed much faster than Form 1040X.

Federal income taxes

The filing of Federal tax returns is required under 26 U.S.C.   § 6011 [2] and 26 U.S.C.   § 6012. [2] Individuals who receive more than the statutory minimum amount of gross income must file. [2]

Income tax in the United States

Income taxes in the United States are imposed by the federal, most state, and many local governments. The income taxes are determined by applying a tax rate, which may increase as income increases, to taxable income, which is the total income less allowable deductions. Income is broadly defined. Individuals and corporations are directly taxable, and estates and trusts may be taxable on undistributed income. Partnerships are not taxed, but their partners are taxed on their shares of partnership income. Residents and citizens are taxed on worldwide income, while nonresidents are taxed only on income within the jurisdiction. Several types of credits reduce tax, and some types of credits may exceed tax before credits. An alternative tax applies at the federal and some state levels.

The standard U.S. individual tax return is Form 1040. There are several variations of this form, such as the 1040EZ and the 1040A, as well as many supplemental forms.

U.S. citizens and residents who realize gross income in excess of a specified amount (adjusted annually for inflation) are required by law to file Federal income tax returns (and pay remaining income taxes if applicable).

Gross income includes most kinds of income regardless of whether the income arises from legitimate businesses. Income from the sale of illegal drugs, for example, is taxable. Many criminals, such as Al Capone, are indicted not only for their non-tax crimes, but for failure to file Federal income tax returns (and pay income taxes).

The IRS occasionally has seen "Fifth Amendment" returns from people who accurately report their annual income and tax liability but refuse to reveal the source of the funds on the grounds that such a statement would tend to incriminate the individual.

Many Americans find the process of filling out the tax forms more onerous than paying the taxes themselves. Many companies offer free and paid options for reducing the tedious labor involved in preparing one's tax return.

A taxpayer who finds a mistake on a previously filed individual income tax return can file corrections with Form 1040X.

Deadline

The annual deadline to file one's Federal individual income tax return is April 15. The IRS lists scenarios for which Tax Day does not follow this standard deadline. [3]

Proof of timely filing

1. A return that is mailed to the IRS is timely filed if it is delivered on or before its due date, that is April 15, but is extended to April 18th for the 2015 Tax Season which is the 2016 calendar year. A return with a U.S. postmark, which is delivered after its due date, is considered timely filed if: - the date of the postmark is no later than the due date; - the return was properly addressed; - the return had proper postage. The timely filing, timely mailing rule requires that the return be postmarked within the prescribed filing period. Thus, an individual return postmarked April 16 and received on April 20 is considered filed on April 20.

2. A return delivered by a designated private carrier is timely if the carrier marks or records the return no later than the due date of the return. The IRS can designate a private carrier if the carrier: - is available to the general public; - is as timely and reliable as U.S. first class mail; - records the date on which the package was given to it for delivery; - satisfies other conditions. The IRS has identified DHL Express, Federal Express, and United Parcel Service as designated carriers.

3. A return delivered by other means than the U.S. mail or a designated private carrier must be delivered to the appropriate IRS office on or before its due date to be timely.

4. An electronically-filed return with a timely electronic postmark is timely filed, provided that the return is filed in the manner prescribed for electronic returns. An electronic postmark is a record of the date and time, in the taxpayer's time zone, that an authorized electronic return transmitter receives the e-filed document on its host system.

Privacy and public disclosure

Tax return laws generally prohibit disclosure of any information gathered on a state tax return. [4] Likewise, the federal government may not (with certain exceptions) disclose tax return information without the filer's permission, [5] and each federal agency is also limited in how it can share such information with other federal agencies. [4]

Occasionally there have been efforts in Congress to require tax returns to be open to public inspection. For example, Senators Robert M. La Follette and George W. Norris supported such legislation, applicable to both individual and corporate returns, and public disclosure for wealthy taxpayers was required from 1923-1926. [6] [7] Presidential candidates have sometimes voluntarily released their tax returns.

Preparation

Popular tax preparation software includes TaxSlayer, TaxACT, H&R Block at Home (formerly TaxCut), and TurboTax.

In some countries, the tax agency provides a prefilled return to streamline the process, but the United States has failed to adopt these technologies as of 2015 after lobbying by tax preparation companies like Intuit. [8] A similar reform was unsuccessfully attempted in California, after a pilot known as ReadyReturn. [9]

List of common forms

Examples of common Federal tax returns (and, where noted, information returns) include:

Transfer taxes

Form 706, U.S. Estate Tax Return;

Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return;

Statutory excise taxes

Form 720, Quarterly Federal Excise Tax Return;

Form 2290, Heavy Vehicle Use Tax Return;

Form 5330, Return of Excise Taxes Related to Employee Benefit Plans;

Employment (payroll) taxes

Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return;

Form 941, Employer's Quarterly Federal Tax Return;

Income taxes

Form 1040, U.S. Individual Income Tax Return;

Form 1040A, U.S. Individual Income Tax Return;

Form 1040EZ, Income Tax Return for Single and Joint Filers with No Dependents;

Form 1041, U.S. Income Tax Return for Estates and Trusts (for 1993 and prior years, this was known as "U.S. Fiduciary Income Tax Return");

Form 1065, U.S. Return of Partnership Income (for 1999 and prior years, this was known as "U.S. Partnership Return of Income") (information return);

Form 1099 series (various titles) (information return);

Form W-2 (information return);

Form 1120, U.S. Corporation Income Tax Return;

Form 1120S, U.S. Income Tax Return for an S Corporation;

Form 2290, Heavy Highway Vehicle Use Tax Return;

See also

Related Research Articles

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Form W-9

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IRS penalties

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References

  1. 1 2 Victor Thuronyi, Tax Law Design and Drafting, Volume 1, page 103(International Monetary Fund 1996).
  2. 1 2 3 Treasury Department, Internal Revenue Service. Internal Revenue Cumulative Bulletin 2005-1, January-June , page 829 (Government Printing Office 2005).
  3. "Tax Topics - Topic 301 - When, Where, and How to File". IRS. Retrieved 24 December 2011.
  4. 1 2 Glee Harrah Cady, Pat McGregor. Protect Your Digital Privacy: Survival Skills for the Information Age , pages 373 and 380 (Que Publishing, 2002).
  5. See generally 26 U.S.C.   § 6103.
  6. Roy Gillispie Blakey, Gladys C. Blakey. The Federal Income Tax , page 119 (The Lawbook Exchange 2006).
  7. W. Elliot Brownlee. Federal Taxation in America: A Short History , page 97 (Cambridge University Press 2004).
  8. Would You Let the I.R.S. Prepare Your Taxes?. NY Times.
  9. https://www.npr.org/2017/03/29/521954033/stanford-professor-loses-political-battle-to-simplify-tax-filing-process