1.1 Types of Taxes
- Federal Income Tax: Paid out by individuals and firms dependent on their own earnings.
Point out and native Taxes: Further taxes imposed by particular person states and municipalities. Payroll Taxes: Taxes for Social Security and Medicare, usually deducted from worker wages.Company Taxes: Taxes over the profits of corporations. - Revenue and Use Taxes: Taxes on goods and services purchased.
- Cash Gains Taxes: Taxes about the earnings in the sale of investments.
1.2 Tax Year
The U.S. tax year typically runs from January 1 to December 31. Tax returns for the previous year are due by April 15 of the following year, though extensions can be requested.
2. Tax Filing for people
2.1 Who Must File?
Not all individuals are required to file taxes. Filing requirements depend on income level, filing status (e.g., single, married, head of household), and age. U.S. citizens, residents, and certain non-residents with U.S. income must file.
2.2 Common Tax Forms
- Form 1040: Standard particular person revenue tax return.
Form W-two: Wage and tax statement furnished by companies. Type 1099: Reviews profits from self-employment, investments, or other sources.
2.3 Deductions and Credits
Taxpayers can reduce their taxable income through deductions or lower their tax liability through credits. Common deductions include mortgage interest and student loan interest, while credits include the Child Tax Credit and Earned Income Tax Credit.
3. Tax Filing for Firms
3.1 Business Structures
The type of business entity determines the tax filing requirements. Common structures include:
- Sole Proprietorship: Revenue is documented about the operator’s own tax return.
Partnership: Income passes via to partners, reported on Form 1065 and K-one. Corporation: Pays corporate taxes on gains using Variety 1120. LLC: Can be taxed being a sole proprietorship, partnership, or corporation, depending on its election.
3.2 Payroll Taxes
Employers are required to withhold and remit payroll taxes for Social Security, Medicare, and federal income tax. These are reported using Forms 941 or 944.
3.3 Business Deductions
Businesses can deduct expenses such as employee wages, office supplies, and travel costs. Proper record-keeping is essential for claiming deductions.
4. The Tax Submitting Process
4.1 Filing Options
Taxpayers can file their taxes through various methods:
On the internet: Use tax application like TurboTax or IRS Totally free File. Paper Submitting: Mail concluded forms on the IRS. Tax Experts: Hire a CPA or enrolled agent for help.
4.2 Key Deadlines
The main deadline for individual tax returns is April 15. Extensions allow filing until October 15, but taxes owed must be paid by April 15 to avoid penalties.
4.3 IRS Audits
Audits are rare but can occur if discrepancies or errors are detected. Maintaining accurate records and reporting all income reduces the risk of an audit.