Individual tax returns are official tax returns that a single person or married couple must submit to a state, federal, local, or state taxing agency to declare all income tax-deductible earned in a certain time frame, typically the previous year. This document is used to calculate any tax due, or that was not paid for the period.
IRS is the federal government's taxing authority within the U.S. It is the only taxing authority in America. The United States has a voluntary reporting system that allows individuals to file hard or electronic copies of tax returns. Each country has a tax agency that supervises tax collection across the nation.
Understanding Individual Tax Return
The individual tax return is among the forms used to report tax-deductible earnings in the U.S. Companies, businesses, and non-profit organizations have to submit their own versions of the individual tax return. Anyone earning a minimum amount of money must complete a tax return annually. Individual taxpayers must submit their tax returns using IRS Form 1040 and 1040-SR. People who are married can choose to file individually or as couples.
Once completed the form, the taxpayer has to submit the form within a specified date. This date is typically April 15th or the next weekday. The normal routine was disrupted in the year 2020 because the economic turmoil due to the COVID-19 epidemic caused the deadline to file taxes for 2019 to be extended until July 15th, 2020. In 2021 the deadline for filing taxes was extended until May 17th, 2021. Additional tax forms might be required, primarily when a taxpayer wants to claim deductions on an itemized basis instead of normal deductions.
All U.S. states, even those that don't have an income tax from the state, are governed by a state taxing authority. The taxing authority is responsible for the annual tax collection of all taxes imposed by the state. Taxpayers submit individual state tax returns with the state where they live if the state tax their income. State tax returns generally determine and assess their tax liability using lines copied over to the Federal tax return.
Individual Tax Return Forms
Form 1040 is a two-page tax form that almost every individual taxpayer uses. It is used to report earnings from salaries, wages, capital gains, tips dividends, interest and pensions, unemployment compensation, annuities, Social Security railway retirement, tax-deductible scholarships, and the Alaska Permanent Fund dividends. The 1040-SR, an alternative version for seniors, features a greater type size and provides greater emphasis to tax benefits specifically for retired people. Also, other versions of the tax return, like Form 1040-EZ and Form1040-A, were retired following the tax year 2017.
Other Forms to Report Individual Taxes
The individual tax return is not the only tax return that some taxpayers have to fill out. Sales of stock, as an example, have to be filed on the Schedule D form and attached to 1040. Business owners and self-employed people must report and pay quarterly taxes by submitting Form 1040-ES. The tax due upon completing Form 1040 is made using Form 1040-V. Everyone makes mistakes from time to time. Taxpayers who wish to amend their tax returns for individual purposes use Form 1040-X.
What an Individual Tax Return Means for You
Knowing a tax return is a great way to aid you in filing your taxes in a timely manner and determining the most effective tax strategies to suit your needs. If, for instance, you run a side business or you are contemplating setting up your own company, it is advisable to think about whether or not to incorporate it as an entity pass-through. If you decide to go down this way, you'll have to use the sole proprietorship option that results from operating as a business (including gig and freelance work). This income is then an element of your tax return.
You can establish a corporation taxed as a separate entity if you prefer. Different corporate structures each have advantages, and the tax return you file depends on your situation and personal preferences. Many people do not require filing an individual return for tax purposes. It's contingent on your income level, and you could still benefit from filing if there's no reason to need to file. For instance, filing a personal tax return is essential to receive certain tax benefits, such as an earned income tax credit.
State Taxes
In the case of state taxes, individual tax returns usually include similar information to what's required for the federal income tax return. However, each state has its particular forms and might have tax laws that are slightly different, which affect the information included in tax returns. Individual tax returns can be filed for specific local tax authorities; however, the taxes are typically declared and paid in state tax returns.
