Personal Income Tax

Find answers to common personal income tax questions while learning a little about its evolution in the U.S. system of governance.

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Brief History: Personal Income Tax

American lawmakers have always worked to balance the following three goals in the process of creating taxes: (1) building revenue; (2) influencing people’s spending habits; and (3) being fair to all taxpayers. Below is a brief overview of the evolution of taxes in the U.S. Constitution.

 

1781 to 1789

The writers of the Articles of Confederation did not support a strong federal government. Under the Articles (ratified on March 1, 1781), only state governments had the power to tax, and they were required to turn over tax revenues to the federal government. Following the ratification of the U.S. Constitution on June 21, 1788 (which replaced the Articles of Confederation), the federal government gained new, stronger powers to tax citizens directly. At that time, taxes were only in the form of tariffs and excise taxes, but this provided the federal government with ample revenue for many years. These types of taxes can be considered regressive, because people with lower incomes paid a higher percentage of their income in taxes than did people with higher incomes.

 

1861 to 1872

During the Civil War, the federal government required more revenue than both the tariffs and excise taxes could provide. On August 5, 1861, President Lincoln imposed the first federal tax on income by signing into law the Revenue Act. But after the war, Congress repealed the Act. 

 

1909 to Present

Because of industrialization and modernization, many people gained huge fortunes that were not taxed in any way. A tax on income was intended to make the system of taxation more equal. The ratification of the Sixteenth Amendment in 1913 gave Congress the right to collect income taxes. As a result, people with higher incomes paid more in taxes than those with lower incomes. This form of taxation is known as a progressive tax.

Personal Income Tax: Frequently Asked Questions (FAQs)

General

What records do I need to keep for tax purposes?


According to the IRS, you must keep records such as receipts, canceled checks, and other documents (W-2s, 1099s, invoices, etc.) that support an item of income, a deduction, or a credit appearing on a tax return for as long as those records may become material in the administration of any provision of the Internal Revenue Code. Basically, you are required to keep all records that support the amounts reported on your tax return until the time limitations for that return expires (usually 3 years). Generally, records must be kept for at least 3 years, but there are certain situations that require they be kept for longer. Also, if you need information from a previously filed tax return, you may either:

  1. Request a copy of your tax transcript by submitting a Form 4506-T (Request for Trascript of Tax Return); or
  2. Create an account on IRS.gov to view a history of your account transcipts (visit https://www.irs.gov/payments/view-your-tax-account).
For more information, see Taxlete's Recordkeeping topic and IRS Topic No. 305 (Recordkeeping).




What are the current tax brackets?


The 2018 Tax Cuts and Jobs Act overhauled the Internal Revenue Code and set forth the following seven tax brackets for ordinary income: 10%, 12%, 22%, 24%, 32%, 35% and 37%. The U.S. follows a progressive tax system, which means a taxpayer's tax rate increases as his or her income increases. For tax year 2020, the top tax rate remains 37% for individual single taxpayers with incomes greater than $518,400 ($622,050 for married couples filing jointly). The other rates are:

  • 35% for incomes over $207,350 ($414,700 for married couples filing jointly);
  • 32% for incomes over $163,300 ($326,600 for married couples filing jointly);
  • 24% for incomes over $85,525 ($171,050 for married couples filing jointly);
  • 22% for incomes over $40,125 ($80,250 for married couples filing jointly);
  • 12% for incomes over $9,875 ($19,750 for married couples filing jointly); and
  • 10% for incomes of single individuals with incomes of $9,875 or less ($19,750 for married couples filing jointly).
Marginal Rates The term "marginal tax rate" refers to the rate you pay at each level (or bracket) of income. Increments of your income are taxed at different rates. For example, if you're a single taxpayer with taxable income of $90,000 in 2019, then the first $9,875 you made is taxed at the 10% rate, the income between $9,876 and $40,124 is taxed at 12%, the income between $40,125 and $85,524 is taxed at 22%, and the remaining income between $85,525 and $90,000 is taxed at 24%. Thus, even though a portion of your income is subject to the higher 24% marginal tax bracket, your effective tax rate is approximately 17.5%. Marginal vs. Effective Tax Rate The marginal tax rate is the statutory rate, as listed above, while the effective tax rate (which will generally be lower) is the actual rate you pay on your taxable income after accounting for deductions and certain tax credits. Check out TaxAct's 2019 Tax Bracket Calculator to quickly determine your marginal and effective tax rates.




What if I am unable to pay my taxes?


It is important to file your tax return on time even if you are unable to fully pay your tax debt because the IRS assesses penalties for late filing. First, determine how much you can pay. Second, choose the payment option that best fits your situation. Common payment scenarios are listed below. (A) If you can pay the full amount immediately: You can pay with an electronic funds transfer or with a credit or debit card, or with a check by mailing it to the address listed on your bill or bringing it to your local IRS office. (B) If you cannot pay the full amount immediately, but can pay it within 120 days: If you cannot pay in full immediately, the IRS offers additional time (up to 120 days) to pay in full. It is not a formal payment option, so there is no application and no fee, but interest and any penalties continue to accrue until the tax debt is paid in full. For information about this option, call the IRS toll-free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses). (C) If you want to make monthly payments to pay off your tax debt: You can ask for an Installment Agreement, which is a fixed monthly payment. This is a formal agreement with the IRS, and involves an application process and fees. For more information on IRS Installment Agreements, visit the IRS's Additional Information on Payment Plans page. (D) If you are unable to pay off the full tax debt: An Offer in Compromise allows you to pay less than the full amount you owe. For the IRS to consider an Offer in Compromise, you must apply, and must generally pay certain fees and a portion of the debt. You must then file tax returns and make payments on time for five years after the IRS accepts your offer. (E) If you are unable to make any sort of payment: The IRS understands there may be times when you cannot pay a tax debt due to your current financial situation. If the IRS agrees that you cannot pay your taxes and pay your reasonable living expenses, it may place your account in a status called Currently Not Collectible. The IRS will not try to collect payment from you while your account is in Currently Not Collectible status, but the debt does not go away, and penalties and interest continue to grow.




Estimated Tax Payments: What are estimated tax payments and how do I know if I need to make estimated tax payments?


Estimated tax payments refer to the process by which certain indiviudals and businesses periodically pay their share of taxes on the income they receive or earn. Taxpayers are generally required to pay taxes on their income as its received or earned. For most employees, these taxes are paid automatically through what is known as tax withholding---the process by which an employer withholds a prefixed amount from an employee's wages to cover the employee's payroll tax obligations (e.g., income tax, social security tax, and Medicare tax). However, if you are self-employed or an independent contractor, then you will generally need to make estimated tax payments to the IRS because you are not subject to employee tax withholding. Sole proprietors, partners, and S corporation shareholders may also need to make estimated tax payments. Who is Required to make Estimated Tax Payments? Taxpayers generally must make estimated tax payments throughout the year if they expect to owe $1,000 or more in taxes when they file their next tax return. Corporations generally must make these payments throughout the year if they expect to owe $500 or more on their next tax return. Estimated Tax Payment Schedule Estimated tax payments are due at four different periods throughout the year:

  • April 15th (for the period January 1st - March 31st);
  • July 15th (for the period April 1st - May 31st);
  • October 15th (for the period June 1st - August 31st); and
  • January 15th (for the period September 1st - December 31st).
Note, If you do not pay enough tax by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your income tax return. For more information on estimated tax payments, including how to make the payments, see Taxlete's blog article entitled Some taxpayers may be required to make estimated tax payments.




Tax Withholding: How can I check whether I am paying enough federal taxes throughout the year?


You can use the IRS Withholding Calculator to help determine the right amount of tax that should be withheld from your paycheck.

The amount of income tax your employer withholds from your regular pay depends on the following two things:

  1. The amount you earn; and
  2. The information you give your employer on IRS Form W–4 (Employee’s Withholding Allowance Certificate).
If your employer is not withholding the proper amount to cover your annual tax obligation, you may need to complete a new IRS Form W–4 to change the amount being withheld.




Forms W-2: When should I expect to receive my Form W-2 from my employer?


Federal law requires that an employer issue a Form W-2 to each of its employees no later than January 31st. If you have not received a Form W-2 by January 31st, the IRS advises that you first contact your employer to try to resolve the issue. If your attempts to resolve the issue have not worked by the end of February, consider contacting the IRS to initiate a Form W-2 complaint. You can call the IRS toll free at (800) 829-1040 or make an appointment to visit an IRS Taxpayer Assistance Center (TAC). For mor information, see the IRS's FAQ page on this topic.




Dependents: What are the requirements for claiming dependents?


A. Dependent Children To claim a child as a dependent, all of the seven qualifying child dependency tests below must be satisfied.

  1. Dependent Taxpayer Test:
    • You cannot claim any dependents if you (or your spouse if filing jointly) could be claimed as a dependent by another taxpayer.
  2. Joint Return Test:
    • The child must not be filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid).
  3. Citizen or Resident Test:
    • The child must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico (there is an exception for certain adopted children).
  4. Relationship Test:
    • The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
  5. Age Test:
    • The child must be either: (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly); (b) under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly); or (c) any age if permanently and totally disabled.
  6. Residency Test:
    • The child must have lived with you for more than half of the year (there are exceptions for temporary absences, children who were born or died during the year, children of divorced or separated parents (or parents who live apart), and kidnapped children).
  7. Support Test:
    • The child must not have provided more than half of his or her own support for the year.
B. Dependent Relatives To claim a relative as a dependent, all of the qualifying relative dependency tests must be satisfied.
  1. Dependent Taxpayer Test:
    • You cannot claim any dependents if you (or your spouse if filing jointly) could be claimed as a dependent by another taxpayer.
  2. Joint Return Test:
    • The person must not be filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid).
  3. Citizen or Resident Test:
    • The person must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico (there is an exception for certain adopted children).
  4. Not a Qualifying Child Test:
    • The person cannot be your qualifying child or the qualifying child of any other taxpayer.
  5. Member of Household or Relationship Test:
    • The person must be either (a) your child (to include a legally adopted child), stepchild, foster child, or a descendant of any of them (for example, your grandchild); (b) your brother, sister, half-brother, half-sister, stepbrother, or stepsister; (c) your father, mother, grandparent, or other direct ancestor (but not foster parent); (d) your stepfather or stepmother; (e) a son or daughter of your brother or sister; (f) a son or daughter of your half-brother or half-sister; (g) a brother or sister of your father or mother; or (h) your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Otherwise, the person must live with you all year as a member of your household (subject to certain exceptions) and your relationship must not violate local law.
  6. Gross Income Test:
    • The person's gross income for the year must be less than $4,200 (there is an exception if the person is disabled and has income from a sheltered workshop).
  7. Support Test:
    • You must provide more than half of the person's total support for the year (there are exceptions for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children).




Income: What is considered income for tax reporting purposes?


When preparing your federal income tax return, you generally are required to report all of your income (known as "gross income") for the applicable tax year on lines 1 through 7 of your Form 1040 (U.S. Individual Income Tax Return). The Internal Revenue Code defines gross income as all income from whatever source derived, including (but not limited to) the following items:

  • Compensation for services, including fees, commissions, fringe benefits, and similar items;
  • Gross income derived from business;
  • Gains derived from dealings in property;
  • Interest;
  • Rents;
  • Royalties;
  • Dividends;
  • Annuities;
  • Income from life insurance and endowment contracts;
  • Pensions;
  • Income from discharge of indebtedness;
  • Distributive share of partnership gross income;
  • Income in respect of a decedent; and
  • Income from an interest in an estate or trust.
For more information, see the following resource:




Reporting Income: What are some common income reporting rules?


Constructively-received income Generally, any income that is available to you is subject to tax regardless of whether the income is actually in your possession. Income is considered "constructively-received" when an amount is credited to your account or made available to you without restriction. You do not need to have possession of it. If you authorize someone as your agent to receive income for you, you are considered to have received it when your agent receives it. Income is not considered constructively-received if your access to it is subject to substantial restrictions or limitations. Assignment of income An assignment of income occurs when you agree (through a contract) that a third-party can receive income for you. If you assign all or part of your income to a third-party, you must include the assigned amount as part of your gross income when the third-party receives it. For example, if you and your employer agree that part of your salary is to be paid directly to your former spouse, then you must include that amount in your income when your former spouse receives it. Prepaid income Prepaid income, such as compensation for future services, is generally included as part of your gross income in the year you receive it. However, if you use an accrual method of accounting, you can defer prepaid income you receive for services to be performed before the end of the next tax year. In this case, you include the payment as part of your gross income as you earn it by performing the services.




Am I required to file a tax return?


Review the IRS chart below to determine whether you are required to file a federal income tax return. Remember, you may want to consider filing even if you are not required to do so. Why? Because you may be entitled to receive a refund due to tax credits such as the Earned Income Tax Credit. 2019 Filing Chart Requirement (for most taxpayers) For more information, see Table 1 in IRS Publication 501 (Dependents, Standard Deduction, and Filing Information).




Tip Income: Do I need to report the cash tips and non-cash tips I received on my tax return?


Yes. Generally, income received from any source is taxable. Thus, tips received by taxpayers are considered income and subject to federal income tax. Some taxpayers mistakenly believe they are not required to report their cash tips to the IRS, which can lead to a lot of trouble during tax time. For more information on the tip income reporting requirements, see our blog post entitled "Taxpayers must report tip income to the IRS, including cash tips" and the IRS's Tip Recordkeeping & Reporting page.




Penalties: Can the IRS assess penalties against me for not filing a tax return or paying my tax liability?


Yes. Taxpayers should be aware of the following common penalties. Failure-to-File Tax Return The IRS may impose an addition to tax penalty against a taxpayer for the failure to file a required tax return, unless the taxpayer can show that the failure was due to reasonable cause and not willful neglect. The initial penalty amount is equal to 5% of the tax liability required to be shown on the return plus an additional 5% for each month the failure to file continues, up to a total penalty amount of 25% of the tax liability. 26 U.S.C. § 6651(a)(1). The 5% monthly penalty amount is reduced by the amount of the failure-to-pay penalty amount (0.5%) for any month that both penalties apply simultaneously; thus, the maximum penalty amount when these two penalties apply cannot exceed 5% per month.

Failure-to-Pay Tax

The IRS may impose an addition to tax penalty against a taxpayer for the failure to pay the amount shown on a tax return, unless the taxpayer can show that the failure was due to reasonable cause and not willful neglect. The initial penalty amount is equal to 0.5% of the tax liability required to be shown on the return plus an additional 0.5% for each month the failure to file continues, up to a total penalty amount of 25% of the tax liability. 26 U.S.C. § 6651(a)(2).

Failure-to-Pay Estimated Income Tax

The IRS may impose an addition to tax penalty against a taxpayer for the failure to pay estimated income tax. 26 U.S.C. 6654(a). The penalty is determined by applying the applicable interest rate (known as the “underpayment rate”) to the tax amount that should have been paid (known as the “underpayment of estimated tax”) for the duration of the underpayment period. The applicable interest rate is determined on a quarterly basis and can be found in 26 U.S.C. § 6621. Note, though, the penalty does not apply if a taxpayer: (1) retired after reaching age 62, or became disabled, in the taxable year or the preceding taxable year; and (2) the underpayment was due to reasonable cause and not willful neglect. See 26 U.S.C. 6654(e)(3)(B).





Deductions

What is a deduction?


A deduction lowers one's tax liability by reducing the amount of income subject to tax. Typically, deductions are expenses that the taxpayer incurs during the year that can be subtracted from the taxpayer's gross income to determine the amount of tax owed. Taxpayers have the option of choosing the standard deduction or itemizing deductions. How do you choose? Well, according to the IRS, you should itemize deductions if the total allowable amount is greater than the amount of your standard deduction. Also, you may be required to itemize deductions if you fall within one of the taxpayer groups that the IRS determined cannot use the standard deduction. For more information, see IRS Topic No. 501, Should I Itemize?




What is the standard deduction?


The standard deduction is a fixed dollar amount that that lowers one's tax liability by reducing the amount of income subject to tax. For example, the standard deduction in 2019 for a single taxpayer was $12,200 ($24,400 for married filers filing jointly). The IRS adjusts the amount each year for inflation and varies according to your filing status, whether your 65 or older age (or blind), and whether another taxpayer can claim you as a dependent. Note also that the standard deduction is not available to certain taxpayers. For more information, see IRS Topic No. 551 (Standard Deduction).




What are some common itemized tax deductions?


For many taxpayers, common itemized tax deductions include deductions for:

  • Home Mortgage Interest;
  • State & Local Taxes;
  • Property Taxes;
  • Healthcare Expenses;
  • Use of a Home Office;
  • Qualified Business Expenses; and
  • Charitable Contributions.
For more information, see IRS Topic No. 500 (Itemized Deductions).




What is the difference between the standard deduction and itemizing deductions?


The standard deduction is a fixed amount that reduces one's tax liability (e.g., $12,200 for single filers in 2019), while itemized deductions represent specific calculated amounts, based on expenses incurred by the taxpayer, that also reduces one's tax liability. Taxpayers have the option of either taking the standard deduction or itemizing deductions, and they should choose whatever option results in the lowest tax liability. Specifically, taxpayers should itemize deductions if:

  1. Their qualified expenses exceed the standard deduction amount ($12,200 for single filers in 2019 and $24,400 for married filing jointly); or
  2. They fall within one of the groups that the IRS determined is ineligible to use the standard deduction.
When itemizing deductions, taxpayers can add up all qualifying expenses, such as home mortgage interest, out-of-pocket medical and dental expenses, state and local taxes, real estate taxes, charitable contributions and others.




What are itemized deductions?


Itemized deductions are certain deductions allowed by the Internal Revenue Code that lowers one's tax liability by reducing the amount of income subject to tax. Most taxpayers have a choice of either taking the standard deduction or itemizing deductions, and taxpayers should choose whichever option results in the lowest tax liability. You may benefit by itemizing deductions for things that include:

  • State and local income or sales taxes;
  • Real estate and personal property taxes;
  • Mortgage interest;
  • Mortgage insurance premiums;
  • Personal casualty and theft losses from a federally declared disaster;
  • Donations to a qualified charity; and
  • Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income.
Note, certain itemized deductions are subject to special limitations. Who must itemize? Certain taxpayers cannot use the standard deduction, and therefore must itemize their deductions. Taxpayers who normally fall within this category are:
  • Married, filing a separate return, and their spouse is itemizing;
  • Filing a return for a short tax year due to a change in the annual accounting period; or
  • Considered to be nonresident aliens or dual status aliens during the year (and not married to a U.S. citizen or resident at the end of the tax year).




Home Sale Losses: Can I deduct the losses incurred from the sale of a home?


No. A loss on the sale or exchange of personal use property is not deductible (this includes a capital loss on the sale of your home used by you as your personal residence at the time of sale). Only losses associated with property used in a trade or business and investment property are deductible.




Vehicle Sales Tax: Can I deduct the sales tax I paid in connection with the purchase of a vehicle?


Yes (as an itemized deduction). If you itemize your deductions, you may deduct the sales tax you paid for the purchase of a vehicle under the general sales tax deduction allowance. You will have to choose between taking a deduction for the sales tax you paid in a given year or taking a deduction for the state and local income tax paid. As of 2018, there is a $10,000 deduction limit ($5,000 if you are filing as Married Filing Separately) on the total amount a taxpayer can claim for real property taxes, personal property taxes, and state and local taxes (or general sales tax if you choose).




Are state and local taxes deductible?


Yes (as an itemized deduction). If you choose to itemize deductions, you may deduct a total of $10,000 for state and local income, real estate, personal property, and general sales taxes paid ($5,000 if you file as married filing separately).




Home Mortgage Interest: Can I deduct the interest I paid on my home mortgage? What about the interest I paid on a home equity loan?


Yes (as an itemized deduction). Note, though, the rules are different for the interest paid on a home mortgage versus the interest paid on a home equity loan. Home Mortgage Interest According to the IRS, you may be able to deduct mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness incurred after December 15, 2017. For more information, see the Instructions for Schedule A (Form 1040). Home Equity Loan Interest The 2018 Tax Cuts and Jobs Act changed the rule for home equity loan interest. You can no longer deduct interest from a loan secured by your home to the extent the loan proceeds were not used to buy, build, or improve your home.




Job Relocation Expenses: Can I deduct the expenses I incurred in connection with a move for my job?


Beginning in 2018, you can no longer claim a deduction for moving expenses unless:

  1. You are a member of the Armed Forces on active duty; and
  2. You move because of a permanent change of station pursuant to a military order.
If you fit within the narrow exception, you may deduct these expenses if you choose to itemize your deductions.




Personal Loans: Can I take a deduction for loans I made to family or friends if there is now no reasonable expectation that I will be repaid?


Maybe (as an itemized deduction). If someone owes you money that you cannot collect, you may have what is considered to be a bad debt. If the bad debt is from a loan made to a family member or friend, it is considered a nonbusiness bad debt. Nonbusiness bad debts must be totally worthless to be deductible. You cannot deduct a partially worthless nonbusiness bad debt. A debt becomes worthless when the surrounding facts and circumstances indicate there is no reasonable expectation that the debt will be repaid. To show that a debt is worthless, you must establish that you have taken reasonable steps to collect the debt. It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. You may take the deduction only in the year the debt becomes worthless. You do not have to wait until a debt is due to determine that it is worthless. Report a nonbusiness bad debt as a short-term capital loss on Form 8949 (Sales and Other Dispositions of Capital Assets), Part 1, line 1. Enter the name of the debtor and "bad debt statement attached" in column (a). Enter your basis in the bad debt in column (e) and enter zero in column (d). Use a separate line for each bad debt. It is subject to the capital loss limitations. A nonbusiness bad debt deduction requires a separate detailed statement attached to your return. The statement must contain:

  1. a description of the debt, including the amount and the date it became due;
  2. the name of the debtor, and any business or family relationship between you and the debtor;
  3. the efforts you made to collect the debt; and
  4. why you decided the debt was worthless.
Loan or Gift To deduct a nonbusiness bad debt, you need to be able to show that you intended to give a loan and not a gift. If you gave money to someone with the agreement that they money did not necessarily need to be repaid, that would be considered a gift and is not deductible.

If you gave money to one of your children to help them pay for their basic needs, this is not considered a loan and cannot be deducted. For more information, see IRS Topic No. 453 (Bad Debt Deduction).




Natural Disaster Losses: Can I take a deduction for losses I incurred because of a natural disaster (e.g., hurricane, flood, etc.)?


These types of losses are known as casualty losses. A casualty loss can result from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake, or volcanic eruption. A casualty does not include normal wear and tear or progressive deterioration. Generally, you may deduct casualty losses relating to your home, household items, and vehicles on your federal income tax return if the loss is caused by a federally declared disaster declared by the President. However, you may not deduct casualty and theft losses covered by insurance, unless you file a timely claim for reimbursement and you reduce the loss by the amount of any reimbursement or expected reimbursement. A casualty loss can result from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake, or volcanic eruption. A casualty does not include normal wear and tear or progressive deterioration. If your property is personal-use property (i.e., nonbusiness property) or is not completely destroyed, the amount of your casualty loss is the lesser of:

  • The adjusted basis of your property, or
  • The decrease in fair market value of your property as a result of the casualty.
For personal-use property, you must subtract $100 from each casualty or theft event that occurred during the year after you have subtracted any salvage value and any insurance or other reimbursement. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year. Report casualty and theft losses on IRS Form 4684 (Casualties and Thefts). For more information about casualty loss deductions for personal-use property, see IRS Publication 584 (Casualty, Disaster, and Theft Loss Workbook).




Charitable Contributions (Donations): Can I deduct the contributions I made to a charity (e.g., non-profits, churches, etc.)?


Yes (as an itemized deduction). These types of donations are known as charitable contributions. You can only deduct charitable contributions if you opt to itemize deductions rather than taking the standard deduction. Generally, you may deduct up to 50% of your adjusted gross income (AGI), but certain situations only allow for a deduction of up to 20% or 30% of your AGI. To be deductible, you must make charitable contributions to qualified organizations. Contributions to individuals are never deductible. To determine if the organization that you contributed to qualifies as a charitable organization for income tax deduction purposes, refer to the IRS's Tax Exempt Organization Search tool. If you receive a benefit from the contribution such as merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can only deduct the amount that exceeds the fair market value of the benefit received. Cash Contributions Requirements For contributions of cash, check or other monetary gift (regardless of amount), you must maintain a record of the contribution:

  • A bank record or a written communication from the qualified organization containing: (a) the name of the organization; (b) the amount; and (c) the date of the contribution.
  • For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.
Note also that charitable cash contributions are limited to 60% of your AGI as opposed to 50% for noncash contributions. Noncash Contributions Requirements Less than $250 To claim a deduction for a noncash contribution of less than $250, you must obtain and keep a receipt from the charitable organization showing:
  1. The name and address of the organization;
  2. The date of the contribution; and
  3. A description of the contributed property.
If your deduction for a noncash contribution is more than $500, you must fill out IRS Form 8283 (Noncash Charitable Contributions) and attach it to your return. $250 to $500 To claim a deduction for a noncash contribution between $250 and $500, you must obtain and keep a contemporaneous written acknowledgment of the contribution. The written acknowledgement must include:
  1. A description of the property (but not necessarily its value);
  2. Whether the charitable organization provided you with any good or services in exchange for the contribution; and
  3. A description and good faith estimate of any goods or services identified in number 2, above.
$501 to $5,000 To claim a deduction for a noncash contribution between $501 and $5,000, you must:
  1. Obtain and keep a contemporaneous written acknowledgment of the contribution; and
  2. Complete IRS Form 8283 (Noncash Charitable Contributions) and attach it to your return.
$5,001 or more To claim a deduction for a noncash contribution property worth more than $5,000, you must:
  1. Obtain and keep a contemporaneous written acknowledgment of the contribution;
  2. Obtain a qualified written appraisal of the donated property from a qualified appraiser; and
  3. Complete IRS Form 8283 (Noncash Charitable Contributions).
For more detailed information, see IRS Topic No. 506 (Charitable Contributions) and IRS Publication 526 (Charitable Contributions).




HSA: Can I deduct the contributions I made to my Health Savings Account (HSA)?


Yes (as an itemized deduction). For 2019, you may deduct a total of $3,500 in HSA contributions if you have self-coverage only or up to $7,000 for family coverage. There is an additional contribution amount of $1,000 for taxpayers who are age 55 or older.





Credits

What are some common tax credits for the average taxpayer?


Common tax credits include the: a) Earned Income Tax Credit; b) Education Credits (the American Opportunity Tax Credit & Lifetime Learning Credit); c) Premium Tax Credit; d) Child Tax Credit (or Credit for Other Dependents); and e) Childcare & Dependent Care Credit.




What is the Earned Income Tax Credit (EITC)?


The Earned Income Tax Credit (EITC) is a benefit for working taxpayers with low-to-moderate income. The amount of the EITC for which taxpayers may qualify for increases relative to their income, filing status, and the number of claimed dependents. The method used to calculate the EITC makes a taxpayer eligible to claim a larger EITC amount if he or she earns income within a certain range. For tax year 2019, the EITC amount for a taxpayer filing as single with one qualifying child increases as the taxpayer's income rises between $1 and $10,400, and decreases as income exceeds $19,050. For tax year 2019, taxpayers filing jointly with three qualifying children who made between $14,550 and $24,850 amount can claim a maximum EITC of $6,557.
The maximum amount of credit for the 2019 tax year is:

  • $6,557 with three or more qualifying children
  • $5,828 with two qualifying children
  • $3,526 with one qualifying child
  • $529 with no qualifying children
For more information, see the IRS's 2019 EITC Chart or the EITC page.




Education Credits: Are there tax credits available to help offset the costs of higher education?


Yes. There are two tax credits available to help taxpayers save on the costs associated with higher education: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). Taxpayers who pay for higher education in 2020 may qualify to claim one or both of these tax-saving credits on next year's tax return. The AOTC has a maximum benefit of $2,500 per eligible student, and the LLC has a maximum benefit of $2,000 per return, per year. Eligibility There are additional rules for each credit, but a taxpayer must meet all three of the following criteria for both credits:

  1. You, your spouse, or a dependent must be enrolled at an eligible educational institution (i.e., a school offering higher education beyond high school); and
  2. You or your spouse must have paid qualified education expenses for higher education and received an IRS Form 1098-T (Tuition Statement) from the eligible educational institution.
Note, you cannot claim either of these tax credits if someone else (e.g., your parents) claims you as a dependent on their tax return. You also cannot claim either credit if your filing status is married filing separately. For more information, see Taxlete's blog post on the AOTC and the LLC.




The Premium Tax Credit: Are there tax credits available to offset the costs of heatlh insurance premiums?


Yes. The Premium Tax Credit (PTC) is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace. To get this credit, you must meet certain requirements and file a tax return with IRS Form 8962 (Premium Tax Credit). Who qualifies for the credit? You are eligible for the premium tax credit if you meet all of the following requirements:

  1. You have household income that falls within a certain range;
  2. You do not file a tax return using the filing status of Married Filing Separately (there is an exception to this rule that allows certain victims of domestic abuse and spousal abandonment to claim the credit using Married Filing Separately; for more information, see the IRS's Premium Tax Credit questions and answers page);
  3. You cannot be claimed as a dependent by another person;
  4. In the same month, you or a family member:
    • Have health insurance coverage through a Health Insurance Marketplace;
    • Are not able to get affordable coverage through an eligible employer-sponsored plan that provides minimum value;
    • Are not eligible for coverage through a government program, like Medicaid, Medicare, CHIP or TRICARE; and
    • Pay the share of premiums not covered by advance credit payments.
For more information about these eligibility requirements, see the IRS's Eligibility for the Premium Tax Credit page.




What is the Child and Dependent Care Credit?


Child and Dependent Care Credit You may be able to claim the child and dependent care credit if you paid expenses for the care of a qualifying individual to enable you (and your spouse, if filing a joint return) to work or actively look for work. Generally, you may not take this credit if your filing status is married filing separately; however, there are some exceptions---see the topic entitled "What’s Your Filing Status? " in IRS Publication 503 (Child and Dependent Care Expenses). Dollar Limit You cannot claim more than $3,000 in total expenses for one qualifying individual or $6,000 for two or more qualifying individuals. Expenses paid for the care of a qualifying individual are eligible expenses if the primary reason for paying the expense is to assure the individual's well-being and protection. If you received dependent care benefits that you exclude or deduct from your income, you must subtract the amount of those benefits from the dollar limit that applies to you. Qualifying Individual A qualifying individual for the child and dependent care credit is:

  • Your dependent qualifying child who was under age 13 when the care was provided;
  • Your spouse who was physically or mentally incapable of self-care and lived with you for more than half of the year; or
  • An individual who was physically or mentally incapable of self-care, lived with you for more than half of the year, and either: (1) was your dependent; or (2) could have been your dependent except that he or she received gross income of $4,200 or more, or filed a joint return, or you (or your spouse, if filing jointly) could have been claimed as a dependent on another taxpayer’s 2019 return.
Children of Divorced or Separated Parents or Parents Living Apart A noncustodial parent who is claiming a child as a dependent should review the rules under the topic entitled "Child of divorced or separated parents or parents living apart" in IRS Publication 503. Note, a child may be treated as the qualifying individual of the custodial parent for the child and dependent care credit even if the noncustodial parent is entitled to claim the child as a dependent.




What is the Child Tax Credit?


The Child Tax Credit is a tax credit of up to $2,000 that taxpayers may claim for each qualifying child listed as a dependent on their tax return. The qualifying child must be under the age of 17 and meet other qualifications (see below). Up to $1,400 of the credit can be refundable for each qualifying child. A refundable tax credit may entitle you to a refund even if you do not owe any tax. Other details and qualifications to claim the credit:

  • The maximum amount of the credit is $2,000 per qualifying child.
  • Taxpayers who are eligible to claim this credit must list the name and Social Security number for each dependent on their tax return.
  • The child must be younger than 17 on the last day of the tax year, generally Dec 31.
  • The child must be the taxpayer’s son, daughter, stepchild, foster or adopted child, brother, sister, stepbrother, stepsister, half-brother or half-sister. An adopted child includes a child lawfully placed with them for legal adoption. They can also include grandchildren, nieces or nephews.
  • The child must have not provided more than half of their own support for the year.
  • The taxpayer must claim the child as their dependent on their federal tax return.
  • The child cannot file a tax return for the same year with the status married filing jointly, unless the only reason they are filing is to claim a refund.
  • The child must be a U.S. citizen, a U.S. national or a U.S. resident alien.
  • In most cases, the child must have lived with the taxpayer for more than half of 2019.
  • The IRS’s Interactive Tax Assistant Tool--- Is My Child a Qualifying Child for the Child Tax Credit?---helps taxpayers determine if a child qualifies for this credit.
  • In some cases, a taxpayer qualifies and gets less than the full credit. These taxpayers must have earned income of at least $2,500 to receive a refund, even if they owe no tax, with the additional child tax credit.
  • The credit begins to phase out at $200,000 of modified adjusted gross income. This amount is $400,000 for married couples filing jointly.
  • Taxpayers can use the worksheet on page 6 of IRS Publication 972 (Child Tax Credit), to determine if they can claim this credit.
Credit for Other Dependents Dependents who cannot be claimed for the Child Tax Credit may still qualify you for the Credit for Other Dependents. This is a non-refundable tax credit of up to $500 per qualifying person. The qualifying dependent must be a U.S. citizen, U.S. national, or U.S. resident alien.




Adoption: Is there a tax credit connected with adoption expenses?


Yes. Taxpayers who incur adoption expenses may be eligible to receive a tax credit of up to $14,080 per eligible child (for 2019). The tax credit is non-refundable, which means it is limited to your tax liability for that year. However, the credit amount in excess of your tax liability may be carried forward for up to five years. For more information, see Taxlete's blog post entitled Did you know special tax benefits are available to parents who adopt? and IRS Topic No. 607 (Adoption Credit and Adoption Assistance Program).





Other

Is there a disclosure or reporting requirements for assets I own outside the United States (also known as foreign or offshore assets)?


Yes (depending on the total value of the assets). Taxpayers with foreign assets may be subject to two separate reporting requirements. One report (Form 8938) is filed along with your federal tax return while the other (FBAR) is reported to the Treasury Department through an online portal. IRS Form 8938 Requirement Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS, generally using IRS Form 8938 (Statement of Specified Foreign Financial Assets) if the aggregate value of the assets exceeds $50,000 (in some cases, the threshold may be higher). The Form 8938 must be attached to the taxpayer’s annual tax return. FBAR Requirement Under the Bank Secrecy Act, you are required to report certain foreign financial accounts (e.g., bank accounts, brokerage accounts, mutual funds, etc.) to the Treasury Department each year and keep certain records of these accounts. You report the accounts by filing a Report of Foreign Bank and Financial Accounts (FBAR) on FinCEN Form 114. Who Must File? A United States person (including a citizen, resident, corporation, partnership, limited liability company, trust and estate) must file an FBAR to report a financial interest in (or signature or other authority over) at least one financial account located outside the United States if the total balance of the person’s foreign financial accounts exceeded $10,000 at any time during the calendar year. A “foreign financial account” is generally defined as an account at a financial institution located outside the United States, regardless of whether the account produced taxable income. The FBAR is an annual report, due April 15th following the calendar year reported. You are allowed an automatic extension to October 15th if you fail to meet the FBAR annual due date of April 15th (you do not need to request an extension). You must file the FBAR electronically through the Financial Crimes Enforcement Network’s BSA E-Filing System (you do not file the FBAR with your federal tax return). -------------------------------------




Do I have to pay taxes on the funds I receive from the sale of my residence?


It depends. You can exclude a maximum of $250,000 of realized gain ($500,000 if married filing jointly) from the sale of your principal residence. To qualify for the maximum exclusion of gain, you must satisfy all five steps of the Eligibility Test. Eligibility Test, Step 1 - Automatic Disqualification Your home sale is not eligible for the exclusion if ANY of the following are true:

Eligibility Test, Step 2 - Ownership Requirement If you owned the home for at least 24 months (2 years) out of the last 5 years leading up to the date of sale (date of the closing), you meet the ownership requirement. For a married couple filing jointly, only one spouse has to meet the ownership requirement. Eligibility Test, Step 3 - Residence Requirement If you owned the home and used it as your residence for at least 24 months of the previous 5 years, you meet the residence requirement. The 24 months of residence can fall anywhere within the 5-year period, and it does not have to be a single block of time. All that is required is a total of 24 months (730 days) of residence during the 5-year period. Unlike the ownership requirement, each spouse must meet the residence requirement individually for a married couple filing jointly to get the full exclusion. If you were ever away from home, you need to determine whether that time counts towards your residence requirement. A vacation or other short absence counts as time you lived at home (even if you rented out your home while you were gone). If you become physically or mentally unable to care for yourself, you only need to show that your home was your residence for 12 months out of the 5 years leading up to the date of sale. In addition, any time you spent living in a care facility (such as a nursing home) counts toward your residence requirement, so long as the facility has a license from a state or other political entity to care for people with your condition. Eligibility Test, Step 4 - Look-Back Requirement If you didn't sell another home during the 2-year period before the date of sale (or, if you did sell another home during this period, but didn't take an exclusion of the gain earned from it), you meet the look-back requirement. You may take the exclusion only once during a 2-year period. Eligibility Test, Step 5 - Exceptions to the Eligibility Test There are some exceptions to the Eligibility Test. If any of the following situations apply to you, click on the associated link to the IRS's page to see if the situation affects your qualification. If none of the following situations apply, and you satisfied all four previous steps, you may claim the maximum exclusion amount. Does Your Home Qualify for a Partial Exclusion of Gain? If you do not satisfy all of steps in the Eligibility Test, you may still qualify for a partial exclusion of gain. You can meet the requirements for a partial exclusion if the main reason for your home sale was a change in workplace location, a health issue, or an unforeseeable event. Use Worksheet 1-B contained within IRS Publication 523 to calculate the allowable amount for your partial exclusion of gain.




If I have a nanny (or other household employee), do I need to give him or her a Form W-2? Do I need to pay any employment taxes?


Social Security and Medicare Taxes According to the IRS, if you paid cash wages of $2,200 or more for 2020 (this threshold may change from year to year) to any one household employee, you generally must withhold taxes for social security (6.2%) and Medicare (1.45%) from all wages you pay that employee. You must also pay your share of social security and Medicare taxes, which is also 7.65% of cash wages. Cash wages include wages paid by check, money order, etc. Do not withhold or pay social security and Medicare taxes from wages you pay to:

  • Your spouse;
  • Your child who is under age 21;
  • Your parent, unless an exception is met; or
  • An employee who is under age 18 at any time during the year, unless performing household work is the employee's principal occupation. If the employee is a student, providing household work is not considered to be his or her principal occupation.
Federal Income Tax Withholding Requirement You are not required to withhold federal income tax from wages you pay to a household employee. However, if your employee asks you to withhold federal income tax and you agree, you will need a completed IRS Form W-4 (Employee's Withholding Certificate) from your employee. IRS Form W-2 Requirement If you must withhold and pay social security and Medicare taxes, or if you withhold federal income tax, you will need to complete an IRS Form W-2 (Wage and Tax Statement) for each employee. For more information, see IRS Topic No. 756 (Employment Taxes for Household Employees).




True or False: Only federal employees and persons residing inside Washington, D.C. are subject to federal income tax and employment tax.


False. Promoters of this scheme incorrectly advise taxpayers who receive wages to file a Form 4852 (Substitute for Form W-2) with the Service and, based on the above theory, include a zero on the line for the amount of wages received. The Internal Revenue Code, however, imposes a federal income tax upon all United States residents and citizens, not just federal employees and those that reside in Washington, D.C., federal territories, and federal enclaves. The Internal Revenue Code also imposes employment tax on all wages paid for employment.




True or False: A taxpayer can avoid tax by filing a return that reports zero income and zero tax liability.


False. All taxpayers who meet minimum income thresholds must file returns and pay any tax owed on their taxable income. No law, including the Internal Revenue Code, permits a taxpayer who has received wages or other taxable income to file a return reporting zero income and zero tax liability. If a taxpayer has received income subject to federal tax, a return showing only zeroes for income and tax liability is not a valid return. Further, inclusion of the phrase “nunc pro tunc” or other legal jargon on an income tax return does not serve to validate an otherwise improper return.




True or False: My income is not subject to tax if I am not a "citizen" or a "person" within the meaning of the Internal Revenue Code.


False. A citizen of any one of the 50 States (e.g., New York, California) of the United States or of the District of Columbia, including those living abroad, is also a citizen of the United States and is subject to federal tax. The Internal Revenue Code defines a taxpayer as any person subject to any internal revenue tax and further defines a person as an individual, trust, estate, partnership, association, company, or corporation.




True or False: A taxpayer can escape income tax by putting assets in an offshore bank account.


False. A citizen or resident of the United States cannot use an offshore financial arrangement (such as a foreign bank or brokerage account, or a credit card issued by a foreign bank) to avoid his federal tax obligations. Taxpayers are required to disclose foreign financial accounts to the Treasury Department and to report the income earned thereon.




True or False: A taxpayer can place all of his assets in a trust to escape income tax while still retaining control over those assets.


False. A taxpayer who places assets in a trust but retains certain powers over or interests in the assets, including the power to control the beneficial enjoyment of the assets, is treated as the owner of the assets for federal tax purposes and is subject to tax on the income from those assets.




True or False: The Internal Revenue Code does not impose a requirement to file a return.


False. Section 6011 of Title 26 of the United States Code expressly authorizes the Service to require, by Treasury regulation, the filing of tax returns. Section 6012 identifies persons who are required to file income tax returns. The Treasury Department has issued regulations requiring taxpayers who meet minimum income thresholds to file income tax returns. Taxpayers also are required to pay any tax owed. Moreover, no provision of the Paperwork Reduction Act serves to exempt taxpayers from the requirement that they file returns.




True or False: Filing a tax return is voluntary.


False. Some people mistake the word "voluntary" for ”optional” – but filing a tax return is not optional for those who meet the law's minimum gross income requirements. The word "voluntary," as used in IRS publications, court decisions, and elsewhere, refers to the fact that the U.S. tax system is a voluntary compliance system. This means only that taxpayers themselves determine the correct amount of tax pursuant to law and complete the appropriate returns, rather than have the government do this for them as is done in some other countries. This system of self-reporting does not make the filing of tax returns or the payment of tax optional. For those who do not comply with this system and fail to self-report their tax liability, the tax law authorizes various enforced compliance measures.




True or False: A taxpayer can refuse to pay taxes if the taxpayer disagrees with the government’s use of the taxes it collects.


False. No law, including the Internal Revenue Code, permits a taxpayer to avoid or evade tax obligations on the grounds that the taxpayer does not agree with the government’s use of the taxes collected.




True or False: A taxpayer can use a home-based business to deduct amounts paid to maintain his household and for other personal expenses?


It depends. Business expenses, including expenses related to a home-based business, are not deductible unless the expenses relate to a legitimate profit-seeking trade or business. Promoters of home-based business schemes improperly encourage taxpayers to claim household expenses as business expense deductions when the purported home-based business is not a legitimate trade or business.




True or False: The 16th Amendment is invalid because it contradicts the original Constitution, was not properly ratified, and lacks an enabling clause?


False. The Sixteenth Amendment to the U.S. Constitution, which authorizes the income tax, was properly ratified by the states and is valid. Further, the argument that the Sixteenth Amendment is invalid due to the lack of an enabling clause is without merit because Congress has the power to lay and collect taxes pursuant to Article 1, Section 8, Clause 18 of the Constitution.





Tax Procedures

How much time does the IRS have to assess taxes against me?


3 years – Generally, the IRS must assess taxes within 3 years from the date you file your return or the return due date, whichever is later. For most taxpayers, this means that IRS must assess taxes within 3 years of the return due date (April 15th). If you self-report owing taxes upon filing a return, the assessment is complete once the IRS accepts your return and nothing more needs to be done by the IRS (unless there is an issue with your return). The 3-year time limit generally encompasses the time in which the IRS can audit your return and propose any additions to tax. For example, if you filed your 2019 tax return on March 1, 2020, but inadvertently omitted $2,000 of your income, the IRS would generally have until April 15, 2023 (3 years after April 15, 2020---the due date of your 2019 tax return) to complete an audit of your return and assess any additions to tax based on the omission. No limit – The IRS does not have a time limitation to assess a tax when you file a fraudulent return or when you do not file a return. 6 years – If you do not report income that should have been reported on your return (and the additional income is more than 25% of the gross income shown on your filed return), then the IRS has 6 years from the date you filed your return to assess additions to tax.




How much time do I have to file a claim for a tax credit or refund?


3 years – You generally have 3 years from the date you filed your original tax return to file a claim for a tax credit or refund. If, however, you paid the tax, you then only have 2 years from the date you paid the tax to file a claim for a tax credit or refund. 7 years – If you are seeking a tax refund related to a bad debt deduction or a loss from worthless securities, then the deadline to file your refund claim is 7 years from the return due date.




What is meant by the phrase "tax assessment"?


An assessment is simply the recording of a tax liability. The IRS makes a tax assessment by recording the taxpayer’s name, address, and tax liability. Before assessing any additional income tax, the IRS must send the taxpayer a notice of deficiency at his or her last known address. The notice of deficiency is a legal determination that is presumptively correct and consists of the following: (a) A letter explaining the purpose of the notice, the amount of the deficiency, and the taxpayer's options; (b) A waiver to allow the taxpayer to agree to the additional tax liability; (c) A statement showing how the deficiency was computed; and (d) An explanation of the adjustments. Taxpayers have 90 days from the date of the notice of deficiency (150 days if residing outside the U.S.) to file a petition in Tax Court to dispute the proposed tax assessments.




I received a "Notice of Deficiency" from the IRS, what is this?


Before assessing any additional income tax, the IRS must send the taxpayer a notice of deficiency at his or her last known address. The notice of deficiency is a legal determination that is presumptively correct and consists of the following: (a) A letter explaining the purpose of the notice, the amount of the deficiency, and the taxpayer's options; (b) A waiver to allow the taxpayer to agree to the additional tax liability; (c) A statement showing how the deficiency was computed; and (d) An explanation of the adjustments. Taxpayers have 90 days from the date of the notice of deficiency (150 days if residing outside the U.S.) to file a petition in Tax Court to dispute the proposed tax assessments.




If I am unable to file my tax return by the April 15th due date, can I obtain an extension to file?


You can get an automatic 6-month extension if you file IRS Form 4868 (Application for Automatic Extension of Time) on or before the due date of your return. The due date of your tax return is generally April 15th. Note, though, an automatic 6-month extension to file does not extend the time to pay your tax. If you do not pay your tax by the original due date of your return, you will owe interest on the unpaid tax and may owe penalties. Special Considerations If you are a U.S. citizen or resident alien, you may qualify for an automatic extension of time to file without filing an IRS Form 4868. You qualify if you meet one of the following conditions on the due date of your tax return:

  • You live outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico; or
  • You are in military or naval service on duty outside the United States and Puerto Rico.
This automatic extension gives you an extra 2 months to file and pay the tax, but interest will be charged from the original due date of the return on any unpaid tax. You must also include a statement showing that you satisfied one of the above requirements. If you are still unable to file your return by the end of the 2-month period, you can get an additional 4 months if you file an IRS Form 4868 on or before June 15th. This 4-month extension of time to file does not extend the time to pay your tax.





 
 

For a complete list and explanation of all the Schedules to the Individual Income Tax Form (Forms 1040 and 1040-SR), see IRS.gov, Schedules for 1040 and Form 10-SR.

Form 1040

The annual income tax return filed by citizens or residents of the United States.

Form 1040-SR

A new income tax form available for taxpayers age 65 and older.

Additional Income &

Adjustments to Income

Additional Taxes

Additional Tax Credits & Payments

Additional forms

Form W-4

Use this form to let your employer know how much federal income tax to withhold from your wages.

Form 9465

Use this form to request a monthly installment plan if you are unable to fully pay the balance of your tax liabilities.

Form 4506-T

Use this form to order a transcript (or other return information) free of charge. You may also designate a third-party to receive the information.

Schedule C

Use this form to report income or loss from a business you operated or a profession you practiced as a sole proprietor. 

Form 1040-ES

Use this form to calculate and pay estimated tax if you are not subject to tax withholding (e.g., independent contractor). 

Form 433-A

This form enables the IRS to determine your ability to satisfy an outstanding tax liability.

Schedule A

Use this form to determine your itemized deductions. You must choose between itemizing your deductions or taking the standard deduction.

Use this link for a more comprehensive list and explanation of Schedules for the Form 1040 and 1040-SR.

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