As we are approaching the tax season the demand for credible information regarding the tax laws goes through the roof. So, here we have some important information you might need on filing your taxes.
Tax laws in America are set by the federal government and enforced by the Internal Revenue Service (IRS). These laws cover various forms of income, including wages, investments, and business profits, and they vary based on factors such as income level, filing status, and number of dependents. Some common deductions and credits include those for charitable donations, mortgage interest, and education expenses. Additionally, each state may have its own set of tax laws, including state income tax and sales tax. It’s important to consult a tax professional or use tax preparation software to ensure compliance with all applicable laws and to maximize any potential deductions or credits.
Who Is Obligated to File Taxes?
In the United States, most individuals are required to file a tax return if they have received income during the tax year. The amount and type of income that triggers the requirement to file a tax return vary depending on the individual’s filing status, age, and income level.
Generally speaking, if you are a single filer and your gross income for the year is over the standard deduction for your filing status, you must file a tax return. For tax year 2022, the standard deduction for single filers is $12,550. For married filing jointly, the standard deduction is $25,100.
In general, most taxpayers will have to file a tax return if they have received income from wages, salaries, tips, self-employment, interest, dividends, rents, capital gains, unemployment compensation, and certain government payments.
However, there are some exceptions to this rule, such as:
Individuals who are below a certain income level, may not be required to file a return. For tax year 2022, for example, single taxpayers under the age of 65 with gross income less than $14,050 and married couples filing jointly with gross income less than $28,100 are not required to file a federal tax return.
Individuals who are not US citizens or resident aliens may not be required to file a return, if they meet certain conditions.
Individuals who are blind or over 65 may have different filing requirements.
It’s important to note that even if you are not required to file a tax return, you may still want to file one if you are eligible for a refund or if you want to claim certain credits, such as the Earned Income Tax Credit. It’s always recommended to consult with a tax professional to make sure that you are meeting all of your tax obligations.
Tax Brackets in the USA
In the United States, the federal government has a progressive income tax system, which means that the tax rate increases as the amount of income increases. This system is divided into different “tax brackets,” with each bracket having its own tax rate. The tax rate and the income level at which it applies can change from year to year, depending on the actions of Congress and the President.
For the tax year 2021, the tax brackets for single filers are:
- 10% for taxable income up to $9,950
- 12% for taxable income between $9,951 and $40,525
- 22% for taxable income between $40,526 and $86,375
- 24% for taxable income between $86,376 and $164,925
- 32% for taxable income between $164,926 and $209,425
- 35% for taxable income between $209,426 and $523,600
- 37% for taxable income over $523,600
For married couples filing jointly, the tax brackets are:
- 10% for taxable income up to $19,900
- 12% for taxable income between $19,901 and $81,050
- 22% for taxable income between $81,051 and $172,750
- 24% for taxable income between $172,751 and $329,850
- 32% for taxable income between $329,851 and $418,850
- 35% for taxable income between $418,851 and $628,300
- 37% for taxable income over $628,300
It’s worth to mention that certain states also have their own income tax brackets, which could be different from the federal ones. Additionally, some states have no state income tax at all.
It’s important to note that these brackets only apply to taxable income, which is your total income minus any deductions and exemptions you may be entitled to. Keep in mind that tax laws are subject to change, so it’s important to check the most current information when filing taxes.
How to File Taxes?
There are several ways to file taxes in the United States, including:
- Online tax preparation software: This is a popular option for many taxpayers, as it is often the easiest and most convenient way to file taxes. There are several online tax preparation software options available, such as TurboTax, H&R Block, and TaxAct, which can guide you through the process of preparing and filing your taxes. Some of these software programs are free to use, while others require a paid subscription.
- Paper filing: Taxpayers can also file their taxes by mailing a paper return to the IRS. Tax forms, such as the 1040, can be obtained from the IRS website, a post office, library or by calling the IRS.
- Hiring a tax professional: Another option is to hire a tax professional, such as a certified public accountant or a tax attorney, to prepare and file your taxes. This can be a good choice for taxpayers with complex tax situations or those who are uncertain about how to file their taxes.
Whichever method you choose, it’s important to have all the necessary documentation, such as W-2 forms, 1099 forms, and any other documentation that shows your income, deductions, and credits.
For those who are filing their taxes online or by mail, you will also need to have your Social Security Number (SSN) or Individual Tax Identification Number (ITIN) and your bank account number and routing number if you are planning to file electronically and requesting a direct deposit of your refund.
Keep in mind that the deadline for filing taxes is April 15th, but if the 15th falls on a weekend or holiday the deadline may be extended.
It’s always recommended to double-check your return before you file it, and to keep a copy of your return for your records. It’s also important to note that the IRS may audit returns, so it’s a good idea to keep all your supporting documentation for at least three years.
