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Types of tax returns in the US

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What are US tax returns?
US tax returns are reports submitted to the US internal revenue service (IRS) or state or local tax collection agencies (such as the California franchise tax board) that contains data used to compute income taxes or other taxes. Tax returns are usually prepared using forms prescribed by the internal revenue service or other applicable tax authorities. Tax returns allow taxpayers to compute their tax liabilities, tax payment schedules or request refunds for overpaid taxes. In most countries, tax returns must be filed annually for individuals or businesses with reportable income (wages, interests, dividends, capital gains, or other earnings).

Top 07 IRS tax forms
Here are the top 07 internal revenue service (IRS) tax forms you might need to know about: 

  1. Form 1040 – US individual income tax return
    Form 1040 is the standard IRS form used by individual taxpayers to file their annual income tax returns. This form contains a section where taxpayers must disclose their taxable income for the year and determine whether additional taxes are due or whether the filer will receive a tax refund. For example, a taxpayer needs to report salary, wages, taxable interest, capital gains, social security benefits, pensions and other types of income in the income section of form 1040. While this form is more intricated than form 1040EZ, it allows you to itemize deductions and claim numerous expenses and tax credits. Therefore, even if you have no taxable income but are eligible for a tax refund or credit, this might be the right form for you.

    Types of form 1040
    US individual tax return: In some cases, taxpayers may need to file different variations of form 1040 instead of the standard version. The following are the options.

  • Form 1040-NR: Several non-resident aliens or their representatives are required to file this form:
    • Individuals occupied in trade or business in the United States.
    • Representative of a deceased person who should have filed Form 1040-NR.
    • Persons representing an estate or a trust must file 1040-NR.
  • Form 1040-ES: This form calculates and pays estimated taxes quarterly. The estimated tax applies to income that is not withheld, including self-employment income, interest, dividends, and rental income. It can also include unemployment compensation, retirement income, and the taxable portion of social security benefits.
  • Form 1040-V: This is the return that accompanies the taxpayer’s payment for any balance on the “amount you owe” line of 1040 or 1040-NR.
  • Form 1040-X: If filler mistakes or forgets to include information on a 1040 form, the 1040X form is used to make changes to formerly filed 1040 forms.
  • Form 1040-SR: The IRS initiated a new form 1040 for seniors in 2019. Changes include larger fonts, no shading (shaded sections can be challenging to read), and standard withholding/deduction tables, including additional standard deductions for seniors. Seniors who complete their taxes online would not notice a difference, but those who do on paper will benefit.
  • Form 1040-EZ: Income tax returns for single and joint filers without dependents are a shortened version of the IRS form 1040. This form is suitable for taxpayers with basic tax situations and provides a quick and easy way to declare income tax. This form has been discontinued since FY 2018 and replaced by a redesigned 1040 form.
  1. Form 1041 – US income tax return for estates and trusts
    The fiduciary of a domestic decedent’s estate, trust or bankruptcy estate files form 1041 to report the income, deductions, gains, losses etc., of the estate or trust. It is also filed to report the income accumulated or held for future distribution or distributed currently to the beneficiaries. Form 1041 is also filed to report any income tax liability of the estate or trust. Lastly, form 1041 is filed to report employment taxes on wages paid to household employees.
  1. Form 1065 – US return of partnership income
    Form 1065 is a tax document issued by the IRS to report a business partnership’s gains, losses, deductions, and credits. This form is filed by LLCs, foreign partnerships with income in the US and non-profit religious organizations. In addition, to form 1065, the partnership must also submit schedule K-1, a document prepared for each partner. Form 1065 provides the IRS with a snapshot of the company’s financial status for the year. Partners must report and pay taxes on the partnership’s share of income on their tax returns. Regardless of whether the income has been allocated, the partners must pay income tax on their income.
  1. Form 1099
    Although there are many types of 1099 forms, they all serve the same purpose; taxpayers use them to provide information to the IRS on all the different types of income they receive throughout the year and their regular salary. This type of income is also known as income from non-employment sources. Taxpayers must report all of their external income to the IRS to avoid being audited. This income may include interest from your bank, dividends from investments, or compensation for self-employment (i.e. freelance work).

    Most common 1099 forms
    A 1099 form is used to report non-employment income, including dividends paid from owning a stock or income that you earned as an independent contractor. You use your IRS form 1099s to figure out how much income you received during the year and what kind of income it was. You’ll report that income in divergent places on your tax return, depending on what kind of income. There are a diversity of 1099 forms since various types of income comprise interest income, local tax refunds, and retirement account payouts. The most common 1099 forms are as follows:

  • Form 1099-DIV: This form is required if you have earned income based on dividends and distributions from your stock portfolio.
  • Form 1099-INT: For those who’ve earned income from interest, such as investment or savings accounts, you will be using the 1099- INT to report this income to the IRS. This form details precisely how much interest income you’ve earned.
  • Form 1099-MISC: The 1099- MISC, arguably the most common 1099, was created to cover miscellaneous income such as freelancer income and work as an independent contractor. So if you’ve received any income over $600 from any source, be looking for a 1099-MISC.
  • Form 1099-R: This form is required if you have taken money out of your retirement account or pension plan. Yes, those withdrawals are likely considered income.
  • Form 1099-S: Another 1099 that seems to be gaining popularity as of late is the 1099-S form, which details real estate transactions. This form is pretty simple, and you should receive the 1099-S from your broker explaining your income from your real estate deals.
  • Form 1099-C: The 1099-C reports any of your debts cancelled in the past year. For example, if your credit card company settled the debt you owed by forgiving $3000, you would be required to report that amount as income on your tax return.
  1. Form 1120 – US corporation income tax return
    Form 1120, US corporation income tax return, is required to report the income, gains, losses, deductions, credits, and figure the corporation’s income tax liability. Corporations file their corporate tax return in form 1120 and pay taxes under the instructions on this return. Once you have completed form 1120 (LLCs filing as corporations), you should know how much tax your corporation must pay. But that money doesn’t go to the IRS in one go; every corporation must pay estimated taxes quarterly.
  1. Form 1120-S US income tax return for an S corporation
    Form 1120-S is a tax document used to report S corporation shareholders’ income, losses, and dividends. Form 1120-S is an S corporation income tax return. A corporation with less than 100 shareholders may choose to form an S corporation to avoid federal double taxation. That is, the corporation transfers its income to shareholders for tax purposes. As a result, shareholders pay taxes, but corporations do not pay taxes.
  1. Form 2290 – heavy highway vehicle use tax return
    Form 2290 is used to calculate and pay taxes on vehicles with a taxable gross weight of 55,000 pounds or more. When purchasing a used car during the current tax period, you must also require filing form 2290. Vehicles with fewer than 5,000 miles (7,500 miles for agricultural vehicles) are considered tax-suspended vehicles and are not subject to heavy vehicle tax. But form 2290 is still required. Form 2290 is used to figure out and pay taxes due if, during the period, the taxable gross weight of a vehicle escalates and the vehicle falls into the latest category. Form 2290 is used to assert a credit for tax paid on vehicles that were demolished, abstracted, sold or used 5,000 miles or less (7,500 miles or less for agricultural vehicles). Form 2290 is used to report acquisition of a used taxable vehicle for which the tax has been suspended and it is also used to figure out and pay the tax due on a used taxable vehicle obtained and used during the period.

At AJSH, we assist our clients with Individual, LLC, S-corp, C-corp returns in the US using authorized third-party software’s such as Turbo Tax or Tax Act in the US (if applicable), filing of monthly/ quarterly/ bi-annually/ annually sales tax returns with the department of revenue etc., and other related services by providing them adequate support and guidance from our end. If you have any questions or wish to know more about different types of tax returns in the US, kindly contact us.

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