Taxpayer

Who Are Taxpayers?

Any person or business that owes taxes to the federal, state, or local governments is referred to as a taxpayer. Taxes on both individuals and businesses are the main source of revenue for governments. In the US, individual taxpayers are frequently required to file and pay federal and state tax returns each year. Businesses must also file yearly returns, despite the fact that they frequently plan for and pay their taxes on time throughout the year.

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Understanding taxpayers

The federal, state and municipal governments all have a role in enacting and enforcing the U.S. tax system. The major regulatory body in charge of enforcing the established income tax system for both people and corporations is the Internal Revenue Service (IRS).

Localized taxes like sales taxes and property taxes are implemented and enforced by state and municipal revenue authorities. Since failing to pay required taxes can result in penalties or additional legal proceedings, both people and corporations need to be aware of their tax duties.

Types of Taxpayers

Individuals

The requirement to pay yearly individual income taxes to the IRS and state revenue agencies is subject to a set of thresholds. The federal filing threshold is determined by a person's filing status. There will also be unique criteria for each state.

The federal and state thresholds should be checked by individual taxpayers to establish their filing requirements for a certain year. Individual taxpayers can get federal tax advice in Publication 501: Dependents, Standard Deduction, and Filing Information from the Internal Revenue Service.

Filing Stipulations

Not every American citizen is required to submit both a federal tax return and a state tax return. The filing status below provides information on the federal threshold for submitting a tax return. Even though different states may have different criteria, they all adhere to identical status norms.

Some persons might not even be required to file tax returns. Because they can receive a refund with the help of appropriate deductions and credits, some persons may profit by filing a return even though their income is below the thresholds.

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Single taxpayer

As of the last day of the tax year, a taxpayer is regarded as single if they are not married, divorced, living with a registered domestic partner, or are legally separated. For tax reasons, the term "single" does not include the head of the family or a widow. The income threshold for tax filing requirements is lower for single taxpayers.

Head of the household

A head of household is an individual who is single or unmarried and who pays at least 50% of the expenses for maintaining his or her household while residing with other qualified family members for whom they give assistance for more than half of the year. Accordingly, the taxpayer must have covered more than half of all household expenses, such as rent or mortgage, utility bills, insurance, property taxes, food, maintenance, and other typical household costs. A dependent kid, grandchild, sibling, parent, or grandparents are some instances of qualified family members.

Married Filing Jointly

If two taxpayers get married before the end of the tax year, they can submit their tax returns jointly. Couples can report their individual earnings and deductions on the same tax return when filing as married filers jointly. A higher tax refund or a smaller tax burden is frequently the result of filing a combined tax return.

Married Filing Separately

Married taxpayers who decide to report their individual earnings, deductions, and credits on different tax returns are said to be married filing separately. Couples who discover that combining their income places them in a higher tax band than each of them would be in if they filed separately may find married filing separately to be enticing. When one spouse has large medical expenditures, other itemised deductions, or certain applicable credits, filing separately may have tax benefits.

Widower

The term "surviving spouse" is also used to describe this group of taxpayers. For a period of two years following the passing of their spouse, widows and widowers with dependents may file their federal taxes under the qualified widow or widower status.

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