Individual taxation

Income. What is included in income for individuals may differ from what is included for entities. The timing of recognizing income may differ by type of taxpayer or type of income. Income tax system permits residents to reduce gross income by deductions.

Generally speaking, income is financial gain derived from labor (work), capital (money), or a combination of the two.

Gross Income means all world-wide income from whatever source derived, unless specifically excluded from taxation by law. Gross income includes income realized in any form, whether in money, property, or services.

The Individual Income Tax Forms. U.S. citizens and resident aliens are required to file Form 1040, 1040EZ, or Form 1040A. Nonresident aliens who are required to file a U.S. return file Form 1040NR.

Schedules and Forms. Schedules and forms are official IRS documents used to report various types of income, deductions, and credits. Totals determined on each schedule or form are entered on the appropriate line of Form 1040 or Form 1040A or occasionally on another schedule.

Filing Deadline. April 15 of each year is the due date for filing your federal individual income tax return if your tax year ends on December 31. Your return is considered filed timely if the envelope is properly addressed and postmarked no later than April 15. If you use a fiscal year (which is a year ending on the last day of any month other than December), your return is due on or before the 15th day of the fourth month after the close of your fiscal year. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day.

Extension. If you cannot file by the due date of your return, then you can request an extension of time to file. However, an extension of time to file is not an extension of time to pay. You will owe interest on any past-due tax and you may be subject to a late-payment penalty if timely payment is not made.

Filing requirements. To determine if you need to file a Federal Income Tax return for 2013 answer the following questions:

  • Did you have Federal taxes withheld from your pension and wages for this tax year and wish to get a refund back?
  • Are you entitled to the Earned Income Tax Credit or did you receive Advance Earned Income Credit for this tax year?
  • Were you self-employed with earnings of more than $400?
  • Did you sell your home?
  • Will you owe social security and Medicare tax on tips you did not report to your employer?
  • Will you owe uncollected social security and Medicare tax on tips you reported to your employer?
  • Are you a church employee with income in wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security or Medicare taxes?
  • Need to file to claim a refund?

Refund. When you file electronically, you usually receive your refund within 3 weeks after the IRS has received your return, even faster if you have it directly deposited into your checking or savings account. Check the status of your refund.

Schedule A. In certain circumstances, it may be advantageous for some taxpayers to itemize deductions on the federal return, even if their federal itemized deductions total less than their standard deductions. Itemizing on their federal returns allows them to itemize on their state returns, thus saving overall tax dollars.

Schedule B. When the taxpayer receives taxable interest totaling more than $1,500 or any interest on foreign investments, it must be listed on Schedule B.

Schedule C. Sole-proprietorship is a business owned by one individual (self-employed individual) who files Schedule C. A proprietor cannot issue a Form W-2 to withhold and pay payroll taxes on amounts they withdraw from the business for their own use, even if these amounts are designated as wages. A proprietor will file Form 1040-ES to pay their estimated income and self-employment tax liability.

Schedule D. Taxpayers with capital gains and losses must file Schedule D. Qualified dividends and capital gain distributions (found on Form 1099-DIV) are treated as long-term capital gains, which generally are taxed at lower rates than ordinary income and short-term capital gains.