Federal Income Tax Returns Filing

General rules of Income Tax Returns Filing in the US

In this blog, we will look into tax rules that affect every person who may have to file a federal income tax return in the US. It answers some basic questions:  Who should file for returns? And what forms to be used to file returns.

 

Who needs to file for returns?

 

If you are a U.S. citizen or resident alien, whether you must file a federal income tax return depends on your gross income, your filing status, your age, and whether you are a dependent.

 

As a brief, there are three major categories:

  1. For Individual – Form 1040 / 1040EZ is required to be filed for 2018 by April 15.  For earlier years, 1040X has to be filed
  2. For Partnership firms – Form 1065 by March 15, 2018
  3. For Corporations – Form 1120 or 1120S by March 15, 2018 (for those fiscal ending Dec 31, 2017). Else it is 2 1/2 months from the date of the financial year ending.
  4. Filing of extensions for submitting the tax returns
      1. For Individuals – Form 4868
      2. For Partnership firms – Form 8736
      3. For S Corp – Form 7004

 

Standard criteria based on which you may choose the forms:

 

Form 1040EZ: This form may be filed if

 

  • Your filing status is single or married filing jointly
  • You claim no dependents
  • You don’t claim any adjustments to income
  • You don’t claim any credits other than the earned income credit
  • You, and your spouse if filing a joint return was under age 65 on January 1, 2018, and not blind at the end of 2017
  • Your taxable income is less than $100,000
  • You had only wages, salaries, tips, taxable scholarship and fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest wasn’t over $1,500
  • Your earned tips, if any, are included in boxes 5 and 7 of your Form W-2
  • You don’t owe any household employment taxes on wages you paid to a household employee
  • You’re not a debtor in a Chapter 11 bankruptcy case filed after October 16, 2005
  • Advance payments of the premium tax credit weren’t made for you, your spouse, or any individual you enrolled in health insurance coverage for whom no one else is claiming the personal exemption

 

Form 1040A: This form may be filed if

 

  • Your income is only from wages, salaries, tips, interest, ordinary dividends, capital gain distributions, taxable scholarships and fellowship grants, pensions, annuities, IRAs, unemployment compensation, Alaska Permanent Fund dividends, and taxable social security or railroad retirement benefits
  • The only adjustments to income you can claim are the IRA deduction, the student loan interest deduction, and the educator expenses deduction
  • You don’t itemize deductions
  • Your taxable income is less than $100,000
  • The only tax credits you can claim are the credit for child and dependent care expenses, the credit for the elderly or the disabled, education credits, the retirement savings contributions credit, the child tax credit, the additional child tax credit, the earned income credit, and/or the premium tax credit, and
  • You didn’t have an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option

 

Form 1040: This form may be filed if

 

  • Your taxable income is $100,000 or more
  • You have certain types of income, such as business or farm self-employment income; unreported tips; dividends on insurance policies that exceed the total of all net premiums you paid for the contract; or income received as a partner, a shareholder in an S corporation, or a beneficiary of an estate or trust
  • You itemize deductions or claim certain tax credits or adjustments to income, or
  • You owe household employment taxes

 

Form 1065: This form may be filed if

 

Form 1065 is an information return used to report the income, gains, losses, deductions, credits, and other information from the operation of a partnership. A partnership doesn’t pay tax on its income but passes through any profits or losses to its partners.

Partners must include partnership items on their tax or information returns. The term “partnership” includes a limited partnership, syndicate, group, pool, joint venture, or other unincorporated organization, through or by which any business, financial operation, or venture is carried on, that is not, within the meaning of the regulations under section 7701, a corporation, trust, estate, or sole proprietorship.

 

  • Partnerships with more than 100 partners (Schedules K-1)
  • You and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership and you must file Form 1065.
  • A domestic LLC with at least two members that do not file Form 8832 is classified as a partnership for federal income tax purposes
  • A religious or apostolic organization exempt from income tax under section 501(d) must file Form 1065
  • A qualifying syndicate, pool, joint venture, or similar organization that fails to be elected under section 761(a) that may be treated as a partnership for federal income tax purposes
  • An electing large partnership (as defined in section 775) must file Form 1065-B, U.S. Return of Income for Electing Large Partnerships.
  • A foreign partnership with effectively connected income (ECI) during its tax year
  • A foreign partnership had U.S. source income of $20,000 or less during its tax year
  • More than 1% of any partnership item of income, gain, loss, deduction, or credit was allocable in the aggregate to direct U.S. partners at any time during its tax year
  • A Foreign partnership is withholding foreign partnership as defined in Regulations section 1.1441-5T(c)(2)(i).
  • A Foreign partnership had U.S. partners at any time during its tax year
  • A Foreign partnership is withholding foreign partnership as defined in Regulations section 1.1441-5T(c)(2)(i).
  • If an entity with more than one owner was formed as an LLC under state law, it generally is treated as a partnership for federal income tax purposes and files Form 1065

 

Form 1120 and series: This form may be filed if

 

Form 1120 is used by U.S. Corporation to report the income, gains, losses, deductions, credits, and to figure the income tax liability of a corporation.

 

  • S corporation (section 1361) should file form 1120S
  • Unless exempt under section 501, all domestic corporations (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income should file form 1120
  • Domestic corporations must file Form 1120, unless they are required, or elect to file a special return.
  • A domestic entity electing to be classified as an association taxable as a corporation must file Form 1120 unless it is required to or elects to file a special return
  • The LLC can file a Form 1120 only if it has filed Form 8832 to elect to be treated as an association taxable as a corporation.
  • A corporation (other than a corporation that is a subchapter T cooperative) that engages in farming should file form 1120
  • Subchapter T cooperative association (including a farmers’ cooperative) will file form 1120C
  • Foreign corporation (other than life or property and casualty insurance company filing Form 1120-L or Form 1120-PC) should file form 1120F
  • Foreign sales corporation (section 922) should file form 1120FSC
  • Condominium management, residential real estate management, or timeshare association that elects to be treated as a homeowners association under section 528 should file 1120H
  • Life insurance company (section 801) should file 1120L
  • Fund set up to pay for nuclear-decommissioning costs (section 468A) should file form 1120ND
  • Property and casualty insurance company (section 831) should file form 1120PC
  • Political organization (section 527) should file form 1120PL
  • Real estate investment trust (section 856) should file form 1120REIT
  • Regulated investment company (section 851) should file form 1120RIC
  • Settlement fund (section 468B) should file form 1120SF

 

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