Although
federal tax returns get most of the attention, they only tell half the story.
Your state tax returns are equally important and typically need to be filed
around the same time as your federal taxes. While many state tax codes mirror
the federal code, there are often key differences between each state which are
important to know before you start the tax process. Below, you will find
state-specific tax information and related resources — including state tax
forms and links to tax laws in all 50 states and D.C.
Tax Basics: A Beginners Guide to Taxes
Congress
writes the Internal Revenue Code (IRC), also called the tax code, which directs
the collection of taxes, the enforcement of tax rules, and the issuance of tax
refunds. The Internal Revenue Service (IRS) is the government agency within the
U.S. Department of Treasury that carries out these functions. The IRS
interprets the tax laws through their regulations, which provide guidance about
how tax laws are applied. The IRS also uses revenue rulings, procedures, and
letter rulings to offer guidance. Although the IRS can offer its
interpretations the federal courts have the final judgment on the
interpretation of the tax code regardless of the IRS’s position.
The
income, payroll, sales, and real estate taxes from individuals and companies
are disbursed by the federal government, according to its budget, to finance
programs such as national defense, Social Security, education, national parks,
and services such as welfare.
Two
types of income are subject to taxation; earned and unearned income. Earned
income includes salaries, wages, tips, commissions, bonuses, unemployment
benefits, sick pay, and some noncash benefits. Unearned income includes
interest, dividends, profits from the sale of assets, business and farm income,
rents, royalties, gambling winnings, and alimony. Contributions to a retirement
account such as a 401(k) or IRA may reduce a taxpayer’s taxable income.
Which Tax Form Should I Use?
Individual
taxpayers must use one of three forms to file your return: Form 1040EZ, Form
1040A, or Form 1040. Form 1040EZ is the simplest form to use. In order to use
Form 1040EZ the taxpayer must meet all of the following requirements:
- must be filing
as single or married filing jointly; - must be under 65
and not blind; - must not be
claiming dependents; - must be claiming
less than $100,000 in taxable income; - must be claiming
income only from wages, salaries, tips, and a limited number of other
kinds of income; - must not receive
any advanced earned income credit payments; - must not claim
any adjustments to income such as IRA and student loan interest
deductions; - must not claim
any credits other than earned income credit; - must not owe any
household employment taxes on wages paid to a household employee.
If you
do not qualify to use Form1040EZ you may be able to use Form1040A. This form
has many of the same restrictions, though it permits a wider array of tax
credits. Form1040 is available to report all types of income, deductions, and
credits. Form1040 also permits itemized deduction, some adjustments to income,
and credits that may be unavailable on Form1040EZ and Form1040A.
Free Consultation with a Utah Tax Attorney
If you are here, you probably have a tax law issue you need help with, call Ascent Law for your free tax law consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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