The little Practical Guide for the Informed and Serene Taxpayer

The little Practical Guide for the Informed and Serene Taxpayer 1

Taxation and personal taxation is by definition a complicated area, so when these subjects concern a country of 50 states with specific tax legislation, it quickly turns into a headache. How to prepare your tax return? When to pay US tax and most importantly, how much will you pay this year? Some answers to help you see more clearly.

The Principle

No one escapes it. Indeed, those who are subject to withholding tax and those who pay their entire tax at once, must declare, every year, at federal and state level, all income received during the fiscal year previous fiscal.
This declaration must be filed no later than April 15 of the year following the income concerned. In practice, if you declare your 2018 income, you will have to file taxes and your declaration by April 15, 2019, at the latest. You will therefore have to complete Form 1040 , which is used in most cases, but there are other forms, simplified (1040 EZ) or adapted to specific situations (1040 À if you earn less than $ 100,000 per year). When in doubt about which one to use, 1040 is the form considered to be standard.

The exception

The obligation to declare applies from a certain amount of income. Of course, this amount is different depending on the family situation, the age of the taxpayer, and the source of his income. In 2018, if you are single under the age of 65, with gross annual income greater than $ 12,000, you are required to report. The same is true if you are a married couple, and you earn at least $ 24,000 gross per year.

The amount of your tax
Taxpayer’s residence

The state of residence will largely influence the amount of your tax each state applies different tax rates and collects or not taxes of different nature (federal, federated, local).
For example, Florida, Washington and Texas have fairly lenient taxation because they do not levy income tax. In contrast, a resident of the Big Apple pays US (federal) tax; New York State (federated) tax, and NYC city tax. It gets complicated when you know that each state applies a different rate. California is one of the states that tax its taxpayers the most, here is what you can find about when can I file my taxes.

Taxpayer status

The amount of tax varies significantly depending on the status of the taxpayer when declaring his income. Thus, in the United States, if the number of children does not appreciably influence the amount of your tax , the fact of being married, and declaring jointly, yes, especially if the spouse does not work. In this case, in fact, the household has an additional share and sees the amount of tax greatly reduced.

Adjusted gross income

Calculate Adjusted Gross Income (Adjusted gross income – AGI) is the first step in calculating your tax. For this, you just need to add the income of any kind that you have received (wages, interest, dividends, capital gains on movable and immovable property, property income, etc.) and then subtract any adjustments such as health insurance contributions.

The Deductions

The taxpayer has the choice between deducting a lump sum deduction amount ($ 12,600 for a married couple) or a number of actual expenses (professional fees or interest on your home loan). Another possible deduction is tax credits (non-refundable credit) for dependents and personal exemption. In short, there are many, so the American tax administration planned the blow by preventing the excessive use of deductions with the Alternative Minimum Tax. Through this system, it ensures that it receives a minimum amount of tax from you in case you are tempted to deduct, deduct and still deduct.

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