US Citizen and Permanent Residents
Engage the expertise of a seasoned CPA to help you navigate personal Income tax laws.
When is a U.S. citizen or resident required to file a U.S. personal income tax return (Form 1040)?
- Your gross income was at least the standard deduction (indexed annually for inflation)
- You owe any special taxes (eg. alternative minimum tax, additional tax on a qualified plan, household employment taxes)
- You received health savings account, Archer MSA, or Medicare Advantage MSA distributions
- You had net income from self-employment of at least $400
- You received advance premium tax credits for health insurance under the Affordable Care Act.
- Even if not required, filing may be beneficial if you qualify for refunds or credits like the Earned Income Tax Credit (EITC) or Child Tax Credit.
- Other scenarios can apply as well
How much tax do I have to pay to the IRS on my income?
Taxes payable are calculated based on the following factors:
2024 Tax Rates For Single Taxpayer
| Tax Rate | On Taxable Income From... | Taxable Income |
|---|---|---|
|
10% |
$0 |
$11,600 |
|
12% |
$11,601 |
$47,150 |
|
22% |
$47,151 |
$100,525 |
|
24% |
$100,526 |
$191,950 |
|
32% |
$191,951 |
$243,725 |
|
35% |
$243,726 |
$906,350 |
|
37% |
$906,351 |
And Up |
Married Filing Jointly or Qualifying Surviving Spouse
| Tax Rate | On Taxable Income From... | Taxable Income |
|---|---|---|
|
10% |
$0 |
$23,200 |
|
12% |
$23,201 |
$94,300 |
|
22% |
$94,301 |
$201,050 |
|
24% |
$201,051 |
$383,900 |
|
32% |
$383,901 |
$487,450 |
|
35% |
$487,451 |
$731,200 |
|
37% |
$731,201 |
And Up |
The above tax rates chart does not take into account state personal income taxes, which vary significantly across states, with some imposing progressive tax brackets, others imposing flat rates, and a few not levying any state income tax at all.
Services TMP Can Assist You With
Form 1040 for US citizens and permanent residents
Dual status returns
State personal income tax returns
Digital currency filings
Foreign asset forms (Form 8938 and FBAR)
Foreign tax credit claims
What is the deadline to file the personal tax returns? Can I file after this deadline if I need more time?
The return due date is typically April 15 following the tax year. You can file Form 4868 by April 15 to have the extended due date of October 15 apply to you. However, any tax owing must still be paid by April 15 to avoid late-payment penalties and interest. The methods on requesting extensions to file state returns vary by state. Some states (eg. California) allow automatic extension of 6 months while others (eg. New York) require an extension request to be filed.
What If I Lived in Multiple States?
If you lived in or earned income in multiple states during the year, you may need to file more than one state tax return.
Here’s what to consider:
Determine Your State Residency Status
Each state classifies taxpayers as:
- Resident: If you lived in the state for most of the year or have strong ties (e.g., home, driver’s license).
- Part-Year Resident: If you moved in or out of a state during the year.
- Nonresident:If you earned income in a state but didn’t live there.
Filing Requirements
- Part-Year Resident Returns: File in each state you lived in, reporting income earned while a resident.
- Nonresident Returns: If you earned income in a state but didn’t live there, you may need to file a nonresident return.
- Reciprocity Agreements:Some neighboring states allow you to pay taxes only in your resident state. Check if this applies to you.
Avoid Double Taxation
Most states offer tax credits for taxes paid to another state, so you’re not taxed twice on the same income.
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Frequently Asked Questions (FAQs)
Find answers to common questions about Democracy
Yes, you can file personal taxes electronically using IRS-approved tax software. They have encryption and security measures in place to protect your data.
Filing your personal tax returns late in the U.S. can lead to failure-to-file penalties and interest on unpaid taxes. The IRS will impose a penalty of 5% on the unpaid tax for each month the return is late. Interest will also accrue on the unpaid tax starting from the original due date of the return until the taxes are fully paid.
It is important to note that state and federal residency are two different concepts. Each state has their own rules and regulations to determine whether an individual is a resident of that state. Typically, a state resident is someone whose “domicile” is in that state. Therefore, even if you are a US citizen therefore a US tax resident on the federal level, you could still be considered a non- resident of the state if you did not live in that state. Similarly, even if you are a federal tax resident for the full year, you could be a part-year resident of two states if you relocated during the year.
No, U.S. citizens are required to report income from all sources on their tax returns. Therefore, income from foreign sources must be reported as well. There are foreign earned income exclusion and/or foreign tax credit mechanisms in place to mitigate double taxation if you also have to report the foreign income to the foreign tax jurisdiction.
Yes, if you’re self-employed, you can claim deductions for reasonable expenses incurred to earn revenues on Schedule C of Form 1040. These may include office expenses, advertising costs, and vehicle expenses related to your business. You’ll need to keep accounting records and source documents (invoices) to support these claims.
- Tax returns, W-2s, 1099s, and supporting documents
- Deduction and credit-related receipts (e.g., medical expenses, charitable donations)
- Investment and retirement account statements
- Business income and expense records (if self-employed)
Keeping digital copies can help with organization and reduce paper clutter. If you’re unsure, a CPA can advise on what to keep based on your situation.
The IRS recommends keeping tax records for a minimum of three years from the date you file your return, as that’s generally the period they can audit your return or you can amend it. However, in some cases, you should keep records longer:
- 3 Years: If you filed correctly and did not underreport income by more than 25%.
- 6 Years: If you underreported income by more than 25%.
- 7 Years: If you claimed a loss from worthless securities or bad debt.
- Indefinitely: If you did not file a return or filed a fraudulent return.
10 How Long Should I Keep My Tax Records?
Not necessarily. You first need to check whether the state you live in or derive income from actually imposes tax on individuals. For states that do, the general rule is that residents of that state are taxed on their worldwide income while non-residents are taxed on their income earned from that state. Generally, you can claim a tax credit on your home state’s return for taxes paid to another state of which you file as a non-resident.
Yes. U.S. citizens living abroad have the same filing requirements as those who reside in the U.S. Therefore, the same Form 1040 must be filed if your worldwide income exceeds the threshold (namely the standard deduction) for your age and filing status. On the state level, however, you are generally considered as a non-resident since you reside in a foreign province/state. Therefore, you wouldn’t need to file a state personal tax return unless you have reportable income derived from that state.
Yes, both U.S. persons residing domestically and overseas are subject to FBAR reporting if you hold financial accounts (bank accounts, investment accounts) with a foreign financial institution and the aggregate value is more than $10,000 at any point during the calendar year. Form 8938 may be required as well depending on the values of the accounts.
It depends. If your income is below the IRS filing threshold, you may not be required to file. However, filing can still be beneficial if you qualify for refundable credits like the Earned Income Tax Credit (EITC) or Child Tax Credit, or if you had taxes withheld and want a refund. It’s best to check IRS guidelines or consult a tax professional.
TMP Pricing For Personal Tax
Basic
Number of income slips:
1-3 slips
Foreign financial accounts:
1-2 accounts
Other schedules:
no or minimal other schedules required
State return:
up to 1 state return
Expert
Number of income slips:
1-5 slips
Foreign financial accounts:
1-5 accounts
Other schedules:
up to 2 other schedules required such as Schedule C (business income), Schedule E (rental income), Schedule D (capital gains) foreign tax credit, foreign earned income exclusion
State return:
up to 1 state return
Premium
Number of income slips:
1-10 slips
Foreign financial accounts:
1-10 accounts
Other schedules:
up to 4 other schedules required such as Schedule C (business income), Schedule E (rental income), Schedule D (capital gains) foreign tax credit, foreign earned income exclusion
State return:
up to 2 state return(s)
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