One thing that a lot of us worry about Is filing taxes. Whether it was back home in India or here in USA, it is something about filing taxes that gets us all worked up. On top of that, there is so much information available online and elsewhere that we are bound to be confused. So, here’s a guide that will try to answer most of your doubts, about filing taxes in USA, how to file them and how to get your refund if at all you are eligible for one.
How to File Taxes:
Before we get into the process of filing your tax Returns it is important to know whether you need to file your returns or not because the government does not require everyone to file a tax return.
The factors that determine whether you need to file or not are:
All you need to do is fill out this survey and you’ll know whether you need to file your returns or not.
Now, let’s get to the process of filing the returns. There are 3 ways in which you can file your taxes.
- File your taxes manually, filling out a form called a1040, according to instructions provided by the IRS; and mail it to the IRS, along with any payments you owe.
- Use a tax software program or the website of a service like TurboTax or H&R Block. The service will walk you through a series of questions about your income and potential deductions, fill out your 1040, and (if you so choose) file it electronically for you.
- Get professional help from an accountant or tax preparer, who will work with you to maximize your refund and fill out your tax return on your behalf. Though this will also include you paying some professional fees.
The first option is free. If you go with the second option, you’ll likely need to pay a fee, though some programs now offer free filing if your return is simple enough. The third option—professional help—will almost certainly cost you money.
What will you need to file taxes?
You’ll need to do this whether you’re hiring a tax preparer or doing your taxes yourself. The goal is to gather proof of income, expenses that might be tax-deductible or win you a tax credit, and evidence of taxes you already paid throughout the year. Our tax prep checklist can give you more guidance, but here’s a short version of what to round up:
- Social Security numbers for yourself, as well as for your spouse and dependents if any
- W-2 form, which tells how much you earned in the past year and how much you already paid in taxes on those earnings (if you had more than one job, you might have more than one W-2)
- 1099 forms, which are a record that some entity or person — not your employer — gave or paid you money
- Retirement account contributions
- Educational expenses
- Unreimbursed medical bills
- Property taxes and mortgage interest
- Charitable donations
- Classroom expenses
- State and local taxes you paid
- Last year’s federal and state tax returns (if this isn’t your first time filing and you’re just refreshing yourself here)
For those who find all of this a bit overwhelming, The IRS’s Volunteer Income Tax Assistance (VITA) and Tax Counselling for the Elderly (TCE) program provide free tax prep services generally to people who make $56,000 or less, have disabilities, are older than 60 or speak limited English. This can be a huge money-saver if you qualify. To find locations in your area, go to irs.treasury.gov/freetaxprep.
Steps to File a Tax Return
- Gather your paperwork, including:
- A W-2 form from each employer
- Other earning and interest statements (1099 and 1099-INT forms)
- Receipts for charitable donations and medical and business expenses if you are itemizing your return.
- Choose your filing status. Filing status is based on whether you're married. The percentage you pay toward household expenses also affects your filing status.
- Decide how you want to file your taxes. The IRS recommends using tax preparation software to e-file for the easiest and most accurate returns.
- Determine if you are taking the standard deduction or itemizing your return. The new tax law increased the standard deduction but eliminated some other types of deductions.
- If you owe money, learn how to make a tax payment, including applying for a payment plan.
- File your taxes by April 15.
Tax Filing Deadlines
The deadline to file federal taxes for most taxpayers is April 15, 2020, unless you file for an extension.
Extension to File Your Tax Return
If you can’t file your federal income tax return by the due date, you may be able to get a six-month extension from the Internal Revenue Service (IRS). This does not grant you more time to pay your taxes.
How to File an Extension
- Fill out IRS Form 4868 the “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.”
- On the form, use the instructions for estimating the taxes you owe. Include your payment to avoid paying penalties and interest.
- You typically must file the extension form and your estimated payment by April 15 or by the due date of your fiscal year return.
Getting That Refund:
Once you’ve entered all the relevant information about your income, deductions, and credits, you’ll be able to determine the balance—whether you owe money, or if you’re owed a tax refund. If you owe money, you’ll probably just send that money to the appropriate government agencies (the IRS and/or your state’s department of revenue) along with your tax return; if it’s more than you can pay all at once, you’ll be able to set up a payment plan. If you’re owed a refund, you have a few options for receiving your payment(s), including a mailed check or direct deposit into a bank account.
How to Check my Tax Refund Status?
If you have filed your federal income taxes and expect to receive a refund, you can track its status. Have your Social Security number, filing status, and the exact whole dollar amount of your refund ready.
Use the Where's My Refund tool or the IRS2Go mobile app to check your refund online. This is the fastest and easiest way to track your refund. The systems are updated once every 24 hours.
You can call the IRS to check on the status of your refund. Wait times to speak with a representative can be long. But you can avoid the wait by using the automated phone system. Follow the message prompts when you call.
When to Expect Your Refund
Refunds are generally issued within 21 days of when you electronically filed your tax return or 42 days of when you filed paper returns
US Tax Refund for Tourists:
Currently, Louisiana and Texas are the only states that provide sales tax refunds to all foreign visitors or non-residents that you can claim by showing your receipts at the airport.
What are the Requirements or Conditions to get Tax Refund in USA as Tourist or Resident?
The requirements to get tax refund are slightly tricky to get a decent refund, as they force you to purchase more at a single store. Most of the requirements or conditions are common for foreigners and US Citizens, only difference is where they can claim tax refund and when. Below are the requirements:
- Minimum Amount: Depending on the state, there is a minimum amount of tax you need to have per receipt or purchase from a brand store or outlet store. In Texas, you need to have a minimum of $12 tax per receipt or combined receipts from the same brand stores. Technically, in Texas with 8.25% sales tax, you need to purchase for at least for $150 USD in a single store or brand outlet to be eligible for the refund.
- Original Receipts: You need to submit original receipts at the Tax refund counter. They do not accept duplicate, photocopy or reprint sales receipts. You need to submit the first original receipt that is printed. No digital or e-mail receipts are accepted, unless it is an online purchase item from a brand store and if the receipt has delivery address of the goods in that state. You need the packaging slip of delivery for online purchases.
- 30 days: You need to have the purchase done within 30 days from the day of your international travel or departure date from US.
- International Travel: You get refund only, if you are traveling outside of US and the items you are buying will be staying outside of US. Technically exporting it to other country, that’s why they ask for the original receipt and take it for refund. It means that the sale is final in US and there are no returns for your same goods you bought here in US.
- Physical Inspection: You need to show your item purchased for physical inspection and it must be in new and unused condition with all the tags.
- Passport, I-94 / Entry Stamp: You need to show your Visa/ Passport, and I-94 with entry stamp on it, if holding foreign passport.
- Departure Information / Flight Tickets: You need to show your international departure info or flight ticket itinerary and for US citizens, you need to show the boarding pass to get tax refund.
- Food or Services: No refund for food or services purchased.
- Participating Stores: You get Tax Refund only if you purchase goods from the participating stores. They claim that it is a big list of 6,500+ stores…but watch out for the brands.
- Processing Fee: There is a processing fee for your tax, and it is crazy. Below are the options
Instant Cash: If you want instant cash it is 50% processing fee for tax refund.
Check / PayPal: If you want a check or can get refund to PayPal, then it is 35% of the tax refund. Also, you will also be charged $4 USD for every single store or brand purchases.
Refund Locations: Both US Citizens and non-US citizens can claim tax refund at all major international airport terminals, they would have a Tax refund desk. Check airport for the details on the terminal. Also, if you are a non-US citizen, then you can even claim tax refund at certain mall locations in the state. Check the state website for the exact locations.
Tax Refund Policies: Tax refund policies can vary by state and there is no standard sales tax percentage set as well. You should check the Sales Tax and Tax Refund policies in that respective state before you shop to ensure you get tax refund. For instance, if you shop in Delaware, there is no sales tax, so no refund.
In this guide, we covered,
- How to file your taxes
- Different ways of filing your tax returns
- What do you need to file taxes?
- Steps to file the taxes
- How to check the status of refund
- US Tax Refund for tourists