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IRS for its acronym in English means Internal Revenue Service. It is the United States' tax collection agency, administering the Internal Revenue Code enacted by Congress.
In the United States, Congress passes tax laws and requires taxpayers to comply. The IRS helps the taxpayer understand and meet their tax obligations, while ensuring that the minority that is unwilling to meet their obligations pays their fair share.
All individuals and legal entities who have received an income within the United States in the immediately preceding year.
By law, the IRS can impose penalties or penalties for not complying with the tax return.
Individuals can declare their taxes according to their marital status:
- Jointly married (with wife),
- Married separated,
- Head of family and widower.
To process and file taxes in the United States, an identification number is required for tax purposes, in most cases it is the Social Security number (SSN). However, there are some people who do not have or are not eligible to obtain this number, in this case the IRS issues another number called ITIN.
ITIN, for its acronym in English stands for Individual Taxpayer Identification Number, in Spanish Individual Tax Identification Number. This number will allow you to process your taxes. It is a nine-digit number that always begins with the number 9 and includes the numbers 70-88 as the fourth and fifth digits.
The IRS issues the ITIN to help people comply with US tax laws, as this number allows it to efficiently process and account for tax returns and payments for those who are not eligible for the numbers from the Social Security. This number is issued regardless of immigration status, as both resident and non-resident aliens may have a tax filing requirement under the Internal Revenue Code. ITINs are for no other purpose than federal tax return.
An ITIN does NOT authorize you to work in the US, does NOT provide you with eligibility for Social Security benefits, and does NOT qualify you for the Earned Income Tax Credit.
- Anyone who does not have an SSN and is not eligible to obtain one, but who is required to provide an identification number for their tax return, for income earned in the previous year, in the United States.
- Non-resident alien who must file a U.S. tax return.
- US Resident Alien Filing a US Tax Return (Based on Days Present in the United States)
- Dependent or Spouse of a U.S. Citizen / Resident Alien
- Dependent or spouse of a non-resident alien visa holder
- Non-resident alien claiming a tax treaty benefit
- Non-resident alien student, professor, or researcher filing a U.S. tax return or claiming an exception
If you are a non-resident alien in the United States, you must fill out and submit form 1040-NR (for tax return) and W7 (for ITIN number application)
In case of being a resident foreigner, you must fill out and submit form 1040 (for tax return) and W7 (for ITIN number application)
For both cases, it is necessary to attach original documents or certified documents proving your identity, it can be the passport or two (2) documents with a photograph and an identification of the country of Citizenship.
Yes, all ITINs issued before 2013 of the following ranges of numbers with digits in the middle (fourth and fifth digits) need to be renewed if you are going to file a tax return
- 70 (eg 9 ## - 70 - ####)
- 71 (eg 9 ## - 71 - ####)
- 72 (eg 9 ## - 72 - ####)
- 80 (eg 9 ## - 80 - ####)
ITINs that previously expired (digits 78 or 79 in the middle) can still be renewed.
If you use an expired ITIN on a US tax return it will be processed and treated as if it was filed on time, but without any exemptions and / or credit claimed and no refund will be paid at that time. You will receive a notice explaining the delay in any refund and that the ITIN has expired.
EIN for its acronym in English stands for Employer Identification Number, in Spanish, the Employer Identification Number, also known as the federal tax identification number, and is used to identify a business entity. In general, companies need an EIN. Any company or business geographically located within the United States or one of the United States Territories can apply for the EIN.
The Employer Identification Number is issued to be used solely for tax administration purposes and should not be used for other activities.
The EIN application must be made to the IRS. This request can be made online through their website, by phone, fax or mail. You must submit form SS4.
It is recommended to seek the advice of an accountant to choose the best type of Corporation that suits you to open according to your immigration status and business name.
The marital status (single, married etc.) is determined according to the particular situation of the person on the last day of the fiscal year (December 31).
In general terms, income is all that profit that is obtained as payment for doing a job, or for some investment of capital (money) or a combination of the two.
It is understood as taxable income:
- a) Earnings from work (wages, commissions, tips).
- b) Capital Income (interest, dividends, royalties, leases).
Gross income is the total sum of all income received during a given period of time, and that no deduction has been made on them. This income can be received in the form of taxable money, property, or services.
They are income designated by law exempt from paying taxes, such as pensions for the support of minor children, interest from municipal bonds, social assistance benefits, VA loans, some military and religious allowances.
They are social benefits and financial aid that the government provides to families or people with limited incomes.
Generally Yes, but in some circumstances they can be partially taken into account for the tax return, depending on the total income of the taxpayer.
It is an agreed payment for the support of the children, (includes everything that is necessary for subsistence: food, shelter, clothing, medical attention and education) according to an agreement or a judgment of divorce or separation in court.
Yes, for the person who receives it and deductible for the person who pays it.
It is a pension for minor children, different from alimony, with support payments. These payments are not deductible for the payer nor are they construed as taxable income for the beneficiary.
Both federal and local taxes must be filed. For Federal tax, the form to fill out is 1120 and for Local 1120 -FL.
Form 1040 must be filed.
Yes you can, but it is recommended to consult an accountant or tax preparer to fill out the different annexes that allow you to report your different types of Income, Deductions and Credits.
It is the right that a taxpayer has so that an amount of their income is not subject to paying taxes.
This deduction is calculated according to your marital status as follows:
- Single $12,550.00 (2021) and $12,950.00 (2022)
- Jointly married $25,100.00 (2021) and $25,900.00 (2022)
- Married separated $12,550.00 (2021) and $12,950.00 (2022)
- Head of household $ 18,000.00 (2021) and $19,400.00 (2022)
Note: People who are 65 or older or blind have an additional $ 1,700.00 (2021) and $1,750.00 (2022).
It is a valuable taxpayer benefit that allows you to save taxes and claim money with the IRS. In order to be a beneficiary of this credit, you have to demonstrate some conditions such as having dependents.
Unlike deductions, credits are not taken into account until after you calculate taxable income and determine taxes, some of these credits are refundable and some are not.
Non-refundable means that the combined amount of these credits cannot be reduced below zero (Child Care and Dependent Disability Credit, Adoption Credit).
They are those that can reduce the taxes payable by the taxpayer to below zero and the difference is reimbursed to him (education credits).
The Earned Income Credit, EIC, is a benefit for people who work, and have low or moderate income. To qualify for the credit, you must meet certain requirements and file a tax return, even if you don't owe any tax or are not required to file. The EIC reduces the amount of tax you owe, and may entitle you to a refund. It is a lump sum for each qualifying child.
a) The taxpayer must have earned income (if they are married, both must work) The taxpayer must have paid more than half of the maintenance cost during the year, of the qualified person, at least during 6 months of the tax year b) The expenses must have been necessary to allow the taxpayer to work c) The person providing the services cannot be dependent on the taxpayer.
NOTE: The above is true until the child turns 19 years old.
To show that you have dependents, the IRS requests the following tests:
- Gross income
- Joint declaration
These evidences will allow to determine if a child or dependent can be considered an exemption.
When gross income is greater than $ 600.
Yes, it is definitely conceived as taxable income. (Form 1099-G must be claimed).
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