USA Taxation
Forms of USA Taxations
Important forms:
Individual filling taxpayer uses form 1040
Partnership firms uses form 1065
S Corps uses form 1120S
C Corps uses form 1120
NPO uses form 990
Individual Filling Status
1. Single
2. Married filing jointly & separately
3. Head of household
4. Qualifying widow with dependent child
A taxpayer may be able to claim more than one filing status. Usually, the
taxpayer will choose the filing status that results in the lowest tax
Single status:
A taxpayer is considered single for the entire tax year if, on the last day of
the tax year, he or she was:
Unmarried,
Legally separated under a decree of divorce or separate maintenance,
Legally divorced
The head of a household or a person who is widowed may not fall under
the "single" category for tax purposes
Married Filing Jointly (MFJ)
An individual that is married by the end of the tax year can file tax returns
jointly with their spouse.
When filing under married filing jointly status, couples can record their
respective incomes, exemptions, and deductions on the same tax return.
A joint tax return often provides a bigger tax refund or a lower tax liability.
Married filing jointly is best if only one spouse has a significant income.
Head of household
A Head of Household is
a single or unmarried person.
They must pay over half (50%) of the household expenses (rent or
mortgage, utility bills, insurance, property taxes, groceries, repairs, and
other common household expenses).
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They must live with and support a qualifying family member
(dependent child, grandchild, sibling, grandparent, or anyone else) and
that family members must live with them for more than half the year.
Qualifying Widow(er) With Dependent Child
During the year in which a spouse dies, the surviving spouse can typically
use the joint filing status. For the two tax years following the year of a
spouse's death, the surviving spouse can file as a qualifying surviving
spouse. While the surviving spouse cannot continue to claim an
exemption for the deceased spouse, they may claim the standard
deduction for a married couple filing jointly
Residential Status
Tax
residency
status
US
Alien
citizenship
Non-
Resident
resident
alien (RA)
alien (NRA)
Alien
An alien is any individual who is not a U.S. citizen or U.S. national
Resident Alien
A Resident Alien for tax purposes is treated in the same manner as a
U.S. citizen when filing a tax return and paying taxes.
Non-resident alien
A Resident Alien for tax purposes must report worldwide income,
whereas, a Nonresident Alien for tax purposes must only report and
pay tax on money that he or she receives from U.S. sources.
If you are an alien (not a U.S. citizen), you are considered a nonresident
alien, unless you meet one of two tests for the calendar year (January 1 –
December 31)
If you pass the below two tests than you are the resident alien.
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1. Green Card Test
2. Substantial Presence Test
GREEN CARD TEST
Aliens who are Immigrants are Resident Aliens of the United States for tax
purposes, under the condition that they spend at least one day in the
United States.
SUBSTANTIAL PRESENCE TEST
You must pass both the 31-day and 183-day tests.
31-day test (Were you present in United States 31 days during current
year?)
183-day test
How to calculate 183 days?
first preceeding year days 2 nd preceeding year days
current year days∈US+ +
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For example:
Physically presence of a person in
Year 2024 is 120 days
Year 2023 is 120 days
Year 2022 is 120 days
Substantial presence test
31-days test (clear)
183-days test (not clear)
120 120
120+ + =180 days
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So, substantial presence test fails and a person is a non-resident alien.
Individual taxation IRS form 1040 and its schedule
Schedule 1: Additional Income and Adjustments to Income
Schedule 2: Additional Taxes
Schedule 3: Additional Credits and Payments
Schedule A: Itemized Deductions
Schedule B: Interest and Ordinary Dividends
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Schedule C: Profit or Loss from Business
Schedule D: Capital Gains and Losses
Schedule E: Supplemental Income and Loss (for rental income,
royalties, partnerships, etc.)
Schedule F: Profit and Loss from farming
Schedule SE: Self Employment Tax
Schedule H: Household Employment Taxes
Income tax calculation
Income xx
Less: adjustments to income (xx)
Adjusted gross income (AGI) xx
Less: Greater of (xx)
- Standardized deduction
- Itemized deduction
Taxable income xx
Tax rates (multiply this)
Tax before credits and other taxes xx
Add/(less) tax credits and other taxes xx / (xx)
Total tax xxx
Less: tax payments & refundable credits (xx)
Tax refund / due xxx
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W – 2 Form Instructions
<W-2 Form Instructions>
[Link]
Who must file Form W-2?
You must file Form(s) W-2 if you have one or more employees to whom
you made payments (including noncash payments) for the employees’
services in your trade or business during 2024.
Complete and file Form W-2 for each employee for whom any of the
following applies (even if the employee is related to you).
You withheld any income, social security, or Medicare tax from wages
regardless of the amount of wages; or
You would have had to withhold income tax if the employee had
claimed no more than one withholding allowance (for 2019 or earlier
Forms W-4) or had not claimed exemption from withholding on Form W-
4; or
You paid $600 or more in wages even if you did not withhold any
income, social security, or Medicare tax.
When to file?
Mail or electronically file Copy A of Form(s) W-2 and Form W-3 with the
SSA by January 31, 2025 for tax year 2024.
Employer must furnish Copies B, C, and 2 of Form W-2 to your employees
by January 31, 2025. You will meet the “furnish” requirement if the form
is properly addressed and mailed on or before the due date.
If employment ends before December 31, 2024, you may furnish copies to
the employee at any time after employment ends, but no later than
January 31, 2025.
If an employee asks for Form W-2, give them the completed copies
- within 30 days of the request or
- within 30 days of the final wage payment, whichever is later.
Extension of time to file Forms W-2 with the SSA.
You may request only one extension of time to file Form W-2 with the SSA
by submitting a complete application on Form 8809
If the IRS grants your request for extension, you will have an additional 30
days to file. The IRS will grant extensions to file Forms W-2 only in limited
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cases for extraordinary circumstances or catastrophe, such as a natural
disaster or fire destroying the books and records needed for filing the
forms. No additional extension of time to file will be allowed
Extension of time to furnish Forms W-2 to employees.
You may request an extension of time to furnish Forms W-2 to employees
by faxing a letter to:
Internal Revenue Service Technical Services Operation
Attn: Extension of Time Coordinator
Fax: 877-477-0572 (International Fax: 304-579-4105)
Fax your letter on or before the due date for furnishing Forms W-2 to
employees. It must include:
Your name and address,
Your EIN,
A statement that you are requesting an extension to furnish “Forms W-2”
to employees,
The reason for delay, and
Your signature or that of your authorized agent.
Requests for an extension of time to furnish Forms W-2 to employees are
not automatically granted. If approved, an extension will generally be
granted for no more than 15 days from the due date, unless the need for
up to a total of 30 days is clearly shown.
Structure of form W-2
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Copy A For Social Security Adminsitration
Mail or electronically file Copy A of Form(s) W-2 and Form W-3 with the SSA by January 31, 2025 for tax
year 2024.
Keep a copy of Copy A, and a copy of Form W-3, with your records for at least 4 years.
Copy 1 For State, City, or Local Tax Department
Send, if required, to your state, city, or local tax department
Copy B To Be Filed With Employee’s FEDERAL Tax Return
Employer must furnish Copies B of Form W-2 to your employees by January 31, 2025 for tax year 2024
Copy C For EMPLOYEE’S RECORDS
Employer must furnish Copies C of Form W-2 to your employees by January 31, 2025 for tax year 2024
To Be Filed With Employee’s State, City, or Local Income
Copy 2 Tax Return
Employer must furnish Copies 2 of Form W-2 to your employees by January 31, 2025 for tax year 2024
Failure to file correct information returns by the due date.
If you fail to file a correct Form W-2 by the due date and cannot show
reasonable cause, you may be subject to a penalty as provided under
section 6721. The penalty applies if you:
Fail to file timely,
Fail to include all information required to be shown on Form W-2,
Include incorrect information on Form W-2,
File on paper forms when you are required to e-file,
Report an incorrect TIN,
Fail to report a TIN, or
Fail to file paper Forms W-2 that are machine readable.
The amount of the penalty is based on when you file the correct Form W-2
$60 per Form W-2 if you correctly file within 30 days of the due
date; the maximum penalty is $664,500 per year ($232,500 for small
businesses, defined in small businesses).
$130 per Form W-2 if you correctly file more than 30 days after the
due date but by August 1; the maximum penalty is $1,993,500 per
year ($664,500 for small businesses).
$330 per Form W-2 if you file after August 1, do not file
corrections, or do not file required Forms W-2; the maximum penalty
is $3,987,000 per year ($1,329,000 for small businesses).
Exceptions to the penalty
There are some exceptions of imposing penalty
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Small Business
if your average annual gross receipts for the 3 most recent tax years (or
for the period that you were in existence, if shorter) ending before the
calendar year in which the Forms W-2 were due are $5 million or less.
How to complete Form W-2
Calendar year basis.
The entries on Form W-2 must be based on wages paid during the
calendar year. Use Form W-2 for the correct tax year.
For example, if the employee worked from December 15, 2024, through
December 28, 2024, and the wages for that period were paid on January
3, 2025, include those wages on the 2025 Form W-2.
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