FAQs
1) US Individual Income Taxes - who is required to file
i) US Citizens or Residents
If you are a US citizen or resident you are required to file US individual income tax return. This may apply irrespective of the fact that you stay or work in US or outside US.
ii) Non-immigrants in US
Following non-immigrants in US are required to file income tax return:
iii) Individuals with US source of Income
Even though you are neither a US citizen/resident nor worked/studied in US, you might still need to file tax return if:
If you are a US citizen or resident you are required to file US individual income tax return. This may apply irrespective of the fact that you stay or work in US or outside US.
ii) Non-immigrants in US
Following non-immigrants in US are required to file income tax return:
- Professionals working or rendering personal services in US on H and L visa
- Students in US on F, J visa
- Dependents of above working in US
iii) Individuals with US source of Income
Even though you are neither a US citizen/resident nor worked/studied in US, you might still need to file tax return if:
- You are employed by a US Company outside US
- You received interest, royalty, rental, dividend or any other income from US source
2) ITIN Application
i) Do I need to apply for ITIN first and then file my tax returns?
No, ITIN application is filed along with your federal tax returns.
ii) Can I efile ITIN application?
No, ITIN application cannot be efiled. It must be paper filed along with the tax returns.
iii) How long does it take to process ITIN?
ITIN is normally processed in 4-6 weeks time. We advise our clients to file ITIN early as during peak tax processing time, IRS may take upto 8 weeks time to process your ITIN.
iv) How should I comply with my state or local taxes if I have filed ITIN application?
State and local returns are efiled once you receive your ITIN. However if you have any state or local taxes due, you must pay them by the last date of return filing to avoid any penalties or interest.
v) My spouse or dependents are not in US, can still apply for ITIN for them?
You apply for ITIN for your spouse. Generally, ITIN for dependents can be filed only if they are residents of US (stayed for 183 days or more in US), Canada or Mexico.
No, ITIN application is filed along with your federal tax returns.
ii) Can I efile ITIN application?
No, ITIN application cannot be efiled. It must be paper filed along with the tax returns.
iii) How long does it take to process ITIN?
ITIN is normally processed in 4-6 weeks time. We advise our clients to file ITIN early as during peak tax processing time, IRS may take upto 8 weeks time to process your ITIN.
iv) How should I comply with my state or local taxes if I have filed ITIN application?
State and local returns are efiled once you receive your ITIN. However if you have any state or local taxes due, you must pay them by the last date of return filing to avoid any penalties or interest.
v) My spouse or dependents are not in US, can still apply for ITIN for them?
You apply for ITIN for your spouse. Generally, ITIN for dependents can be filed only if they are residents of US (stayed for 183 days or more in US), Canada or Mexico.
3) FBAR
i) What is FBAR?
FBAR is a report of Foreign Bank and Financial Accounts of US persons.
ii) Am I subject to FBAR?
If you have a financial interest in or signature authority or other authority over any financial account(s) and if the aggregate value of these accounts exceeds $10,000 at anytime during the calendar year, you must file FBAR.
iii) I have joint account with my relative, am I still covered by FBAR?
If you have either financial interest in or signature authority over the foreign financial account, you are subject to FBAR filing.
iv) Do I need to file FBAR with my tax returns?
No, FBAR is filed separate of tax returns but the due date is the same as of your individual tax return. It can be filed online at http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html.
FBAR is a report of Foreign Bank and Financial Accounts of US persons.
ii) Am I subject to FBAR?
If you have a financial interest in or signature authority or other authority over any financial account(s) and if the aggregate value of these accounts exceeds $10,000 at anytime during the calendar year, you must file FBAR.
iii) I have joint account with my relative, am I still covered by FBAR?
If you have either financial interest in or signature authority over the foreign financial account, you are subject to FBAR filing.
iv) Do I need to file FBAR with my tax returns?
No, FBAR is filed separate of tax returns but the due date is the same as of your individual tax return. It can be filed online at http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html.
4) Unreimbursed employee expenses
i) What is unreimbursed employee expense?
You can deduct only unreimbursed employee expenses that are paid or incurred during your tax year, for carrying on your trade or business of being an employee, and are ordinary & necessary. An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary. Please refer to publication 529 at https://www.irs.gov/publications/p529/ar02.html for a detailed list of such expenses.
ii) Can I claim travel, lodging, meal and entertainment expenses?
Generally you cannot deduct these expenses. However, you may be able to deduct these expenses while you are working on a temporary assignment/project in the US.
iii) What is a temporary assignment/project?
A temporary assignment is one that is realistically expected to last (and does in fact last) for one year or less. You will need to refer to the terms of your employment to determine if your project is temporary or not.
You can deduct only unreimbursed employee expenses that are paid or incurred during your tax year, for carrying on your trade or business of being an employee, and are ordinary & necessary. An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary. Please refer to publication 529 at https://www.irs.gov/publications/p529/ar02.html for a detailed list of such expenses.
ii) Can I claim travel, lodging, meal and entertainment expenses?
Generally you cannot deduct these expenses. However, you may be able to deduct these expenses while you are working on a temporary assignment/project in the US.
iii) What is a temporary assignment/project?
A temporary assignment is one that is realistically expected to last (and does in fact last) for one year or less. You will need to refer to the terms of your employment to determine if your project is temporary or not.
5) Earned income credit
The Earned Income Credit (EIC) is a tax credit for low and middle income wage earners with and without children. For the most part, if you meet the earning levels listed in this tax information, you qualify. The 2016 qualifying levels are:
6) Mileage Deductions
If you used your vehicle in the course of your business, you could be eligible for mileage and use deductions. You may also be eligible to deduct charitable and medical mileage. Remember that you must keep accurate records in order for the deductions to be allowed. Consult our tax experts today to get more information on this.
7) Tax Deductions
Did you know that you can claim some deductions without itemizing? These deductions are called adjustments to income, and they are claimed right on page one of your Form 1040. Some of the most popular tax deductions are here:
8) IRS Withholding Calculator
If you are an employee, the Withholding Calculator can help you determine whether you need to give your employer a new Form W-4, Employee's Withholding Allowance Certificate to avoid having too much or too little Federal income tax withheld from your pay. You can use your results from the calculator to help fill out the form.
Continue to the Withholding Calculator
9) Filing Past Due (back year) Tax Returns
Following are the benefits of filing your past due (back year) tax returns:
Avoid interest and penalties
File your past due return and pay now to limit interest charges and late payment penalties.
Claim a refund
You risk losing your refund if you don't file your return. If you are due a refund for withholding or estimated taxes, you must file your return to claim it within 3 years of the return due date.
Protect Social Security benefits
If you are self-employed and do not file your federal income tax return, any self-employment income you earned will not be reported to the Social Security Administration and you will not receive credits toward Social Security retirement or disability benefits.
Avoid issues obtaining loans
Loan approvals may be delayed if you don't file your return. Copies of filed tax returns must be submitted to financial institutions, mortgage lenders/brokers, etc., whenever you want to buy or refinance a home, get a loan for a business, or apply for federal aid for higher education.
The Earned Income Credit (EIC) is a tax credit for low and middle income wage earners with and without children. For the most part, if you meet the earning levels listed in this tax information, you qualify. The 2016 qualifying levels are:
- $47,955 ($53,505 for married filing jointly) with three or more qualifying children
- $44,648 ($50,198 for married filing jointly) with two qualifying children
- $39,296 ($44,846 for married filing jointly) with one qualifying child
- $14,880 ($20,430 for married filing jointly) with no qualifying children
6) Mileage Deductions
If you used your vehicle in the course of your business, you could be eligible for mileage and use deductions. You may also be eligible to deduct charitable and medical mileage. Remember that you must keep accurate records in order for the deductions to be allowed. Consult our tax experts today to get more information on this.
7) Tax Deductions
Did you know that you can claim some deductions without itemizing? These deductions are called adjustments to income, and they are claimed right on page one of your Form 1040. Some of the most popular tax deductions are here:
- IRA Deduction
- Moving Expenses
- Student Loan Interest
- College Tuition
- Standard Deduction
- Mortgage Interest, Real Estate Taxes, Personal Property Taxes
- Charitable Contributions
- Casualty and Theft Losses
- Miscellaneous and Job Related Expenses
8) IRS Withholding Calculator
If you are an employee, the Withholding Calculator can help you determine whether you need to give your employer a new Form W-4, Employee's Withholding Allowance Certificate to avoid having too much or too little Federal income tax withheld from your pay. You can use your results from the calculator to help fill out the form.
Continue to the Withholding Calculator
9) Filing Past Due (back year) Tax Returns
Following are the benefits of filing your past due (back year) tax returns:
Avoid interest and penalties
File your past due return and pay now to limit interest charges and late payment penalties.
Claim a refund
You risk losing your refund if you don't file your return. If you are due a refund for withholding or estimated taxes, you must file your return to claim it within 3 years of the return due date.
Protect Social Security benefits
If you are self-employed and do not file your federal income tax return, any self-employment income you earned will not be reported to the Social Security Administration and you will not receive credits toward Social Security retirement or disability benefits.
Avoid issues obtaining loans
Loan approvals may be delayed if you don't file your return. Copies of filed tax returns must be submitted to financial institutions, mortgage lenders/brokers, etc., whenever you want to buy or refinance a home, get a loan for a business, or apply for federal aid for higher education.