Filing taxes in the United States is a task that must be done conscientiously, as it has a significant impact on both our personal finances and the functioning of the country. And while the country’s tax system is complex, with the right guidance you can tackle it efficiently.

In this article, you’ll learn how to pay federal, state, and local taxes to meet your tax obligations without errors. Start!

How to pay each type of tax in the United States

Federal Taxes

Filing taxes in the United States begins with federal taxes. The Internal Revenue Service (IRS) requires you to file a return if your income is above a certain threshold. Here are the key steps to do it correctly:

  • Gather the necessary documentation: This includes Form W-2 from employers, or Form 1099 if you’re an independent contractor, and any other income or deduction documents.

  • Choose the correct form: The most common are the 1040 and the 1040-SR for seniors. There are also forms for specific situations such as the 1040-NR for nonresident aliens.

  • Decide how to file it: You can do this electronically via e-file or on paper. Electronic filing is faster and more secure.

  • Make careful calculations: Apply deductions and credits that can reduce your tax burden. If you need help, consider using tax software or consulting a professional.

  • Pay what you owe or request your refund: If you owe taxes, make sure you pay by the deadline to avoid penalties. If you’re hoping for a refund, good news! The IRS usually issues it within 21 days of receiving your return.

State Taxes

How you file taxes in the U.S. at the state level varies depending on where you live. Each state has its own set of rules and forms for filing taxes.

Some states, such as Florida and Texas, do not have state income taxes, while others require a process similar to the federal one. Generally, you’ll need the same documents as for your federal tax return.

Local Taxes

In addition to federal and state taxes, you may have to deal with local taxes. These can include property and sales taxes. How to report taxes in the United States locally depends on the laws of your municipality or county, so check with your local tax authorities for the most accurate information.

Taxes for Nonresident Foreign Taxpayers

If you’re a non-resident, but have income in the United States, you still need to comply with the country’s tax laws. The process is slightly different and it is essential to know it in order to comply with the law and avoid penalties. Here’s what you need to know:

1. Understanding Your Non-Resident Status

First, determine if the IRS considers you a nonresident for tax purposes. Generally, this applies to individuals who do not pass the substantial presence test or who do not have a permanent resident card (green card). International students, visiting professors, and temporary workers often make up this category.

2. Taxable Income

As a nonresident, you will be taxed only on your income from U.S. sources. This includes wages, interest, dividends, and rents. It is important to correctly identify what income needs to be reported.

3. Non-Resident Tax Forms

The primary form for nonresidents is Form 1040-NR. This form is used to report your income and calculate the tax owed. Depending on your specific circumstances, you may need to fill out additional forms.

4. Tax Treaties and Exemptions

The United States has tax treaties with many countries, which can affect the amount of tax you owe. These treaties may offer reduced rates or tax breaks for certain types of income. Check the IRS’s list of tax treaties to see if your country has a treaty with the United States.

5. Deadlines and Filing of the Return

The tax filing deadline for non-residents is usually April 15, just like for residents. If you are outside the United States during this date, you could have an automatic extension until June 15. Be sure to submit your return and any payments by these dates to avoid penalties.

6. ITIN and Identification Requirements

If you don’t have a Social Security Number (SSN), you’ll need to obtain an Individual Taxpayer Identification Number (ITIN) to file your taxes. You can apply for an ITIN by using Form W-7 and submitting it with your tax return.

Since tax laws can be complex, we recommend reviewing IRS guidance and considering the help of an international tax expert to avoid mistakes.

Efficient U.S. Tax Filing

Filing your taxes in the United States doesn’t have to be a stressful task. Remember, the key is in preparation and in using the resources at your disposal.

If at any point in the process you feel unsure, seek the help of a tax professional. Although we at Interlink FBC do not provide these services directly, we can put you in touch with experienced professionals. Are you ready to get started? Contact us!