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21. Income Tax In US

Income Tax return filing is very simple in US as compared to India . Here Tax forms are very simple and easy to fill up. One need not know all about Taxation laws, but still can very easily file tax return. Here in US there are two types of taxes. One is the FEDRAL Tax, which is something like our Income tax, and the other is the STATE Tax. Last day of filing the income tax return is 15th of April. Accounting year is considered from 1st of January till 31st of December. US has a Tax treaty with India . Under this Tax treaty one can file his tax return either in India or in US as per the convenience. But you need to show your income earned in either of the country.

Suppose you come to US in the middle of the year. You must be definitely having some income in India before you came to US in that particular financial year. Also some part of salary is paid to you even when you are in US. This income is taxable and hence you pay tax on that income. Generally you pay tax on this income in India as in most of the cases income tax is deducted at source. So one pays tax on the income in India . So now you are liable only for the tax on the income that you earn in US.

Here there are different types of forms for different category of people. For those who are US residents and who have status of Resident Aliens, they have to file the what is called 1040EZ form (form 1040 easy). Any person who is in the US for more than 183 days continuously, gains status of Resident Alien. Any person who is in US for less than 183 days in that financial year is considered as Non Resident Alien.

Non Resident Alien will not have some Tax benefits which any US citizen or Resident Alien will have. Here in particular, Non-resident Alien will not get Standard deduction on their income. Also they have to pay Tax as per the Flat rate. So basically when you file your Tax return as NR you land up paying more taxes. But you have to file 1040NR when you are having status as Non resident Alien.

For filing Tax return form one can get help from the government body, which is, know as IRS (Internal Revenue Services). This is same as Income Tax department in India . Also one has to pay tax to the state government. Each state has a different tax law for the State Tax. Booklet of information on this is available on request. Tax forms are available freely at the public places like Post office, Public library where one can get the form that he/she requires. Also, government gives special services for the people who needs the guidance. One can get this information even on phone by calling them. One can even go in person to understand the form.

Apart from these facilities provided by the government one can even go to private Tax consultants. They charge somewhere between $30 to $60. They take care of every detail and one need not bother about anything. Along with the Tax you are supposed to send one form called "W2" form. The employer provides this form to all the employees. The form contains all the information based on the salary of the person. Also all the taxes paid by the employer to the State government as well as Federal government. Details about the social security taxes and the medical taxes paid by the employer are also included in this form.

There are three copies of this form. One copy is to be sent with the State Tax form, one with the Federal Tax form and one is for the employee's personal record. Before sending the W2 form one should check the validity of the information in it. Most important is the correct social security number. If there is any change in any of the information one should inform the employer ASAP. Employer is supposed to send the corrected information to IRS and also a corrected copy to the employee, which is called W2C form.

2 Comments:

  • Good to see all the information. Thanks! I would like to know about the SOCIAL SECURITY NO. FOR F1 VISA ARE THEY ISSUE SSN?

    Regards,
    Jayant

    By Anonymous Jayant Godbole, at 11:04 AM  

  • Very informative and easy to follow. You help your reader through understanding the simpler yet different tax structure in a calming way. Well done.

    By Anonymous Anonymous, at 10:02 AM  

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