In the United States, paying taxes is a legal obligation for all residents, whether they are citizens or immigrants. Taxes are collected at the federal, state, county, and municipal levels to fund essential public services such as Social Security, Medicare, education, and public transportation. The tax system includes various types of levies, including income tax, sales tax, and property tax, meaning everyone contributes indirectly through earnings, spending, or property ownership.
Income tax, calculated based on annual earnings, is typically withheld by employers from paychecks and remitted directly to the government. While states like Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not impose state income tax, residents in most other states—including immigrants—must file tax returns based on their income.
Every year, individuals are required to report their income and tax liabilities using official tax return forms, even if their employer has already reported earnings to the government. Accurately completing these forms not only ensures compliance but may also qualify taxpayers for deductions and credits, reducing their overall tax burden.
How Taxes Are Collected and Distributed
The Internal Revenue Service (IRS) oversees federal income tax collection, with revenue flowing into the U.S. Treasury. State income taxes, where applicable, are managed by individual state revenue departments.
Steps to File Your Taxes Correctly
To navigate the tax filing process smoothly, follow these steps:
- Determine if you need to file: Generally, if your income exceeds a certain threshold, filing is mandatory. For 2024, the threshold is $14,600 for single filers and $29,200 for joint filers. These amounts adjust annually, and seniors aged 65+ may qualify for different thresholds.
- Gather tax documents: Collect all necessary forms, such as W-2s (for wages), 1099s (for miscellaneous income), and other proof of earnings.
- Choose a filing method: The IRS recommends e-filing for convenience, often through online tax preparation services.
- Complete and submit returns: Ensure your federal and state tax returns are accurate and include all income sources. The deadline for most filers is April 15.
- Pay owed taxes: Settle any federal or state tax liabilities via electronic transfer, check, or money order.
Understanding your tax obligations is critical to avoiding legal penalties or financial strain. By following these guidelines, taxpayers can fulfill their responsibilities while optimizing their financial planning.