Who needs to file a US tax return?
Who must file a US tax return?
If you are a US citizen or green card holder and you have income, you likely need to file a tax return. US Global Tax can help you determine if your income meets the threshold to file. If you do need to file an income tax return, we'll help with your tax preparation, determine the amount of tax you owe, and ensure you receive the highest possible tax refund IRS. Continue reading below to learn more about who needs to file US tax returns, or contact us today to get started with New Zealand's foremost US tax professionals.
Find out if you need to file a US tax return
Any individual United States citizen or green card holder based anywhere in the world, with a total income greater than USD $12,000 (or equivalent), needs to file a US tax return. This threshold varies for married individuals filing jointly or separately, while lower thresholds exist for other types of income, such as self-employment income.
Your total income includes income from all sources, be it from salary or wages, interest, self-employment income, or investment income. The location where this income was earned has no bearing on whether you'll need to file a US tax return.
Filing taxes does not always mean paying taxes
Importantly, the obligation to file a US tax return doesn't necessarily mean that any taxes will need to be paid. Extensive tax treaties exist between the US and most other countries (New Zealand included). Furthermore, US Global Tax has successfully helped many clients who owed income tax reduce their tax bill to zero.
US tax residency is linked to citizenship
Tax residency is not usually related to residency in an immigration sense, but rather a determination of which country (or countries) your tax home is. It is important not to confuse this with another IRS rule of a “tax home”, which deals with work across multiple states.
Most people worldwide are tax residents of only one country—the country where they currently reside. However, the US is one of only a handful of nations that consider a citizen of the US to be a tax resident regardless of where they live. In this case, you may be a tax resident of two countries: The USA and your country of residence.
Income thresholds determine your tax liabilities
Now that we know that you—as a US citizen—are a tax resident of the US, we can then determine whether your income falls above or below the specific thresholds that necessitate the filing of a US tax return.
A return must be filed to the US each year in which you have income, covering the calendar year period of the prior year (for example, in 2019 a tax return covering the period 1st January 2018 to 31st December 2018 must be filed).
Tax treaties address the risk of double taxation
In the case that you have tax residency in two countries or income from multiple countries, tax treaties are used to determine which country has the right to tax. This is determined as part of the tax return preparation process and uses a complex understanding of the local tax rules, US tax rules, and the tax treaty in place.
Don't lose sight of your US tax obligations
Any person subject to US taxation (i.e. a citizen or green card holder) must file their required returns. The IRS has extremely strict and punitive penalties for those who do not meet their filing obligations. This is well publicised, and due to FATCA legislation, the avenues for the IRS to track US citizens failing to file are much simpler than they have ever been.
If you still have questions about your potential filing obligations or if you're ready for expert help filing your US tax return, please contact us today. With US Global Tax, you can enjoy the peace of mind of New Zealand's premier US tax specialists.
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