How does the tax declaration system work in the USA
Ukraine recently introduced mandatory electronic declaration of wealth, income and expenses for government employees, deputies and some categories of public activists. You can often hear calls for a mandatory declaration of all categories of the population and comparison with mandatory tax returns in the United States. But is this comparison appropriate? Is everything really publicly declared in the USA? No, and no, writes Lyuba Shipovich in a blog for Voice of America.
April 17 in the United States has expired the deadline for annual tax returns. I just this week filled out my declaration and describe the whole process, and you are already comparing.
So, I have an input: 2 did not work for 2017 for the month, changed two jobs, received one order for freelancing, lived in one state, and worked in another, spent quite a large amount on charity.
You can manually fill out a tax form by printing out forms from the Federal Tax Service website (https://www.irs.gov/forms-instructions) and then sending it by mail. You can contact the specialists who help fill in that costs from $ 0 (low-income people are often helped by students or volunteers) or $ 100-150 (individual taxes with average earnings) and up to very significant amounts. You can also use online services to fill out tax forms. Previous years, I turned to accounting professionals, and this year I decided to use the program TurboTaxbecause at least it turns out to be more expensive, but I can indicate in some detail my expenses, which can be deducted from taxes, and, consequently, as a result I will benefit.
It takes a few seconds to create a profile in TurboTax: standard questions about the place of residence, rent or ownership of a house, marital status, the presence of children or other persons in support, membership in the military, and the like. And then - directly tax forms. Taxes must be paid to the federal budget and the budget of the state in which you live or work, therefore, there are also at least two tax forms. I start with federal taxes. At the end of January I returned from Ukraine, started working on March 1, and changed jobs on October 1. Employers provide each employee with a W-2 form, which indicates which taxes have already been calculated on wages. I had two W-2s from two jobs. From one company, it was a paper form that was mailed to me.
The data from this form is transferred to TurboTax manually, substituting the values in fairly convenient fields with hints. From another work, W-2 was in the electronic system Tastewhich is integrated into TurboTaxtherefore, after entering the name of the company where I work, all the information was pulled into TurboTax automatically. Then there were questions about other sources of income. Specified $ 3000, which received a third-party project for one of the clients. Since this income is regarded as self-employment, it was possible to indicate expenses for the Internet, telephone, car, and equipment used for work. Once income is filled, go to the part that can reduce the amount for taxation. TurboTax gives hints:
- I indicate that I have a house and I pay a loan for it, interest on the loan is not included in taxation, so this amount is deducted by the program;
- I indicate that I have paid real estate taxes, this amount is also deducted;
- I indicate all donations to charitable organizations (organizations must have a 501c3 status, which exempts donors from taxation): monetary contributions, gifts, fuel costs for travel to charitable events;
- who pays for education, treatment, can also write off this from the amount for taxation.
Further, the question of health insurance. It is mandatory in the USA. Those who do not have insurance must pay fines. Since January I was in Ukraine, and in February there was still no work, I wasn’t insured for the 2 month in the 2017 year, during these months TurboTax charges $ 118 for each month.
The final federal tax form is then generated. After a short review and confirmation, I press the "Submit" button.
Turning to state taxes. I lived in 2017, in New Jersey, and worked and paid taxes in New York. TurboTax automatically transfers data from the federal form to the forms of both states. Taxes paid in New York are counted as a loan in New Jersey and New York still owes me, because in New Jersey taxes are lower.
Taxes paid in excess of the norm are returned by the state and the federal tax service. To return, you can specify your bank account, and the funds will come automatically, or give a postal address where you will send a check. Reverse order for those who remain owed to the state or federal budget. They can specify the account from which to withdraw the necessary amount, or send a check to the tax. I select the bank account in the program, indicate TurboTax, so that my taxes are sent to the tax office electronically (you can also choose the paper version), and after a few minutes I receive a confirmation that my taxes are accepted and I will receive a refund soon.
That's all. Fast and convenient. I am not obliged to provide any information about my income or expenses, except in cases when I want to reduce my amount for taxation. Apart from the tax authorities, no one has access to information, all data remains private. This is not at all what the public declaration of Ukrainian officials is, therefore comparisons are inappropriate.
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