The scope of the American taxing system, including American tax returns, is a very wide one, and it exceeds the scope that is customary in other countries. As a result, it is possible that as you are reading these lines you might come to discover that you are required to submit tax returns to the American tax authority (the IRS), without having been made aware of that fact.
In this article we’ll detail the tax return obligations in the United States, we’ll highlight who they are referring to and what they include. Would you like to make sure that you aren’t required to file tax returns to the IRS? Keep reading.
The Applicability of the Tax Return Requirement in the United States
The obligation to submit American tax returns is not reserved only for American citizens residing in the United States and make a living independently, as could be assumed.
The tax return submission requirement deviates from the boundaries of the physical territories of the United States and takes on a more personal applicability: the requirement applies to all citizens of the United States and all green card holders, including those who don’t reside in the United States, and even applies to foreign citizens who have any kind of business dealings in the United States.
This is true for American corporations of all types, as well as foreign corporations that operate within the borders of the United States.
Therefore, even if you are Israeli citizens who have investments in the United States you are required to submit a tax return to the American IRS. Not to mention if you have an American dual citizenship or are green card holders (even if you’ve never visited the United States).
Who is Required by Law to Submit Tax Returns in the United States?
| American citizens and green card holders (permanent residents) residing in the United States |
| American citizens and green card holders not residing in the United States |
| Foreign citizens with income generated within the territory of the United States |
If you meet one of the criteria mentioned above – you are required to fill in and submit a tax return, given that you meet the income threshold decided by law.
Annual Income Threshold
Unlike the Israeli taxing system, the American taxing system does not impose the tax return submission requirement only on the self – employed, but treats hired workers the same as well.
And yet, while the income threshold that requires tax return submission from self – employed tax – payers stand at 400 dollars, the income threshold that requires tax return submission from hired workers is higher, and is dependent on the personal status of the tax – payer.
Tax Law Instructions Distinguish Between a Number of Personal Statuses
Individual
Single / divorced without children / widowed without children.
Married Submitting as Individuals
Married couples submitting their tax returns together.
Married Submitting Separately
A married individual who chooses to submit his or her tax returns separately.
Head of a Household
This is in reference to a person who is not married according to taxation rules but is the provider of a household with dependents.
Declared Widower
Widowers with children during the first two years after their partners’ passing. For each one of the statuses mentioned above the taxing method assigns a different income threshold that requires tax return submissions:
| Individual | 12,200 dollars |
| Head of Household | 18,350 dollars |
| Married Submitting Together | 24,400 dollars |
| Married Submitting Separately | 5 dollars |
| Declared Widower | 24,400 dollars |
In addition, for every tax – payer over the age of 65 or is blind, tax instructions dictate a higher yearly income threshold – currently standing at a sum of 1,650 additional dollars. This means: an individual who is blind will be required to submit a yearly tax return if their yearly income exceeds the amount of 13,850 dollars.
The Scope of the Tax Return Requirement
When it comes to a tax – payer that is an individual the yearly tax return is completed through a 1040 form – the yearly income tax form. Tax payers that are classified as corporations submit a similar form that is unique to them – a 1065 form.
The form includes, beyond the breakdown of the personal details, data on the total global income of the tax – payer (meaning – also their income in Israel), data referring to deductions, credit, and refunds that the tax – payer is entitled to.
It is important to note that beyond the tax return submission requirement to the IRS, American citizens (only American citizens!), are required to submit an additional form through which they must declare holding of foreign financial account with a balance exceeding 10,000 dollars (or had exceeded that amount during the year).
As mentioned, this requirement is enforced on American citizens only and is not submitted to the IRS but rather to the American treasury department.
Tax Return Submission Dates
The date for tax return submissions is 15th of April of the subsequent tax year. Citizens who do not reside in the United States as well as foreign citizens will have to submit their tax return by the 15th of June of the subsequent tax year.
American citizens would be able to receive an extension on the submission of their tax return for the 15th of October, while foreign citizens are able to receive an extension for the submission of their tax return until the 15th of December.
Failing to submit tax returns or submission of partial tax returns could lead to fines and rigid sanctions being imposed. If you are not sure whether or not you are required to submit a tax return or if you need help submitting you tax return, the MasAmerica team will be happy to be at your service.
