One of my senior clients telephoned about his tax return of USA for 2019 but with emphasis on 1040 SR. I was not taken aback since for one well versed with US Taxation, change is spice of life. We as CPAs are forced to update our knowledge by CPE stipulations.
I am very happy to deal with 1040 SR as it reveals gems for seniors like myself.
Now form 1040 SR and more….
Though 1040 and 1040-SR seems to tally with each other in all manner with even all serial items, I shall deal with the later 1040-SR today in extensive style to welcome its arrival and also to celebrate a senior like myself in an unprecedented scale worshipping his/her ____________ unflinching commitment to USA taxation making it one of the greatest income producer of the world.
Form 1040-SR can be seen in the following web address:
Most of the seniors who become American citizen due to sponsorship or by birth but live in India by occupation, are expected to file tax returns. Most of them being seniors do not bother to read or understand the instructions.
With the tightening of rules at all levels, both in India and USA, ignorance may not be bliss. I had a case of an Indian, but of USA citizenship and naturally their passport never bothered to submit tax returns since his father took care of the matter.
Only when he applied for renewal of his passport for visiting the graduation ceremony of his son, the embassy was kind enough to take the passport and refused to return citing some improprieties as the citizen of USA.
When he met me and explained his story, I have to work in close liaison with IRS to file the returns and meet their requirements.
Yes, he got his passport again but the moral of the story is that many green card holders from India never bother to file tax returns.
Tax returns of green card holders containing Indian income are substantial in many cases. Recently immigration authorities have started questions whether the tax payer visiting USA wants to make USA a permanent residency and whether they file tax returns for USA. These instances show the essential emergency of filing taxes on a timely basis and if necessary, carry the copies of latest tax returns and usage of professionals like CPAs so that any tax return can be retrieved at any point of time.
Form 1040, has been explained in details in earlier articles for the tax year 2018. Not much change has been observed.
The website for form 1040 is given as under:
The instructions for filling up the above form are as under from their web site.
This 108-page document, a legendary work was explained threadbare in my earlier articles. One can read them from Taxguru.in.
Itemized deduction has however undergone a sea change which will be explained in detail in the following paras.
Schedule A – Itemized deductions
Itemized deductions appear as serial number 8 of page 2 of new 1040 form. Let us analyze the additions, retention or removal of items.
The above schedule one of the oldest survivors of the schedules now has 18 serial items as per the list given below:
The writer hopes to write a separate essay on itemized deductions in future and hence detailed explanations have not been given.
Let us answer various questions that arise during tax seasons, particularly now when every tax instruction seems to have been changed. One needs to hear about them in this globalized world.
Since partnership is a conduit, partners ultimately pay the taxes.
The new instructions being issued on Form 1040, are equally applicable on the partners who would file their individual tax returns.
What’s New Tax rates. For tax years beginning after 2017, the Tax Cuts and Jobs Act (P.L. 115-97) replaced the graduated corporate structure tax structure with a flat 21% corporate tax rate. The instructions for Schedule J may be studied.
We are aware that 1120S is a conduit for its members, just like a partnership firm.
It is a pleasure to know the introduction of form 1040-SR. Though nothing new could be enforced, this makes seniors who are the backbone of American taxation, a new recognition and an enviable position.
American government, popularly known as Federal Government created history by completely changing the relevant tax codes and reduced the tax rates from the tax year 2018 onwards. Corporations had massive reduction in tax rates which enabled them to make American economy to scale up its size and helped more industries return to USA.
For 30 years only cosmetic changes were made but these recent changes had quietly shaken up the tax payers of all sizes. With 21% tax rate for big corporations, the whole world has woken up to face tough competition from the first ranked economy in the world, undoubtedly USA. USA gained the lowest unemployment rate which also helped the current government to challenge the Chinese and other countries to agree for new trade agreements.
Please do avail the services of top CPA professionals to file your tax returns, get tax refunds on time and face IRS enquiries boldly without any trepidation.
For Indian professionals, this is my fervent request that please read articles on taxation in USA and other countries to widen your knowledge and acquire power to guide the world. Let us not look like novice if a foreign company calls one for discussion.
Form 1040: https://www.irs.gov/pub/irs-pdf/f1040.pdf
Form 1040 instructions: https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
Forms like 1065, 1120, 1120S have been discussed by quoting the sources from IRS instructions.
An attempt has been made to quote as much as possible from IRS web site https://www.irs.gov/.
But with a simple layman’s language, as usual.