Tax returns in the United States are reports filed with theInternal Revenue Service (IRS) or with the state or localtax collection agency (California Franchise Tax Board, for example) containing information used to calculateincome tax or other taxes. Tax returns are generally prepared usingforms prescribed by the IRS or other applicable taxing authority.
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Under theInternal Revenue Code returns can be classified as eithertax returns orinformation returns, although the term "tax return" is sometimes used to describe both kinds of returns in a broad sense. Tax returns, in the more narrow sense, are reports of tax liabilities and payments, often including financial information used to compute the tax. A very common federal tax form is IRSForm 1040.
A tax return provides information so that the taxation authority can check on the taxpayer's calculations, or can determine the amount of tax owed if the taxpayer is not required to calculate that amount.[1] In contrast, an information return is a declaration by some person, such as a third party, providing economic information about one or more potential taxpayers.[1]
Information returns are reports used to transmit information about income, receipts or other matters that may affect tax liabilities. For example,Form W-2 andForm 1099 are used to report on the amount of income that an employer, independent contractor, broker, or other payer pays to a taxpayer. A company, employer, or party which has paid income (or, in a few cases, proceeds that may ultimately be determined not to be income) to a taxpayer is required to file the applicable information return directly with the IRS. A copy of the information return is also sent directly to the payee. These procedures enable the IRS to make reasonably sure that taxpayers report income correctly.[2]
The filing ofFederal tax returns is required under federal law. Individuals who receive more than the statutory minimum amount of gross income must file.[3] The standard U.S. individual tax return is Form 1040. There are several variations of this form, such as the 1040EZ and the 1040A, as well as many supplemental forms. U.S. citizens and residents who realize gross income in excess of a specified amount (adjusted annually for inflation) are required by law to file Federal income tax returns (and pay remaining income taxes if applicable). Gross income includes most kinds of income regardless of whether the income arises from legitimate businesses. Income from the sale of illegal drugs, for example, is taxable. Many criminals, such asAl Capone, are indicted not only for their non-tax crimes, but for failure to file Federal income tax returns (and pay income taxes).
Many Americans find the process of filling out the tax forms more onerous than paying the taxes themselves. A recent survey by Credello uncovered that only 13% of Americans file their taxes completely on their own and 53% rely on an online software system.[4] Many companies offer free and paid options for reducing the tedious labor involved in preparing one's tax return.
For tax-filing season 2024, the IRS announced a pilot ofDirect File, where people can calculate and submit their federal taxes and some state taxes in partnership with select state tax agencies for free. This initiative came as a result of the 2022Inflation Reduction Act, signed into law by PresidentJoe Biden.[5]
TurboTax is the most popular tax preparation software in the United States, holding a 66.6% market share of self-prepared returns in 2018.H&R Block at Home (formerlyTaxCut) is the second most popular with a 14% share. Other popular tax software includes:TaxACT at 7%,Tax Hawk (includingFreeTaxUSA) at 5.9%,Credit Karma's free tax software (now owned byIntuit/TurboTax) at 1.7%, andTaxSlayer at 1.5%.[6]
In some countries, the tax agency provides a prefilled return to streamline the process, but the United States has failed to adopt these technologies as of 2013 after lobbying by tax preparation companies likeIntuit.[7] A similar reform was unsuccessfully attempted in California, after a pilot known asReadyReturn.[8]
The annual deadline to file one's Federal individual income tax return is April 15. The IRS lists scenarios for whichTax Day does not follow this standard deadline - Taxpayers can file an extension where the taxes owed must be paid by April 15 but the completed tax return filed by October 15.[9]
A taxpayer who finds a mistake on a previously filed individual income tax return can file corrections withForm 1040X.
In the United States, taxpayers may file an amended return with the Internal Revenue Service to correct errors reported on a previously paid tax return. Typically a taxpayer does not need to file an amended return if he or she has math errors as the IRS will make the necessary corrections. For individuals, amended returns are filed usingForm 1040X, Amended U.S. Individual Income Tax Return. In some cases taxpayers may useForm 1045Archived 2018-08-04 at theWayback Machine, for example, to carry back a Net Operating Loss to a prior tax period. Form 1045 is generally processed much faster than Form 1040X.
Tax return laws generally prohibit disclosure of any information gathered on a state tax return.[10] Likewise, the federal government may not (with certain exceptions) disclose tax return information without the filer's permission,[11] and each federal agency is also limited in how it can share such information with other federal agencies.[10]
Occasionally there have been efforts in Congress to require tax returns to be open to public inspection. For example, SenatorsRobert M. La Follette andGeorge W. Norris supported such legislation, applicable to both individual and corporate returns, and public disclosure for wealthy taxpayers was required from 1923 to 1926.[12][13] Presidential candidates have sometimesvoluntarily released their tax returns.
The IRS occasionally has seen "Fifth Amendment" returns from people who accurately report their annual income and tax liability but refuse to reveal the source of the funds on the grounds that such a statement would tend to incriminate the individual.
Examples of common Federal tax returns (and, where noted, information returns) include:
Transfer taxes
Statutory excise taxes
Employment (payroll) taxes
Income taxes
Federal laws requiring the filing of income tax returns:
