What Is a Taxpayer?

A taxpayer is an individual or business required to pay taxes to government authorities. Tax obligations are managed by the IRS at the federal level in the U.S., as well as by state and local agencies. A taxpayer’s responsibilities can vary based on filing status, income level, tax brackets, and eligibility for deductions and credits. Failing to comply with tax requirements can lead to penalties, making careful and timely filing essential.

How the U.S. Tax System Applies to Taxpayers

The U.S. tax code is legislated and enforced by federal, state, and local governments. TheInternal Revenue Service (IRS) is the primary governing agency overseeing the implementedincome tax code for both individuals and businesses.

State and local revenue agencies are responsible for implementing and enforcing localized taxes such as sales taxes and property taxes. Individuals and businesses must know their tax obligations, as failure to pay can lead to penalties or legal action.

Different Categories of Taxpayers Explained

Individuals

There are specific thresholds governing the obligation to pay annual individual income taxes to the IRS and state revenue departments. The federal threshold depends on filing status. Each state will also have its own thresholds.

Individual taxpayers should check both the federal and state thresholds to determine their filing obligations for a given year. The Internal Revenue Service’s Publication 501: Dependents, Standard Deduction, and Filing Information, provides federal tax guidance for individual taxpayers.

An individual’s filing status will influence how much tax is withheld from payroll. It is also a primary factor influencing annual tax obligations for a given year. Individual taxpayers must therefore maintain the same filing status with their employer that they plan to use for their annual tax filing. Improperly notating the tax filing status on employee withholding forms likeForm W-4 can result in withholding too much or too little which will be reconciled at tax-filing time.

Generally, marriage and dependents (usually children) are the two things that will characterize a taxpayer’s status. If married, an individual can choose to file separately or jointly. Taxpayers also have the option to file as a widower if their spouse has died.

Individuals who are not obligated to file annual tax returns will still encounter taxes in their everyday life. Other than income taxes, taxes are imposed daily and annually throughsales taxes on goods and services andproperty taxes required to be paid separately to local governments. Sales and property taxes differ by location.

Filing Thresholds

Not all individuals in the U.S. are obligated to file a federal tax return and a state tax return. The federal threshold for filing a tax return is detailed by filing the status below. Individual states follow similar status standards but can have differing thresholds.

Some individuals may not need to file tax returns. Some people may benefit from filing a return even if below thresholds because they can be paid a refund with applicable deductions and credits.

Individual taxpayers need a Social Security number to file tax returns. Social Security numbers can be obtained from the Social Security Administration. A Social Security number will serve as a taxpayer identification number so it is important to obtain one if you plan to have tax obligations.

In general, there is no age level associated with paying federal and state taxes. Any individual who has gross income at or above the threshold levels outlined below should file a tax return.

Single Taxpayer

A taxpayer is considered single if s/he is unmarried, divorced, a registered domestic partner, or legally separated according to state law as of the last day of the tax year. The head of a household or a widowed person doesn't fall under the “single” category for tax purposes.Single filers have lower income thresholds for tax filing obligations.

Head of Household

A head of household is a single or unmarried taxpayer who pays at least 50% of the costs of supporting their household and lives with other qualifying family members for whom they provide support for more than half of the year. The taxpayer must have paid more than half of the total household bills, including rent or mortgage, utility bills, insurance, property taxes, groceries, repairs, and other common household expenses.

Some examples of qualifying family members include a dependent child, grandchild, brother, sister, or grandparent.

Married Filing Jointly

Two taxpayers who wed by the end of the tax year can file their tax returns jointly. When filing under married filing jointly status, couples can record their respective incomes and deductions on the same tax return. A joint tax return will often provide a bigger tax refund or a lower tax liability.

Married filing jointly is best if only one spouse has a significant income. If both spouses work and have large, unequal incomes and deductions,filing separately might be better.

Married Filing Separately

Married filing separately is a tax status used by married taxpayers who choose to record their respective incomes,deductions, and credits on separate tax returns. Married filing separately may be appealing to couples who find that combining their income pushes them into a higher tax bracket than either of them would be in if they filed separately.

There is a potential tax advantage to filing separately when one spouse has significant medical expenses, miscellaneous itemized deductions, or certain available credits.

Qualifying Widow(er)

This category of taxpayer is also referred to as a surviving spouse. The federal qualifying widow or widower tax filing status is available for two years for widows and widowers with dependents after their spouse's death.

Understanding Individual Tax Rates and Deductions for 2025

Individual taxpayers who must file an annual federal tax return are subject to the following tax rates and standard deductions for 2025 as detailed by their filing status.

All individual taxpayers are entitled to the following standard deductions:

The Basics of Filing with Form 1040

The 1040 tax form makes filing easy for individual taxpayers with simple returns. It covers half a page and can be referred to as postcard filing. However, while the front page 1040 is simplified, many taxpayers will have to attach relevant forms or schedules depending on their situations.

Tax Obligations for Self-Employed Individuals

Self-employed or sole-proprietor taxpayers may need to file a Schedule C with their 1040. Schedule C is primarily an income statement for self-employed workers and sole proprietors. It includes 1099 income. These individuals may qualify for certain business deductions.

Filing Taxes for Partnerships and Small Business Entities

Partnerships and limited liability companies (LLCs) are business entities with more than one owner. These entities make up a large portion of the small businesses in the United States. Other types of small entities that may need to consider annual income tax filings can include trusts, estates, and qualified joint ventures.

Partnerships and LLCs are usually taxed as partnerships. For federal taxes, partnerships typically file Form 1065 which is an informational return with K-1 reporting that passes the taxable income or loss to the individual taxpayer owners. Therefore, partners also pay taxes on their K-1 income and file this report using a 1040 Form, which is then subject to individual 1040 tax rates.

Corporate Tax Filing Guidelines

Corporations typically make regular estimated tax payments throughout the year. These payments are reconciled with the annual tax filing. Most corporations will file aForm 1120.

Form 1120 serves as the primary tax filing document for most corporations and can be compared to Form 1040 for individuals. Like the 1040, Form 1120 also requires attached forms and schedules depending on a corporation’s situation.

The Bottom Line

Individual and business taxpayers fund government operations through taxes on income and assets. Individual tax responsibilities can vary based on factors such as marital status, dependents, and types of income, all of which can influence tax liabilities and potential refunds. Consulting a tax professional can help ensure that you remain compliant and identify optimal tax strategies, especially if you're a first-time filer or if you have a complex financial situation.