INDIVIDUAL TAX RETURN 1040
When do I have to file?
What deductions & penalties are there?
Is there a relationship between IRS 1040
and 100 AEAT?
VÍDEO
QUESTIONS AND ANSWERS
ABOUT INDIVIDUAL
TAX RETURN 1040
Find out the answers to the main questions about Individual Tax Return 1040 in 4 minutes.
AM I REQUIRED TO FILE 1040?
Required to file.
U.S. Persons (U.S. Citizens, Green Card Holders and Resident Aliens) are required to file annually regardless of:
· Where their income is earned.
· Where in world they live.
· Whether or not the U.S has a Tax Treaty with that country.
· Whether or not they also pay Foreign Taxes.
Minimum to File
· If you file Single and you are under 65 by December 31, and your minimum gross income is $ 13,850. If you are 65 or older, your gross earned income must be at least $ 15,700.
· If you file as Married Filing Jointly, the minimum to file is $ 27,700 gross income. But if you file as Married Filing Separately, the minimum limit is $ 5 of gross income.
· On the other hand, if your income is passive income (interest, dividends, etc.) you are required to file the return from $ 1,250, and you also have to file a 1040 if your net earnings from self-employment were at least $400
DOES IT ALWAYS HAVE TO BE SUBMITTED BEFORE APRIL 15TH?
File form 1040 by April 15th
Extension for resident abroad: 2 months
If you are U.S. Person, you qualify for an automatic extension of two month till June 15 without filing the form 4868.
This extension gives you an extra 2 months to file and pay the tax, but interest will be charged from the original due date of the return on any unpaid tax.
Extension of 4 more months, filing Form 4868.
If you are still unable to file your return by the end of the 2-month period, you can get an additional 4 months if, no later than June 15, you file Form 4868.
This 4-month extension of time to file does not extend the time to pay your tax. All taxes must be paid before April 15th.
WHAT DEDUCTIONS CAN I APPLY?
Standard deductions:
Single $13,850 – Married Filing Jointly $27,700 – Heads of the Household $20,800
Foreign Earned Income Exclusion
Most commonly used exclusion for expats: $120,000 (2023)
Only from earned income.
You must live in another country.
Foreign Tax Credit
Let’s you deduct the amount of Foreign Taxes paid from the U.S. Tax liability.
If paid foreign taxes at higher rate, you can carry forward the excess paid for use in the subsequent 10 years.
Child Tax Credit
For children, dependents, up to 17 years old.
From 2018 to 2020 $1,400 refund ($2,000 Credit)
In 2023 you will get a refundable credit of $1,500 if younger than 17.
Stimulus Checks (only for filers of 2020 ans 2021)
In 2020 you can claim the Economic Impact Payments if you have not received them during the year, up to $1,200 + $600.
In 2021, the EIP3 will be $1,400, if you have not recieved it.
STIMULUS CHECKS? RECOVERY REBATE CREDIT
If you were an eligible individual in 2020 and in 2021, you should have received three stimulus checks that you may be or may be not received up to now. The first two checks, EIP1 and EIP2, should have been claim in the Form 1040 2020, the third EIP3 should have been claim in the Form 1040 2021, in line 30 “Recovery Rebate Credit” as refundable and nontaxable credit.
The EIP1 was the first economic impact payment in the amount of $1,200, originally distributed between March and November 2020, and the EIP2, the second, of $600, distributed after December 28, 2020, and the last EIP3 distributed after February 28, 2022, in the amount of $1,400.
If you have not received any of the checks and you did not claim them in 2021 and 2022, you can always file an amended return, Form 1040X.
The amount of the prepayments was based upon the data in taxpayer’s 2018 and 2019 federal return. If an eligible individual was entitled to an economic impact payment and received a payment greater than the Recovery Rebate Credit calculated on the 2020/21 return, s/he still in most cases gets to keep the original payment. The excess does not need to be repaid to the IRS. If this is your case and have any doubt if you need to pay back the IRS, please post you question in our blog at: Claiming the recovery rebate credit – US Tax Consultants
ARE THERE ANY PENALTIES FROM THE IRS ON THE FORM 1040?
There are two types of penalties: failure-to-file penalty and failure-to-pay penalty. In any case, paying taxes must always be done before April 15; for filing late you can take in consideration the requested extensions, which do not apply to the failure-to-pay penalty.
The failure-to-file penalty is 5% of your balance due for every month (or part of a month) in which your taxes go unpaid. The amount you owe for this penalty will be reduced by the amount you owe for the failure-to-pay penalty. The maximum amount of this penalty is 25% of your unpaid taxes.
The failure-to-pay penalty is 0.5% of your balance due for each month (or part of a month) in which your taxes remain unpaid. This penalty will not be more than 25% of your unpaid taxes.
If both penalties apply to you during the same month, the failure-to-file penalty is reduced by 0.5% per month. The 25% cap applies to both penalties together.
DO I NEED A PROFESSIONAL TAX PREPARER?
Tax preparers of all backgrounds need an active PTIN to file tax returns on behalf of their clients. PTINs identify these professionals to the IRS and protect them from fraud.
A professional tax preparer can save you time and money, can answer your questions and resolve issues. The tax code is very complicated: Professional tax preparers keep up with it and with all the changes each and every year. You gain peace of mind: Making mistakes can be very costly and reduce the risk of an audit. It takes the hassle out of doing it yourself.
HOW MUCH DOES IT COST TO HAVE FORM 1040 PREPARED ?
The fee is for a current year Individual Federal Tax Return which includes the following Forms: 1040, 2555, 1116, Sch. A. B, one Sch. C, Sch. D, Sch. E (three rental property), up to three Schedule K-1’s, and up to ten Bank Interest/Dividend entries, and up to 10 brokerage transactions. We do not include Form 8938, please, let us know if you are required to file Form 8938, the principal document to comply with the FACTA regulations and we will prepare it for a fee.
Do you need to amend your previously filled tax Returns? Only if we have already prepared the original 1040, the fee will be €250,00. For all our clients who have not filed their returns before June 1st, we will provide a 4-month automatic extension (until October 15th)
Other obligatory forms and schedules
You can see the rest of fees for other obligatory Forms and Schedules at Fees – US Tax Consultants. We will keep you inform before hand of your other obligations and the estimated cost if necessary.
IF I MAKE A MISTAKE IN MY 1040, WHAT CAN I DO?
You simply have to submit an Amended Return, Form 1040X, to correct the errors that you have made in a return already filed.
If you amend your return before it is due (before June 15), then your amendment is on time, and no interest or penalty will accrue. Also, the IRS can be quite reasonable, especially for a first-time mistake.
The IRS advises that you generally must file Form 1040X to amend a return within three years from the date you filed your original tax return, or within two years of the date you paid the tax, whichever is later.
The four most common reasons to file an Amended Return are to correct an error or omission to your income, to change your filing status, to change your deductions and to claim a credit or correct a credit.
WHO SHOULD PREPARE MY 1040?
WHAT IF I HAVE TO FILE MODELO 100 FROM THE AEAT?
The IRS recommends that the preparation be done by a professional IRS Certified Tax Preparer.
In general, it is recommended that the same preparer prepare the American and Spanish taxes, especially in the case of the IRS 1040 and the AEAT 100.
This ensures that the information is the same. It is also important that the preparer knows the taxation of both countries and has a deep knowledge of the Double Taxation Treaty.
Otherwise, it is very likely that one or both returns may contain errors.
At U.S. Tax Consultants we are IRS Certified Tax Preparers and Acceptance Agents and have over 56 years of experience in US and Spanish tax filing.
WHY CHOOSE US TAX CONSULTANTS TO PREPARE THE 1040?
Experts in U.S. and Spanish taxation for over 56 years. We have been filing both US and Spanish taxes for over 56 years. Whether you have to file only the 1040 or also the AEAT Modelo 100, our experience is a guarantee.
Quality. The reliability and experience of our professionals is a guarantee. Our quality controls prevent mistakes from being made. That said, it is important that the information you provide us is correct and updated.
Tracking system for our clients. U.S. Tax Consultants has designed an e-mail customer information tracking system (TMS) specifically for the 1040.
Credit card payment. You can easily and safely pay by credit card.
WHAT DO I HAVE TO SEND YOU SO YOU CAN PREPARE OUR U.S. TAX RETURN?
Documentation
We always need a copy of your last year Tax Return, a copy of your U.S. Passport and a copy of your SSCard, up to date. We also need all W2 and 1099 from your U.S. payers and/or financial entities in the U.S. and other countries.
If you are fiscal resident of Spain, we will also need a copy of your fiscal data issued after April 10 by the Spanish Tax Agency and your Spanish Tax Return, whenever is filed.
You have a complete list at: List of required documents.
Uploading
It is essential that in any case you upload the documentation to us through the secure encrypted file transfer system of our website in the Client’s Area.
HOW LONG DOES IT TAKE TO PREPARE THE 1040?
We have developed the T.M.S. (Tracking Model System) which allows you to know how long it will take to complete the whole 1040 preparation process defined in 8 phases. In each of the phases you will receive an e-mail confirming the current status and next steps.
From the moment all the documentation is delivered, the estimated time if there are no external setbacks is between 10 and 15 days.
Blog
How to Report IRA and ROTH IRA Accounts in Spain?
In this article on "How to Report IRA and ROTH IRA Accounts in Spain? we will analyze how IRA and ROTH IRA accounts are taxed under IRPF and Wealth Tax, and whether they need to be reported in Form 720. Obligation to Report on Form 720 An American citizen who is a tax...
Securing Your Financial Future: US Banking and Investment Strategies for Expats in Europe
For US expats living in Europe, maintaining access to US banking and investment services is a critical yet often underestimated challenge. Staying connected to the US financial system while living abroad is vital for long-term financial security and success. However,...
SHOULD I SUBMIT FORM D6?
Form D6 is an annual declaration for information purposes of Spanish investments made abroad in companies listed on the stock exchange or on the organized market. They will be subject to communication through Form D6 if you are an individual and/or legal entity...
CONTACT US
info@ustaxconsultants.es +34 915 194 392
Travesía de las Cañas, 2 – 28043 Madrid, Spain
Monday – Friday: 9am–2pm, Saturday & Sunday: Closed
El Peñayu, 15 – 33534 Piloña, Asturias, Spain
Naval Station Rota – Rota Gateway Mall – 11530 Rota, Spain
January to June. Mon. – Friday: 11m–6pm, Saturday & Sunday: Closed
info@ustaxconsultants.pt +351 211 380 833
KNOW2GROW R. Dr. Augusto José da Cunha, Loja 3C 1495-240 Algés. Portugal.
Sitio do Alportel 32A – Sao Bras de Alportel – Algarve 8150-014, Portugal.
