What is an Individual Income Tax Return?

M.J. Casey

An individual income tax return is a required report submitted to the taxing governmental authority, such as the Internal Revenue Service (IRS) in the United States. The report is required for all individuals, and married couples who meet specified income levels. The purpose of the report is to determine the amount of taxes owed by the individual. The taxation level is determined by the adjusted gross income. In the US, many states reference the federal individual income tax return to determine taxes due to the state.

A W-9 form, a type of US tax form.
A W-9 form, a type of US tax form.

In the US, the specified income level for filing requirements is established by the IRS based on laws adopted by the United States Congress. The threshold income level is not a simple number or other parameter but is a sometimes-complicated calculation itself. Most adults residing in the United States and holding full time jobs or receiving retirement, pension, investment or any regular payments, not including disability or social security payments, are required to file an individual income tax return, either singly or jointly. Other adults, such as dependent children or parents, may or may not be required to file, based on their statuses as dependents on a filing adult’s return and on personal income.

Most regular employees in the US need a W-2 to complete their tax returns.
Most regular employees in the US need a W-2 to complete their tax returns.

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The taxes to be paid based on the individual income tax return are a reflection of the nation’s commitments, current economic conditions, and legislation effecting certain groups. It is an attempt to balance the tax burden in such a way as to be equitable, but the IRS offers no clear definitions of equitable taxation. Income is seen as wages earned, interest on money loaned, and returns on investments in businesses, stocks and other investment vehicles.

Standard deductions are amounts that the IRS calculates to be proportional to the expenses an average taxpayer incurs in a year. The standard deduction does not address any individual variation in living expense. A standard deduction is given for each person filing and each dependent. An extra standard deduction may be allowed for special circumstances, such as a blind taxpayer, subject to current law. Should the product of the standard deduction and the number of deductions claimed, exceed the income, the adjusted gross income (AGI) is zero, and no taxes are due.

Should the AGI not exceed the income, the taxpayer may choose to itemize deductions rather than use the standard deduction. In this case, certain individual expenses are totaled. Items that may be counted are based on law but typically include interest on the primary residence, health care and insurance premiums, and education and child care expenses. The income less the itemized deductions determine the AGI. The AGI, determined by either standard deductions or itemized deductions, is compared to tax tables to determine the tax due.

An individual income tax return is not a complicated document to complete. Still, many taxpayers pay tax preparation professionals to prepare their taxes. Money management software vendors and some large tax return preparation companies publish do-it-yourself software that allows for easy individual income tax return preparation, even in complex scenarios. Certain numbers are often taken from a federal individual income tax return and transferred to the state income tax form, and state taxes are applied as specified by the legislatures of each state.

The individual tax return is required to be filed by one person or married couples meeting specific income requirements.
The individual tax return is required to be filed by one person or married couples meeting specific income requirements.

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