what is a taxpayer 
a taxpayer may be an individual or business entity that is obligated to pay taxes to a federal state or local government taxes from both individuals and businesses are a primary source of revenue for governments in the united states individual taxpayers are usually required to file and pay both federal and state tax returns annually businesses must also file annual returns but usually plan for and pay regular estimated tax payments throughout the year understanding taxpayersthe u s tax code is legislated and enforced by federal state and local governments the internal revenue service irs is the primary governing agency overseeing the implemented income tax code for both individuals and businesses 1state and local revenue agencies are responsible for implementing and enforcing localized taxes such as sales taxes and property taxes both individuals and businesses must be aware of their tax obligations since not paying necessary taxes can result in penalties or further legal actions types of taxpayersthere are specific thresholds governing the obligation to pay annual individual income taxes to the irs and state revenue departments the federal threshold is based on an individual s 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 2an 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 therefore it is important that individual taxpayers 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 like the form 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 2individuals 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 through sales taxes on goods and services and property taxes required to be paid separately to local governments sales taxes and property taxes vary based on location 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 people may not need to file tax returns at all some people may benefit from filing a return even if below thresholds because they can be paid a refund with applicable deductions and credits 2individual 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 3in 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 2a 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 person who is widowed does not fall under the single category for tax purposes single filers have lower income thresholds for tax filing obligations 4a head of household is a single or unmarried taxpayer who pays at least 50 of the costs of supporting his or her household and lives with other qualifying family members for whom they provide support for more than half of the year this means that 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 grandparent 5two taxpayers that 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 6married filing jointly is best if only one spouse has a significant income if both spouses work and the income and itemized deductions are large and very unequal it may be more advantageous to file 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 7this category of taxpayer is also referred to as 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 8individual taxpayers may choose single head of household married filing jointly married filing separately or widower as their filing status for their annual income tax return filing individual tax rates and standard deductionsindividual taxpayers who must file an annual federal tax return are subject to the following tax rates and standard deductions for 2020 as detailed by their filing status 9all individual taxpayers are entitled to the following schedule a standard deductions 10form 1040the current 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 individual situations 1112self employed business taxes for individualsself employed or sole proprietor taxpayers may need to file a schedule c with their 1040 the 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 1314taxes for partnerships other small entitiespartnerships 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 which 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 15taxes for corporationscorporations typically make regular estimated tax payments throughout the year these payments are reconciled with the annual tax filing most corporations will file a form 1120 internal revenue service instructions for form 1120 accessed may 17 2021 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 16