Tax Return
What is a Tax Return?
A report in which an American citizen files his total-year income to the IRS, calculating refund/tax owed amounts.
Who should file an American tax return?
According to US law, every American citizen who has taxable income is usually obligated to file a return, even if he doesn't reside in the United Sates.
Who is eligible for the child credit?
Those American citizens that have children under the age of 17 (according to the year being filed- see below about prior-year returns), with a valid social security number, would be eligible. They would also need to earn a minimum amount of joint earned income (the minimum amount varies: $11,300 in 2006 and $11,750 in 2007, $8,500 in 2008, $3,000 in 2009 and 2010)
What is called earned income (in regards to child credit eligibility)?
The IRS refers to earned income as including all taxable income and wages you get from working. It can be by working for someone who pays you or by working in your own business. These can be represented by a W-2, 1099-Misc, Tofes 106, Shumat Mas Hachnasa, etc.
(IRS Link)
What is not considered earned income, yet is still taxable (i.e. Passive Income)?
(i.e. you would still be required to list them on your tax return, and pay any possible taxes)
The IRS defines passive income as income earned from business or trade in which you did not materially participate in, or rental activities, even if you did materially participate in them. (3en_US_publink1000104565">IRS Link) The passive incomes, while taxable, would not help the taxpayer accrue any refundable child credits.
Practical examples would include income from renting out an apartment- whether partially or fully, capital gains (income from stocks, bonds, funds, etc) (1099-B), or interest and dividend income (1099-DIV or 1099-INT), among others. In Israel, payments from Kitzvat Yeladim or Avtachat Hachnasa, as well as Social Security or disability payments, are neither earned income or passive income, and are not taxable by the U.S.
A few more details:
A return can be filed up to four years back (assuming all dependents were already citizens in the tax year in question; please reference our US Citizenship page for more details). The deadline to file a tax return for 2006 is April 15, 2010. For international dwellers, there is an additional 2 month extension (June 15, 2010).
All prior-year returns are filed via Fed-Ex registered mail. It should be expected within 6-8 weeks from the date the return was filed.
All current-year returns are filed electronically. If a refund is due, the direct deposit date is within 2 weeks (minimum 10 days). In order to E-File the return, there must be a U.S. address and the taxpayer's U.S. bank account listed.
The last date to file returns for 2009 electronically form is October 15 2010.
The IRS can be contacted to obtain information such as prior-year income amounts listed, prior-year returns filed, refunds issued, balance due, etc (1-800-829-1040, 8am-8pm EST).
[Tax Refunds Plus can contact the IRS on behalf of the taxpayer if needed, for a fee).
It is important to note that the IRS can pull up a return for revue up to three years from when it was filed. Information concerning your income records would be required. Therefore, we strongly advise that you keep hold of all your income documentation during this period.
For additional details and information, please feel free to contact us.
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