Individual Tax

Individual Tax

Due Date

The due date for filing individual income tax return is generally April 15 of each year. If you are not ready to file your individual income tax return, you can file extension before April 15. The due date for filing after the extension is October 15.

Required Documents

Valid ID (Driver’s License/Passport), Phone Number, Social Security Number, Home Address, Date of Birth for family members, and bank account information, etc.

Proofs of Income

Wages (W-2)
Interest (1099-INT)
Dividends (1099-DIV)
Capital Gain & Loss (1099-B)
Social Security (1099-SSA)
Distributions from an HSA, Archer MSA,
or Medicare Advantage MSA (1099-SA)
Retirement (1099-R)
Government Payment (1099-G)
Gambling Income (W-2G)
Nonemployee Compensation (1099-NEC)
Property Rental Income
S Corp & Partnership Income (K-1)
Other Income

Estate Tax and Gift Tax

Gift Tax

According to the IRS, the annual gift exclusion for 2020 is $15,000. If you gave gifts to someone in 2020 totaling more than $15,000 (other than to your spouse), you probably must file Form 709. Starting in 2020, the lifetime gift tax exemption is $11.58 million. This means that you can give up to $11.58 million in gifts over the course of your lifetime without ever having to pay gift tax on it. You can pay the gift tax every year for the excess of the gift amount, or you can pay it after the accumulation exceeds exemption, and the highest tax rate is 40%.

Estate Tax

The estate tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death. The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all these items is your “Gross Estate”. The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests, and other assets. According to the IRS, the federal estate tax is only applied to estates with values exceeding $11.58 million in 2020. When the estate tax is imposed, the global assets of US citizens and permanent residents will be calculated. No matter where you are, as long as you define your status as a citizen or permanent resident, all property in the world is taxable. If you are a non-resident, only property in the United States is taxable. US citizens enjoy various estate allowances and annual gift exemptions.

Generation Skipping Transfer Tax

The generation skipping transfer tax is an additional tax on a transfer of property that skips a generation. The IRS believes that if everyone is passed on from generation to generation, there will be a generation is not taxed by IRS. Therefore, IRS will collect generation skipping transfer tax, which has the highest tax rate of 40%. Suppose Mr. & Mrs. Li have $2.5 million to pass on to their grandchildren in addition to lifetime exemption; without having any estate planning, they need to pay for 1million (40%) of estate tax first, and additional $0.6 million (40%) of generation skipping transfer taxes for the remaining 1.5 million. This means their grandchildren will only get 36% of total, remaining 64% will go to the IRS. IRS is the biggest winner.