US Tax return preparation series

The trend of outsourcing preparation of income tax returns overseas, particularly to India, began about five years ago and shows no signs of abating. Its popularity has grown as tax practitioners have come to appreciate its advantages

Outsourcing tax preparation services offshore, particularly to India, began about five years ago and has grown at a phenomenal rate. Its popularity has grown as tax practitioners have come to appreciate its advantages. The tax return outsourcing business has dramatically changed and expanded beyond the client to tax preparers and now, to back-office outsource processing. More and more CPA and accounting firms are opting to outsourcing tax return to India to help minimize operating costs and maximize efficiency and gain competitve advantages.

Poupular tax return outsourcing services using leading tax software like Lacerte, Creative Solutions, ProSeries, Drake, ATX, Pro Systems or any other tax software that you work with. Tax Compliance during the busy season becomes easy to manage with our backoffice tax support

Basics about US Taxation

Overview of 1040

Who needs to file a 1040 ?

Following persons may need to file a Federal Income tax return if:

•Citizen or resident alien or elects to be treated as a resident alien of US.
•Resident of Puerto Rico .
•A non-resident alien with income from US sources.

When and where to file a return?

When a person has a gross income of taxable nature and has taxes withheld he needs to file a tax return.
Filing Deadline: The returns needs to be filed by the 15th day of the 4th month after the tax year ends.
For 2008 tax year we need to file the return by 15th April 2009.
An automatic extension for filing the return is available (Oct 15th).Form 4868 needs to be filed.

Filing Status

There are 5 types of Filing Status available:

•Single
•Married Filing Jointly
•Married Filing Separately
•Head of Household
•Qualifying Widow(er) with dependent child

Dependents

A Person Can be claimed as a “Dependent” if he meets following 5 tests:

•Joint Return Test
•Relationship Test
•Citizenship Test
•Gross Income Test
•Support Test

Benefits of Claiming Dependents

Taxpayer is eligible to claim maximum personal exemption of $3,400 each for 2007 as a deduction from the Taxable Income.

Certain credits are available with respect to the Dependents.

Form 1040

Income
(-) Adjustments to Income
= Adjusted Gross Income (AGI)
(-) Deductions
= Taxable Income
Multiplied by Tax rate equals Tax Liability

The form is divided into following parts:

1.Personal Information
2.Income Section
3 Adjusted Gross Income
4.Taxes and Credits
5.Other Taxes
6.Payments
7.Signatures.

Form 1040