In the United States, The Internal Revenue Service (IRS) which is a branch of the US Treasury is authorized to collect the Federal Income Tax. It is compulsory to pay the Federal Income Tax irrespective of your place of stay in the US. Most of the states also have additional income tax. There are some exceptions however. Exceptions are states like Florida, Texas, Nevada, Washington, Wyoming, South Dakota and Alaska where there is no State Income Tax. Two states viz, Tennessee and New Hampshire collect income tax on only interest and dividend income. City or municipal income taxes are also applicable in some cases.

In the US, the tax year is the calendar year i.e. from Jan 1st to 31st Dec. The deadline for filing Federal Tax Return is April 15th of the following year. There may be different dates for filing state income tax returns. When there is an unavoidable case for not filing the return in time, you can plea for an extension in form 4868 to the IRS. If allowed you can file the return by August 15th. The extension does not of course allow you to pay for tax liability later than the stipulated date. Interest on tax due has to be paid in case tax is not paid by the due date.

In case you are employed, your employer is required to deduct Federal Income Tax and State Income Tax if applicable from your earning. It is also statutory for your employer to deduct Social Security plus Medicare contributions which together is called FICA. This is usually 7.65% of your gross income. The same amount is also contributed by your employer to the FICA. All tax deductions by your employer are to be deposited to IRS periodically and Wage and Tax statement in form W2 is to be submitted to you by your employer by Jan 31st. Apart from these deductions there may be non-tax related deductions like health insurance premiums, retirement savings etc. The balance is your take home pay.

If you are self employed, you have to make payments of your estimated tax on a quarterly basis to the Federal and State Governments. Failure to do so will attract penalty and interest in addition to assessed tax. Form 1040- ES is used to pay essential Federal Taxes. When you take up employment in a company, you will be asked by your employer to fill up Form W4 which gives the employer information about the deductions you can make. Every deduction entitles you to deduct your income from purview of income tax.

The deductions claimed in W4 are only an estimate of your tax liability. For further details please visit www.immihelp.com/newcomer/income-tax-usa.html.