Internal Revenue Service (IRS) collects Federal Income Tax in US. Payment of Federal Tax is compulsory for all irrespective of your place of residence. In addition to this, in certain states you have to pay state income tax. In some places you are also required to pay city or municipal income tax. For payment of income tax, Income Tax Returns in prescribed forms are required to be submitted to IRS for each calendar year i.e. from Jan 1 to December 31. The forms are multifarious – the basic forms for U.S.A individual, income tax return and being forms 1040, 1040A and 1040EZ- for single and joint filers with two dependents.

Basic tax forms are available free at banks, libraries and post offices, etc. You can also visit the IRS website and download the form. The forms provide worksheets and instructions in detail. The returns can be filed by you or you can seek professional help to file them. A pin number is a must before e-filing your taxes. This pin number is available from IRS website for which you have to key in your date of birth, social security number and information from last year’s return. When you file your return, you should get a hard copy and retain it for at least seven years. If the return is simple, it may be filed by you. If however it appears too complicated, you may seek the help of professionals like H&R block or Jackson Hewitt who undertake such jobs for a small fee.

Take professional help preferably from a CPA in case your tax return is complicated. The IRS customer service at (800) 829-1040 is also at your disposal. When you own a business, get your income tax return filed by a CPA without fail. Make sure that you preserve hard copies of all documents. The tax return should preferably be sent by a certified mail with a return receipt. If you have to pay tax, you may need to submit your credit card particulars, pay online or send a check payable to” Unites States Treasury”. In case you are eligible for a refund, you may provide your bank particulars to IRS to enable them to deposit the refund directly in your account.

There are basic strategies to reduce your income tax liability.

• . . . Review the tax credits and deductions available for 2009. Check if you are eligible for $8000 tax credit for first time home buyers.

• . . . If you have two jobs or are a social security recipient, check your eligibility for Making Work Pay Tax Credit.

Other methods are mentioned below:

• . . . Making a mortgage payment in excess.

• . . . Pay property taxes.