Federal Tax filings
Individual - Form 1040
Individuals who lived or had income in the United States during a calendar year are required to file Form 1040 if gross income exceeds the threshold under the filing status claimed. Additional considerations apply to children with earned income and circumstances such as advance payments of health coverage tax credits, premium tax credits, self-employment wages, special taxes, health savings distributions, among others.
Gross income includes all income you receive in the form of money, goods, property, and services that is not exempt from tax. If you are a self-employed service business, your gross income from that business is the gross receipts. Self-employed manufacturing, merchandising, or mining businesses will instead use the gross profit method. Gross income includes any income from investments and incidental sources.
An individual must file a Form 1040 return to claim a refund for tax credits such as the Earned Income credit, Refundable child tax credit, Additional child tax credit, American Opportunity credit, Credit for Federal tax on fuels, Premium tax credit, Health coverage tax credit, Recovery rebate credit, Credits for sick and family leave, and Child and dependent care credit.
Partial-year residents are required to file Form 1040 if the criteria is met. However, a bona fide resident of Puerto Rico excludes Puerto Rico source income under Section 933, except income for services rendered as an employee of the United States or any U.S. agency. The standard deduction is adjusted proportionately to income excluding Puerto Rico source income relative to total income.
Form 1040 is due on April 15 each year. Late filing penalties generally do not exceed 25% of the balance due. Interests are due on amounts owed, including interests on penalties.
Individual - Form 706
An individual may use Form 706 to elect to transfer of portability (the unused portion of the allowable exemption), or when the fair value of property in the United States held by the decedent exceeds the allowable exemption amount. For 2022, the death of a Puerto Rico resident who held US property will receive a $60,000 Federal Estate tax exemption upon transfer. US residents will receive a $12,060,000 Federal Estate tax exemption.
The deadline to file Form 706 is within nine months of the decedent’s death. Apply for an automatic 6-month extension with Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, or an additional extension in certain circumstances.
The extended deadline to file Form 706 two years after the decedent’s death date is only available for transfers of portability.
Entities - Form 1041
For property in a trust, so long as the trust remains in revocable status, it is a grantor trust, and is disregarded for federal income tax purposes. Accordingly, Form 1041, US Income Tax Return for Estates and Trusts is not required unless elected to otherwise for property held in a revocable trust.
When the status of the trust becomes irrevocable, Form 1041 must be filed by April 15.
The fiduciary of a domestic estate must file Form 1041 if the domestic estate has gross income above $600, has a nonresident alien beneficiary, or the held a qualified investment in a QOF, the latter of which should include Form 8997 with Form 1041.
A fiduciary of a foreign estate must file Form 1041-NR.
Form 1041 must be filed by April 15. File Form 7004 for an automatic 5-1/2 month extension of time to file.
Entities - Form 1065
A US partnership must file Form 1065 when it receives income or incurs expenses that are subject to federal income tax.
To be certified as a qualified opportunity fund, the partnership must file Form 1065 and attach Form 8996, Qualified Opportunity Fund (“QOF”), even if the partnership did not report income and expenses.
Limited Liability Companies that are classified as partnerships for federal income tax purposes share the same filing requirements as US partnerships.
A religious or apostolic organization exempt from income tax under section 501(d) must file Form 1065 to report its taxable income, which must be allocated to its members as a dividend, whether distributed or not. The religious or apostolic organization must also make an exact copy of Form 1065 and all accompanying schedules and attached statements available for public inspection.
File Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns to request an extension of time to file by the regular due date of the return.
Generally, a US partnership must file Form 1065 by the 15th day of the 3rd month, or March 15 if the partnership reports on a calendar year.
Entities - Form 1120-F
A Puerto Rico company doing business in the US must file Form 1120-F in lieu of Form 1065 or Form 1120.
Entities - Form 1120
US corporations must file Form 1120, US Corporation income tax return whether or not they have taxable income, unless exempt under Section 501. US entities that elect to be classified as an association taxable as a corporation must file Form 1120. Accordingly, all US entities must file Form 1120, unless they are exempt, or elect to file a special return.
If an entity elects a change in classification, the entity must also file Form 8832, Entity Classification Election, and attach a copy of Form 8832 to Form 1120 (or the applicable return) for the year of the election.
If an entity with more than one owner was formed as an LLC under state law, it is generally treated by default as a partnership for federal income tax purposes and files Form 1065, U.S. Return of Partnership Income. Generally, a single-member LLC is disregarded as an entity separate from its owner and reports its income and deductions on its owner’s federal income tax return. In the US, the LLC can file a Form 1120 only if it has filed Form 8832 to elect to be taxed as a corporation.
File Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns to request an extension of time to file by the regular due date of the return.
A corporation must file its income tax return by the 15th day of the 4th month after the end of its tax year. A corporation that has dissolved must file by the 15th day of the 4th month after the date it dissolved. However, a corporation with a fiscal tax year ending June 30 must file by the 15th day of the 3rd month after the end of its tax year. A corporation with a short tax year ending anytime in June is treated as if the short year ended on June 30 and must file by the 15th day of the 3rd month after the end of its tax year.
Entities - Form 1120S
An entity must file Form 1120-S if it received an accepted election by the IRS after filing Form 2553 that remains in effect.
Once the election is made, it stays in effect until it is terminated. An election terminates automatically if the corporation is no longer a small business corporation as defined in section 1361(b). A small business corporation cannot have either of the following:
- more than 100 shareholders
- a corporate shareholder (other than an estate, eligible trusts, or a section 501 organization)
- a nonresident alien as a shareholder
- more than 1 class of stock.
This kind of termination of an election is effective as of the day the corporation no longer meets the definition of a small business corporation. The entity must attach a statement notifying the IRS of the date of termination to Form 1120-S for the final year of the S corporation.
An S election may also terminate if for each of 3 consecutive tax years, the corporation has accumulated earnings and profits, and derives more than 25% of its gross receipts from passive investment income. The election terminates on the first day of the 1st tax year beginning after the 3rd consecutive tax year. The corporation must pay a tax for each year it has excess net passive income.
An S election may also be revoked. Under certain circumstances, a revocation may be rescinded before it takes effect under Regulation section 1.1362(a)(4).
An S corporation must file Form 1120-S by the 15th day of the 3rd month after the end of its tax year. For calendar year corporations, the due date is March 15, 2022. A corporation that has dissolved must file by the 15th day of the 3rd month after the date it dissolved. If the S corporation election was terminated during the tax year and the corporation reverts to a C corporation, the corporation must file Form 1120-S for the S corporation’s short year by the due date of the C corporation’s short year return.
Nonprofit Entities - Form 990
United States
Form 990 is an annual information return required to be filed with the IRS by most organizations exempt from income tax under section 501(a) (including an organization that hasn’t applied for recognition of exemption), and certain political organizations and nonexempt charitable trusts.
Form 990 must be filed by an exempt organization if it has either (1) gross receipts greater than or equal to $200,000, or (2) total assets greater than or equal to $500,000, unless exempt from filing Form 990. Organizations exempt from filing Form 990 include organizations described in section 501(c)(3) (except private foundations) and other organizations described in 501(c) subsections
If an organization has gross receipts less than $200,000 and total assets at the end of the tax year less than $500,000, it can choose to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, instead of Form 990.
If an organization has annual gross receipts of $50,000 or less, it must submit Form 990-N if it does not file Form 990 or Form 990-EZ, with certain exceptions.
Exempt Social Clubs and Small Insurance Companies or Associations apply the same gross receipts test as other organizations to determine whether they must file Form 990 but use a different definition of gross receipts to determine whether they qualify as tax exempt for the tax year.
Puerto Rico
Foreign organizations and U.S. possession organizations as well as domestic organizations must file Form 990 or 990-EZ, except for certain religious, governmental, or political organizations, and certain special circumstances.