Taxpayers must meet certain requirements to pay taxes, which can vary depending on the type of tax. For example, to potentially qualify as a taxpayer of federal income tax in the U.S., you simply have to earn wages, even if you’re not a citizen. It’s possible that you may not owe any federal income tax because you didn’t earn enough. However, you could still be considered a taxpayer if you pay other forms of tax. For example, when you buy gasoline, you generally pay an excise tax. Homeowners often pay property tax based on the value of their home. Taxpayers typically end up owing taxes to the IRS or the IRS owes the taxpayer a refund because the taxpayer paid more taxes than they should. If a taxpayer chooses not to pay the taxes they owe, they’ll likely face penalties and fees. Taxpayers who willfully provide false information to the IRS can be charged with tax fraud and face multiple years in jail and fines.
Examples of a Taxpayer
An individual who files the standard Form 1040 to report their federal income tax liability is a taxpayer. That individual could also lead a corporation that also counts as a taxpayer and files a separate tax return. In other cases, however, a taxpayer might be an individual and business owner who only files one tax return. For example, a single-member LLC founder or a sole proprietor could elect to have their business be considered a “disregarded entity,” meaning only the individual is the taxpayer. The owner would report their business income on their personal income tax return.
What Being a Taxpayer Means for Individuals
Being a taxpayer also often means you’re entitled to a taxpayer bill of rights, such as those from the IRS or from state tax authorities. For example, the IRS declares in its Taxpayer Bill of Rights that taxpayers have the right to pay no more than the correct amount of tax. For example, if more tax is withheld from your paycheck than you actually owe, you’ll receive a tax refund. This type of right to not overpay can also apply to situations such as paying an incorrect amount of sales tax. New York State, for example, notes that you might be eligible for a refund in situations where you paid sales or use tax when you didn’t need to.
