All You Need To Know About Filing Free Tax Return

International Tax Specialists / By /

The Basics of Filing a Free Tax Return and Form 5472

Tax return filing can often seem like a daunting task because of the intricacies involved in it. However, the IRS offers facilities that make the procedure easier to understand and execute. One such provision involves filing a free tax return. This article aims to provide detailed anti-insights into the process, including the use of form 5472.

Filing a free tax return is a provision offered by the IRS to those taxpayers who have an Adjusted Gross Income (AGI) below a certain figure. This provision enables them to file their federal tax returns free of charge through the IRS’s Free File program. The limit for the AGI varies each tax year and is based on several factors.

Free File consists of two main components: brand-name software or Free File Fillable Forms. To qualify for the Free File brand-name software, your AGI must be below a specified limit, and these programs often provide state tax returns either for free or an additional charge. The Free File Fillable Forms aren’t dependant on AGI and are best suited for those more comfortable preparing their taxes.

Now, comes the role of form 5472. This form pertains to Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. U.S corporations that have a 25% foreign ownership must file form 5472, regardless of whether they have had any transactions with the related foreign party or not. Failing to accurately report all the required information could result in penalties.

But how does one prepare the form 5472? There are several parts you need to pay attention to:

  • Form 5472 first requires the basic details about the reporting corporation like the total assets, name of the foreign shareholder, the foreign shareholder’s address, and the shareholder’s identification number.
  • Next, you will have to provide details about the related party transactions. This involves reporting the monetary amount attributed to the specific type of transaction that happened during the tax year.
  • Make sure to also include information about any non-monetary transactions that occurred between the parties.

      • Preparing a form 5472 can seem to be a complex process, but it is crucial that it should be done meticulously to avoid the risk of penalties. If the task of preparing and filing this form seems too overwhelming, you might want to consider hiring a tax professional to handle it for you. There are also several software applications available that can guide you through the process.

      In conclusion, while tax return filing may seem complex, the IRS has taken steps to simplify the process. The provision of a free tax return can save taxpayers money and effort. However, it is crucial to understand the various forms and documents involved, such as form 5472, to ensure accuracy in filing.