United States — Tax: Income Tax

Why this matters

A relocating person should care about US income tax due to its complexity and potential impact on their tax liability.

Key facts

• Top statutory personal income tax rate (national plus sub-national): 43.6% (2025)
• The top rate applies from about 8.7 times the average wage (2025)

Steps

1. Obtain a Tax Identification Number (TIN) — A TIN is a unique identifier required for tax purposes. US citizens and residents can obtain an Individual Taxpayer Identification Number (ITIN) from the IRS if they do not have a Social Security number.
2. Gather Required Documents — Residents will need to gather various documents, including W-2 forms from employers, 1099 forms for freelance or self-employment income, and receipts for any deductions or credits claimed.
3. File Form 1040 and Pay Any Owing Taxes — Residents must file Form 1040 by the tax filing deadline (usually April 15th) to report their income and pay any taxes owed. Failure to file or pay taxes can result in penalties and interest.
4. Take Advantage of Tax Credits and Deductions — Residents may be eligible for various tax credits and deductions, such as the earned income tax credit, child tax credit, or mortgage interest deduction. These can help reduce tax liability.

Costs

• IRS Form Filing Fees: varies by filing method (e.g., e-file, paper file)
• Tax Preparation Fees: varies by service provider (e.g., H&R Block, TurboTax)
• Penalties for Late Filing or Payment: varies, but typically ranges from 3.25% to 6.25% of taxes owed per month

Timelines

• Tax Filing Deadline: April 15th of each year (with extensions available in certain circumstances)

Required documents

• W-2 form
• 1099 form
• Receipts for deductions or credits claimed
• Social Security number or ITIN

Common mistakes

• Failing to file or pay taxes on time
• Underreporting income or overclaiming deductions

What this figure does not cover

This is the top marginal rate only. The lower brackets, allowances, social security contributions, special regimes for new residents or expatriates, and how tax residency is decided are not covered here. Check the national tax authority for your situation.