Getting the Basics Right

NEW YORK - Forbes.com has teamed up with the authors of Ernst & Young Tax Guide 2006 to develop a series of tips to help you avoid paying more tax than necessary. The circumstances of your situation will determine if you qualify, so review the tax code and check with your tax adviser.

Here are ten things you need to know about filing this year's tax forms.

Who Must File?

You must file a federal income tax return if you are a citizen or resident of the U.S. or a resident of Puerto Rico. If you are single and aged under 65, you must file if your gross income was at least $8,200; if 65 or older, the limit is raised to $9,450.

Filing Status

Your filing status depends on whether you're single or married, and on your family situation. Your filing status is determined on Dec. 31, the last day of the tax year.

Expatriates

If you're a U.S. citizen or resident living outside the country, you must file a tax return if you meet the filing requirements. For information, get Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. It's available at most U.S. embassies and consulates.

Residency Status

If you are a resident alien for the entire year, you must file a tax return and follow the same rules that apply to U.S. citizens. If you are a nonresident alien, check Publication 519 to see if U.S. income tax laws apply to you. If you are a resident alien for part of the tax year and a nonresident alien for the rest of the year, you are a dual-status taxpayer. Different rules apply for each part of the year. See Publication 519.

Children Under Age 14

If a child's only income is interest and dividends, a parent can include the child's income on the parent's return. If this is done, the child doesn't have to file a return. This includes capital-gain distributions and Alaska Permanent Fund dividends.

The Self-Employed

You must file a tax return if your net earnings from self-employment were $400 or more. It's to your advantage to report self-employed income because if you don't already qualify, you will become eligible for Social Security benefits.

Form 1040EZ

This is the simplest form to use. You may use it if your filing status is single, married or filing jointly; you and your spouse were under age 65 at the end of 2005; you don't claim dependents; your taxable income is less than $100,000; your income is only from wages, salaries, tips, unemployment compensation, Alaska Permanent Fund dividends, taxable scholarships or fellowship grants, and taxable interest of $1,500 or less.

Filing Deadline

This year's deadline for filing 2005 tax returns is April 17 because April 15 falls on a Saturday. File Form 4868 for an automatic extension to Oct. 16. Warning: If you do not pay the tax due by the regular due date, you'll owe interest and may be hit with a penalty.

Social Security Number

You must enter your Social Security number in the space provided on your return. Double check to be sure you have entered the number correctly. If you're married, enter the numbers for both you and your spouse whether you file jointly or separately.

Paying

If you have an amount due on your tax return, you can pay by check, money order or credit card. If you filed electronically, you also may be able to make your payment electronically.

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