Viewpoints from Kaizen

U.S. Individual Foreign Tax Credit Introduction If you paid or accrued foreign taxes to a foreign country or U.S. possession and are subject to U.S. tax on the same income, you may be able to take either a credit or an itemized deduction for those taxes.   You can take the foreign tax as a deduction or claim as a credit to reduce your U.S. taxable income/tax liability. In most cases, it is to your advantage to take foreign income taxes as a tax credit.   You can claim a credit only if your foreign taxes are qualified:   The tax must be imposed on you: you can claim a credit only for foreign taxes that are imposed on you by a foreign country or U.S. possession.   You must have paid or accrued the tax: You could claim a credit only if you paid or accrued the foreign tax […]

Tax Tips for U.S. New Business Owner   Congratulations! You start a new business in U.S. However, understanding the tax responsibilities that come with starting a business venture is also significant for you as the business owner. This article will give you some tax tips of starting a new business based on IRS resources.   Choose a business structure   The form of business determines which income tax return a business taxpayer needs to file. The most common business structures are:   (1)     Sole proprietorship: An unincorporated business owned by an individual. There is no distinction between the taxpayer and their business. (2)     Partnership: An unincorporated business with ownership shared between two or more people. (3)     Corporation: Also known as a C corporation. It is a separate entity owned by shareholders. (4)     S Corporation: A corporation that elects to pass corporate income, losses, deductions, and credits through to the shareholders. […]

How to Notify IRS of Your Address Change   If your address has changed (e.g. moving), you need to notify the IRS to ensure you receive any tax refunds or IRS correspondence. There are several ways to notify the IRS of an address change:   Tax Return   If you change your address before filing your return, enter your new address on your return when you file. When your return is processed, IRS will update our records. Be sure to also notify your return preparer.   Oral Notification   The IRS can be notified by phone or in person. They will need to verify your identity and address. Please have information IRS on file, for example: your full name; your address; your date of birth; your social security number (or individual taxpayer identification number).   By Form   To change your address with the IRS, you may complete a Form […]

U.S. 199A Qualified Business Income Deduction Introduction Many individuals, including owners of businesses operated through sole proprietorships, partnerships, S corporations, trusts and estates may be eligible for a qualified business income deduction, also called the section 199A deduction, for years beginning after December 31.   The deduction allows them to deduct up to 20% of their qualified business income (QBI), plus 20% of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. Income earned by a C corporation or by providing services as an employee is not eligible for the deduction.   The deduction has two components.   QBI Component. This component of the deduction equals 20% of QBI from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust or estate. Depending on the taxpayer’s taxable income, the QBI Component is subject to limitations including: (1)     The type of […]

U.S. Corporation Foreign Tax Credit Introduction Domestic corporations that have paid or accrued qualified foreign income taxes to a foreign country or U.S. possession may generally credit those against their U.S. income tax liability on foreign source income.   The goal of the foreign tax credit is to keep a U.S. taxpayer’s worldwide effective tax rate from exceeding the U.S. statutory tax rate, which is accomplished through the foreign tax credit limitation.   You can claim a credit only if your foreign taxes are qualified:   The tax must be imposed on you: you can claim a credit only for foreign taxes that are imposed on you by a foreign country or U.S. possession.   You must have paid or accrued the tax: You could claim a credit only if you paid or accrued the foreign tax to a foreign country or U.S. possession.   Your qualified foreign tax is […]