US

Tax Changes You Need to Know Before Filing Your U.S. 2020 Tax Return   There are several tax changes or annual inflation adjustments for tax year 2020. This article will give you a short checklist of tax changes you need to know before you file the 2020 tax return.   Stimulus Checks   During 2020, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s $2 trillion relief package, the government sent up to $1,200 in the form of a stimulus check to millions of Americans. But do you know how to report your stimulus checks income when you file the tax return? The good news is your stimulus check will not count as taxable income. Eligible Americans who did not receive the first or second payment can claim a Recovery Rebate Credit based on their 2020 income on the 2020 tax returns.   Standard Deduction   Standard […]

Why I Receive the US Form 1099-INT?   If you received interest more than $10, you would get a Form 1099-INT. A 1099-INT tax form is a record that a person or entity paid you interest during the tax year. You may not have to pay income tax on all the interest it reports, but you still need to report this information on the return.   The Internal Revenue Service requires most payments of interest income to be reported on tax form 1099-INT by the person or entity that makes the payments. This is most commonly a bank, other financial institution, or government agency.   The form 1099-INT will include your Social Security Number or Taxpayer Identification Number and the amount you received. When you file your tax return, you don’t need to attach the copies of the form 1099-INT you receive, but you need to report the information from […]

Prepare for Your U.S. Tax Return   The tax season is coming. Kaizen highly recommend you gather and prepare you tax documents in advance for your 2020 tax return. The sooner you file the tax return, the sooner you will get you refund. This article will give you a checklist of basic documents you should prepare.   Personal Information Social Security numbers and dates of birth for you, your spouse and other dependents on your tax return. If someone does not have a Social Security number, you will need their tax identity numbers instead. Copies of last year’s tax return, if possible.   Income Information Income from employment: you should receive the Form W-2 from your employer. Investment income: Various Form 1099, such as1099-INT or 1099-DIV. Income from state and local income tax refunds and/or unemployment: Forms 1099-G. Alimony income: taxable alimony received (only appliable to divorces finalized before January […]

U.S. Second Round of Economic Impact Payments The IRS and the Treasury Department began issuing a second round of Economic Impact Payments, often referred to as stimulus payments, late December 2020. This article will give you a summary of the second round of economic impact payments.   How Can I Receive the Second Payments?   According to the IRS, there is no action required by eligible individuals to receive this second payment. The payments are automatically sent to the eligible individuals.   Am I Eligible for the Second Payments?   Generally, U.S. citizens and resident aliens who are not eligible to be claimed as a dependent on someone else’s income tax return are eligible for this second payment. Eligible individuals will automatically receive an Economic Impact Payment of up to $600 for individuals or $1,200 for married couples and up to $600 for each qualifying child. Most people who have […]

 Returning an IRS Erroneous Refund   Sometimes taxpayers may receive the erroneous refund by IRS’s mistake. The “erroneous refund” is the refund you are not entitled to at all or for an amount more than you are entitled to. If you receive the erroneous refund, you have the legal obligation to repay the amount to the IRS. And the sooner the better – holding onto the money for too long could result in the need to pay interest or penalties. For example, millions of stimulus checks were sent out to the unqualified taxpayers (nonresident aliens) by mistake, and the taxpayers are required to return the payments immediately to the IRS.   If your refund was a paper Treasury check and has not been cashed, you should write “Void” in the endorsement section on the back of the check and attach a note stating, “Return of erroneous refund check”. Then you […]

Introduction to U.S. Form 1099-NEC   Beginning with the 2020 tax year, the IRS would require business taxpayers to report nonemployee compensation on the new Form 1099-NEC instead of on Form 1099-MISC. Businesses would need to use this form if they made payments totaling $600 or more to a nonemployee, such as an independent contractor.   Form 1099-MISC, Miscellaneous Income, is an information return that businesses use to report payments (e.g., rents and royalties) to nonemployees. Each payer must complete the Form 1099-MISC and send the copy of the Form by January 31 if during the tax year the payer pays $600 or more to a recipient.  And the recipient should report all earnings on the tax return.   Form 1099-NEC is not a replacement for Form 1099-MISC. Form 1099-NEC, Nonemployee Compensation, is a form that solely reports nonemployee compensation. Form 1099-NEC is only replacing the use of Form 1099-MISC […]

U.S. Gross Receipt Tax Introduction   A gross receipt tax (GRT) is a state tax on the gross revenues of a business. Gross receipts tax is similar with sales tax, but the two are inherently different.   Sales tax is paid by the consumer based on the amount purchased. This is not an expense to the business owner because the amount owed to the taxing authority is no more than what the customer has paid. On the other hand, the gross receipts tax is a percentage of revenue received. Although some states do not charge sales tax on services rendered, you still must pay gross receipts taxes on the amount that you collect for those services.   Gross receipts tax impact firms with low profit margins and high production volumes, as the tax does not account for a business’ costs of production, as a corporate income tax would.   Each […]

U.S. Federal Tax Payment Options   If you are not able to pay the tax you owe by your original filing due date, the balance is subject to interest and a monthly late payment penalty. There is also a penalty for failure to file a tax return, so you should file timely even if you cannot pay your balance in full. It is always in your best interest to pay in full as soon as you can to minimize the additional charges. This article will discuss U.S. federal tax payment options for your reference.   You can choose to pay the tax electronically or by mail. Paying electronically is a convenient way to pay your federal taxes online, by phone for Electronic Federal Tax Payment System (EFTPS) or card payments, or from a mobile device. When paying electronically, you can schedule your payment in advance. You will receive instant confirmation […]

California Fictitious Business Name Naming a business is an important branding strategy for a person or entity involved in a for-profit trade or business in California. California fictitious business name, also known as a California DBA (doing business as), is only used for branding purpose and is not a type of business structure.   An individual or a business entity must file a fictitious business name (FBN) statement with the Registrar-Recorder/County Clerk’s office in the county where the business will be located. If the business is not located in California, the business needs to register with the Clerk of Sacramento County.   Under California law, sole proprietors, partnerships, limited liability companies and corporations must file a DBA if they plan to operate under a different name. Filing a FBN statement makes the identity of the person doing business under the fictitious name available to the public.   To file a […]

Are Employee Fringe Benefits Taxable in U.S.   Employers can offer fringe benefits to employees; common fringe benefits include health insurance, retirement plans, and parking passes. Although most employee fringe benefits are nontaxable and may be excluded from an employee’s income, some benefits must be reported on the employee’s Form W-2 and included in your taxable income. This article will discuss some common fringe benefits for your reference.   Retirement Plans   Employer contributions on behalf of their employees’ qualified retirement plans are not taxable to the employees when they are made. However, when the employee receives the distributions from a retirement plan, the amounts you received are taxable income.   Accident and Health Benefits   If an employer pays the cost of an accident or health insurance plan for an employees, including an employee’s spouse and dependents, the employer’s payments are not wages and are not subject to Social […]