US

Tips When You Hire Employees in U.S.   As a business owner, you must obtain the following information when you hire employees:   Eligibility to Work in the United States   You must use Form I-9 to verify the identity and employment authorization of individuals hired for employment in the United States. Both employees and employers (or authorized representatives of the employer) must complete the form.   Employee’s Social Security Number   You are required to get each employee’s name and Social Security Number (SSN) and to enter them on Form W-2. You should ask your employee to show you his or her social security card and record the information.   Please note that an individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN.   Employee’s Withholding   You should have a Form W-4, Employee’s Withholding Certificate, on file for each […]

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 […]

U.S. Foreign Investment in Real Property Tax Act (FIRPTA) Introduction   The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests.   A disposition means “disposition” for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers’ agents, and settlement officers are required to withhold 15% (10% for dispositions before February 17, 2016) of the amount realized on the disposition (special rules for foreign corporations).   In most cases, the transferee/buyer is the withholding agent. If you are the transferee/buyer, you must find out if the transferor is […]

U.S. Individual Capital Loss Deduction   When a person sells a capital asset, the sale normally results in a capital gain or loss. Is capital loss deductible in taxpayer’s income tax return? The following will give you a brief introduction to capital loss deductions rule.   Firstly, we should figure out some basic concepts. A capital asset includes inherited property or property someone owns for personal use (e.g. cars and home) or as an investment (e.g. stocks and bonds). A capital gain or loss is the difference between the basis and the amount the seller gets when they sell an asset. The basis is usually what the seller paid for the asset. But please note that taxpayers can only deduct capital losses on the sale of investment property but cannot deduct losses on the sale of property they hold for their personal use.   Capital gains and losses are classified […]

U.S. Individual Income Tax Part 7 When, How, and Where to File   After the previous introductions, you must have a better understanding of U.S. individual income tax. This article will answer the next key question–when, how, and where to file the tax return.   When to File   If you are a calendar year filer and your tax year ends on December 31, the due date for filing your federal individual income tax return is generally April 15 of each year. If you use a fiscal year (tax year ending on the last day of any month other than December), your return is due on or before the 15th day of the fourth month after the close of your fiscal year. If your due date falls on a Saturday, Sunday, or legal holiday, the due date is moved to the next business day. For the 2019 tax return, the […]

U.S. Individual Income Tax Part 6 Tax Liability or Refund   After subtracting your adjustments and deductions from your gross income, you have your taxable income. Now you can use the IRS’s tax table to calculate your preliminary tax liability for the year.   The individual income tax rate (2019) structure is a progressive tax rate structure.   2019 Tax Rate Single Head of Household Married Filing Jointly Married Filing Separately 10% $0–$9,700 $0–$13,850 $0–$19,400 $0–$9,700 12% $9,701–$39,475 $13,851–$52,850 $19,401–$78,950 $9,701–$39,475 22% $39,476–$84,200 $52,851–$84,200 $78,951–$168,400 $39,476–$84,200 24% $84,201–$160,725 $84,201–$160,700 $168,401–$321,450 $84,201–$160,725 32% $160,726–$204,100 $160,701–$204,100 $321,451–$408,200 $160,726–$204,100 35% $204,101–$510,300 $204,101–$510,300 $408,201–$612,350 $204,101–$306,175 37% Over $510,300 Over $510,300 Over $612,350 Over $306,175   For example, if: a taxpayer with a single filing status has $92,000 of taxable income. The income tax liability in 2019 is calculated as the below: ($9,700 − $0) × 10% = $970 ($39,475 − $9,700) × 12% = […]