US

U.S. Individual Income Tax Part 4 How to Calculate Your Taxable Income?   Some people may be interested in how to calculate own taxable income (line 11b in Form 1040). This article will give you a brief guideline.   Step 1        Total Income   The IRS requires you to report all your income that you have received during the tax year. This includes your wages, taxable interest, ordinary dividends, taxable IRA distribution, taxable pensions and annuities, taxable social security benefits, capital gain (attach Schedule D) and other income (attach Schedule 1). Your total gross income is determined by adding up all types of income.   Step 2        Adjusted Gross Income (AGI)   Your AGI is the next step in figuring out your taxable income. Once you report all of your income on your Form 1040 and Schedule 1, you will then have the chance to adjust your income on Schedule […]

U.S. Taxation of Foreign Investment in Real Estate Related Income Real estate is a tax-driven industry. Foreign investors, nonresident alien, who have purchased real estate property in the U.S. are subject to several tax and filing requirements. You are a nonresident alien, including foreign individuals or foreign business entities, if not meet the resident alien definition.   According to the resident alien definition, you are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1-December 31). To meet substantial presence test, you must be physically present in the U.S on at least 183 days during the current year, or 183 days during the 3-year period that includes the current year (at least 31 days) and the 2 years immediately before that.   This following content focus on U.S. taxation of real estate held directly by non-resident aliens, especially […]

U.S. Employer Identification Number Guide The Employer Identification Number (EIN), also known as the Federal Employer Identification Number (FEIN) or the Federal Tax Identification Number (FTIN), is a unique nine-digit number (for example, 12-3456789) assigned by the Internal Revenue Service (IRS) to business entities operating in the United States for the purposes of identification. EIN just like a Social Security Number (SSN) for your personal identification number. The EIN number allows you to communicate with the Internal Revenue Service (IRS) in the dealing of all the tax matters of your company. You may also need EIN for bank account opening, business license application or other reasons.   The EIN is issued by the Internal Revenue Service (IRS) upon application. You can apply for EIN via website, fax or mail. Expedited service is not available. To complete the application, you should prepare the Form SS-4 and submit it with your company’s […]

The Relevant Information about U.S. Corporation Dividends   A corporation may subject to double taxation. Specifically, a corporation must file and pay corporate income tax during each taxable year, and the shareholders must pay taxes on any dividends or other distributions during the taxable year when they got them from the corporation. However, the corporation can choose to retain the earnings to finance growth and reasonable needs of the business up to USD 250,000 (USD 150,000 for personal service corporation) to avoid double taxation temporarily. However, if the retain earnings exceed USD250,000 (USD 150,000 for personal service corporation), Accumulated Earnings Tax with tax rate 20% will be added to regular income tax.   A dividend is a corporate distribution to a shareholder out of current or accumulated earnings and profits (E&P). Dividends first come from current earnings and profits, then out of accumulated earnings and profits once the former are […]

Taxation on Unrelated Business Income for Non-profit Organizations   Non-profit organizations generally operate for charitable or other beneficial purposes, most income that they receive is exempt from tax under the Internal Revenue Code. However, when tax-exempt non-profits earn income through an activity that is unrelated to their exempt purposes (such as activity that is commercial in nature, like sales of goods) and the activity is “regularly carried on,” the revenue from the activity may be taxable income under IRS rules for “unrelated business income taxation”.   Generally, an exempt organization that has $1,000 or more of gross income from an unrelated business must file Form 990-T to IRS. Form 990-T requires the organization to disclose unrelated trade or business income, deductions directly connected with the unrelated business trade or income. An organization with more than one unrelated trade or business should attach separate schedules for each additional trade or business […]

Issues about Hiring Employees in the U.S. Company   A U.S. employer may sponsor a prospective or current foreign national employee who is inside or outside the United States and who may qualify under one or more of the employment-based (EB) immigrant visa categories. Generally, aliens with extraordinary ability in the sciences, arts, education, business, or athletics; outstanding professors and researchers; professionals with advanced degree or persons with exceptional ability, can apply an employment-related visa (e.g. H1-B, J-1) which allows the employee to work for a particular employer.   If you plan to sponsor a foreign employee for a work visa, you’ll need to fill out an Application for Permanent Labor Certification according to the U.S. Citizenship and Immigration Services website and prepare all the necessary supporting documents. Usually, you can get help from an immigration lawyer.   An U.S. employer should pay both federal payroll tax and state payroll […]

U.S. Individual Taxpayer Identification Number Guide In the United States, to facilitate tax collection, the Internal Revenue Service (IRS) requires that it is necessary to submit corresponding tax identification numbers when filing federal tax returns. If you plan to open a corporate bank account or a personal bank account in the United States, the tax identification number of the company’s responsible person or individual is also one of the required documents. Individual identification number includes Social Security Number (SSN) and Individual Taxpayer Identification Number (ITIN).   As the ITIN application is more complicated than the process of SSN regarding the required materials and procedures. This article will focus on explaining the use of the ITIN, individuals who are eligible for ITIN, application methods, application timeframe, the change of legal name on ITIN, and the expiration and renewal of the ITIN.   Compare of the ITIN and SSN   Social Security […]

Guide to Starting a Corporation in New York Unless otherwise mentioned, the quotation of U.S. Corporation specifically refers that the Corporation registration is in accordance with New York State Business Corporation Law.   Introduction   In New York, corporations and limited liability companies (LLCs) are the most prevalent business forms. Investors must consider each type of business form carefully because one business form may be an advantage to certain investors but not to others.   Due to the location advantage, New York is one of the most popular options for both domestic and foreign investors. Investors can choose to establish a corporation or an LLC subsidiary in New York. A corporation offers limited liability to its shareholder and has centralized governance structures. An LLC has the similar characteristics. While the corporation is the first choice for foreign investors, the LLC is an acceptable alternative. Whatever type of business is chosen, […]

Guide to Starting a Corporation in Delaware   Unless otherwise mentioned, the corporation mentioned in this article specifically refers to the C Corporation registered in accordance with Section 102 of General Corporation Law of the State of Delaware.   Introduction   In Delaware, corporations and limited liability companies (LLCs) are the most prevalent business forms. Investors must consider each type of business form carefully because one business form may be an advantage to certain investors but not to others.   Delaware is one of the most popular options for both domestic and foreign investors. Investors can choose to establish a corporation or an LLC subsidiary in Delaware. A corporation offers limited liability to its shareholder and has centralized governance structures. An LLC has the similar characteristics. While the corporation is the first choice for foreign investors, the LLC is an acceptable alternative. Whatever type of business is chosen, investors should […]

Guide to Starting an Incorporation in Canada British Columbia   Unless otherwise mentioned, the B.C. incorporation mentioned in this article specifically refers to a company incorporated in British Columbia, Canada, in accordance with Business Corporations Act.    Introduction   Many foreign investors would like to expand their business in Canada. However, starting a business for a foreigner is little complicated and restricted. Federal and many provinces/territories in Canada impose a resident Canadian requirement which provides that a certain number of directors of a company must be “Resident Canadians”. Options for foreigner to form a company are limited if they are not Canadian resident or cannot cooperate with Canadian citizens or landed immigrants.   Currently, British Columbia has the most flexible rules regarding non-resident business. According to the Business Corporations Act of Business Columbia, no Canadian resident is required to be appointed as a director. Therefore, non-Canadian residents can incorporate Canadian […]