INDIVIDUAL TAXES
US RESIDENT TAX
If you are a U.S. citizen or legal resident, the requirements for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. If you are not a legal resident, but you have income from the United States, you are still required to file a US income tax return. Below are the different filing statuses.1. Single Status
Single taxpayers who are unmarried and who do not qualify to use the head of household or qualifying window(er) filing status must use the single filing status.
2. Married Filing Jointly
If you are married, then you and your spouse can file a joint tax return. You are considered married if you are legally married on the last day of the year. In order to file jointly, both you and your spouse must agree to file a joint tax return, and both must sign the return.
3. Married Filing Separately
Married taxpayers can choose between filing a joint tax return or separate tax returns. The Married Filing Separately filing status provides fewer tax benefits than filing joint returns, but taxpayers will need to weigh the pros and cons and decide which is the best filing status.
4.Head of Household
You can claim the Head of Household (HOH) filing status on your tax return if you are unmarried, have cared for a dependent for over half the year, and paid more than half the cost of maintaining a home.
5.Qualifying Widow(er) Filing Status
If you are married and your spouse died during the year, you can use married filing jointly as your filing status for that year’s tax return. The year of death is the last year for which you can file jointly with your deceased spouse. You may be eligible to use qualifying widow(er) with dependent child as your filing status for two years following the year of death of your spouse. For example, if your spouse died in 2010, and you have not remarried, you may be able to use this filing status for 2011 and 2012. This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions).
US NON-RESIDENT TAX
If you are a student, teacher, or trainee who was temporarily present in the United States on a "F", "J", "H" visa, and you are engaged in a trade or business in the United States, you must file a non-resident return. You also must file a non-resident return if you have income such as wages, tips, scholarship and fellowship grants, dividends, etc.1. F-1 and J-1 Status Tax Return
International students or foreign students in F-1, J-1 visas are considered Non- Residents for tax purposes and they are subject to tax treaties between their respective countries and the United States. Non-residents and international students are not subject to Social Security and Medicare taxes and pay only federal and state taxes.
2. H-1B Status Tax Return
The taxation of income for H-1B employees depends on whether they are categorized as either non-resident aliens or resident aliens for tax purposes. A non-resident alien for tax purposes is only taxed on income from the United States, while a resident alien for tax purposes is taxed on income from both inside and outside the United States. Like US citizens, they have to pay federal and state taxes, H-1B employees also have to pay Social Security and Medicare taxes as part of their payroll.
FOREIGN EARNED INCOME TAX
If you are a United States citizen or resident alien, you have to report all income to the IRS each year, including income earned in a foreign country. However, you may qualify to exclude from income up to an amount of your foreign earnings that is now adjusted for inflation ($91,400 for 2009, $91,500 for 2010, $92,900 for 2011). In addition, you can deduct certain foreign housing expenses and claim paid foreign tax credit.GIFT TAX
The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.When a taxable gift in the form of cash, stocks, real estate, or other tangible or intangible property is made, the tax is usually imposed on the donor (the giver) unless there is retention of an interest which delays completion of the gift. A transfer is completely gratuitous where the donor receives nothing of value in exchange for the gifted property. A transfer is gratuitous in part where the donor receives some value but the value of the property received by the donor is substantially less than the value of the property given by the donor.
ESTATE TAX
The estate tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death.RETIREMENT INCOME
Retirement income includes social security, retirement accounts, pensions, savings accounts, stocks or stock mutual funds, and annuities. Social security benefits become taxable after exceeding a certain amount.BUSINESS TAXES
As per United States regulations, after establishment of a corporation, it doesn't matter the corporation has been active or inactive during the fiscal year, it is required to file annual tax return for the last year. If the corporation was inactive, then it is required to pay a minimum maintenance fee, and you are required to bring us two of your checks. However if your company was active last year, to file your corporation tax return, you might need you to bring in all 12-month bank statements and receipts of company's daily operational expenses and related fees to our office, in addition, you will have to prepare at least three company checks (prepare for the payment to the IRS). This is known as the U.S. Corporation income tax. In addition to the Corporation income tax, there are also 2 more taxes. They are Employer's Quarterly Federal Tax (Payroll) and New York State and Local Quarterly Sales and Use Tax Return (Sales Tax). We are required to file Payroll Tax every quarter, four times a year. Corporation owner will have to provide us three company checks, one payable to U.S. Treasury, one payable to NYS Employment Taxes and the last one is for our service charge. Sales Tax filing are different for every states, some states require filing every single month, however, in New York States, we are required to file every three months, business owners are only required to provide us two company checks. Corporation Filing Schedule
PAYROLL TAXES
As an employer, you are required to withhold federal and state income taxes, Social Security and Medicare taxes from your employees' pay-checks. You are also required to pay partial Social Security tax and Medicare tax for your employees. In addition, you are subject to pay federal and state unemployment taxes and purchase workers' compensation and disability insurance to be compliant with the Department of Labor.SALES TAX
Many states impose sales and use tax on retail sales of certain goods and services. As a retail business owner, you are required to register your business and collect the tax from customers and submit it to the government. Some local governments may have imposed sales and use tax too. Please double check with your local government before you start to collect sales and use tax.INCOME TAX
As a business owner, you are required to file an annual income tax return for your business. You report your profit or loss and pay the necessary tax before due date. You may choose to file an income tax either on a fiscal year or calendar year based on the type of entity that you have chosen. Usually, it is due by the 15th day of the 3rd month after the end of the tax year. However, some entities have different due dates.NOT-FOR-PROFIT ORGANIZATION TAX
A not-for- profit organization usually is tax exempted. However, you still need to file a tax return and pay tax for any income that is not related to its exempt purpose. A payroll tax is required if you have any employees.ESTABLISH / INCORPORATE
YOUR BUSINESS
TYPES OF BUSINESS ENTITIES
SOLE PROPRIETORSHIP
Sole proprietorship is an individual company. This type of entity is an unincorporated business and does not separate from the owner. The individual has to report the
business profit or loss on his/her personal tax return, therefore, the individual has unlimited responsibilities for the
business's debts and liabilities.
PARTNERSHIP
Must have two or more individuals, parties, or groups. They can contribute money,
property or labor, and expect to share profit, loss, and management right of the
business. A partnership is also an unincorporated business. A partnership does not pay income tax itself, however, each partner has to
report his/her share of profit or loss on each personal tax return.
C-CORPORATION
A formal legal incorporation that is usually filed with the state government. It protects personal assets from
business's debts and liabilities. It can have indefinite lifespan until dissolved, unlimited
shareholders, dividends taxed on shareholder level, however, net profit must be taxed at corporate level.
S-CORPORATION
In order to form a S-Corporation in the United States, you must be either a resident or
a citizen of the United States. Usually its net profit is taxed under each shareholder's tax return,
which avoids double taxation. However, taxes like the payroll tax and sales tax are still required to
be filed and paid on the corporation itself.
LIMITED LIABILITY COMPANY
Must be approved by the state. Owners of an LLC are called members; there is no
limit on the number of members. Tax on a LLC is similar to that of a sole
proprietor or a partnership depending on the number of members.
PROFESSIONAL LIMITED LIABILITY COMPANY
The purpose of a PLLC is to provide professional services. The professional must be licensed for his profession. The PLLC needs to be approved by the Department of Education before
being submitted to the Department of State. A PLLC is taxed as a partnership if it
has multiple members, or as a sole proprietor if it has a single member.
NOT-FOR-PROFIT ORGANIZATION
Usually is exempt from income and property taxes, but still need to file income tax and
payroll tax returns. Any surplus of a not-for-profit cannot be returned to its owner or
distributed to its shareholders.
WHY INCORPORATE YOUR BUSINESS?
Reasons to incorporate your business include: protecting your personal assets from corporate debts and liabilities, getting tax benefits and raising capital.
OBTAIN AN EIN
Reference: www.irs.gov