Income tax is a tax on income from salaries, wages, and other income. The United States has a multilayered income tax system. Accordingly, taxes are imposed at the federal, state, and sometimes local levels of government. Both federal and state income taxes apply tax rates to taxable income, but the application of the tax rate, as well as the type of taxable income, and the deductions and exemptions between the two is different.
Unlike the relatively complex tax system, accounting and cost accounting in the US has clear and simple rules.
Different State Income Taxes
Income tax return in USA varies considerably from state to state. Some states do not tax income such as Delaware, Florida, Nevada, South Dakota, Washington, and Wyoming. Meanwhile, New Hampshire and Tennessee only levy income tax on interest and dividend income, not income tax on wages or salaries.
Every natural person living in USA who earns income from work from abroad is obliged to inform the Tax Administration and register in the Register of Taxpayers. Based on the fees paid, it is necessary to calculate and pay taxes and contributions. The amount, manner and scope of taxation depend on the type of contract and the country in which the income was generated.
Income tax Returns for LLC
LLC (Limited Liability Company) does not pay tax at the company level at all, only at the partner level, ie only once. At the shareholder level, personal income tax is filed, which includes the loss or profit made by the LLC as income from the business. If the LLC has executives or employees who are more permanent in the United States, or if the company has offices or warehouses in the United States, the partners of such a company must file a tax return in the United States. When an LLC begins to do business in the United States through employees or offices, its owner creates a “permanent establishment” or “actual place of management” in the United States and is thus required to tax income in the United States through employees, offices and other activities in USA. If the company does not have executives, employees, warehouses or offices in the USA, ie it operates outside the USA, so partners must file a tax return on the company’s income only if the partners are U.S. citizens or reside in the U.S. for a longer period of time.
US Tax Return infrastructure is Heterogeneous
When you decide for company registration in USA, you will encounter different taxes on different types of companies. For example, LLC companies file tax returns but do not pay taxes. This obligation falls on the business owner. If you have such a company in Florida, for example, then you will not pay state taxes at all, in Pennsylvania, you will pay a uniform tax rate and in Connecticut, you will pay the highest tax of all states with this type of company. What may seem like unnecessary complexity at first glance can be used very well for tax optimization. According to your goals and expected profits, we will advise you on choosing the type of company, setting up accounting processes and the state where to start the business.