Earned Income Tax Credit

EITC, the Earned Income Tax Credit, sometimes called EIC is a tax credit to help you keep more of what you earned. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file

Do I Qualify for Earned Income Tax Credit :

To qualify for EITC you must have earned income from employment, self-employment or another source and meet certain rules. You must either meet the rules for workers without a qualifying child or have a child that meets all the qualifying child rules for you.

 

How to Claim EIC:

 

You need to file a tax return to claim EITC. Find out how—documents you need, common errors to watch out for, the consequences of filing an EITC return with an error, how to get help preparing your return and more.

 

It’s not too late to file your tax returns for 2011 , 2012 and 2013 to claim the EITC if you were eligible. But you must file to claim it Contact are office if you think you are eligible for EIC, we will be happy to assist .

 

 

 

 

Tips for taxpayer who missed the tax deadline

If you missed the April 15 tax filing deadline, don’t panic. Here’s some suggestion.

• File as soon as you can.  If you owe taxes, you should file and pay as soon as you can. This will help minimize the interest and penalty charges. There is no penalty for filing a late return if you are due a refund.
• IRS Free File is your best option.  Everyone can use IRS Free File to e-file their federal taxes for free. If your income was $58,000 or less, you can use free brand-name software.
• IRS E-file is still available.  IRS e-file is available through Oct. 15. E-file is the easiest, safest and most accurate way to file your taxes. With e-file you receive confirmation that the IRS received your tax return. If you e-file and choose direct deposit of your refund, you’ll normally get it within 21 days.
• Pay as much as you can.  If you owe tax but can’t pay it all at once, try to pay as much as you can when you file your tax return. Pay the remaining balance as soon as possible to stop further penalties and interest.
• Make a payment agreement online.  If you need more time to pay your taxes, you can apply for a payment plan with the IRS. The easiest way to apply is to use the IRS Online Payment Agreement tool. You can also mail Form 9465, Installment Agreement Request
• A refund may be waiting.  If you’re due a refund, you should file as soon as possible to get it. Even if you are not required to file, you may still get a refund.

Estimated Taxes

Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

 

 

HOW TO PAY ESTIMATED TAXES

 

If you are filing as a sole proprietor, partner, S corporation shareholder and/or a self-employed individual, you should use Form 1040 ES-to figure and pay your estimated tax.

 

WHO MUST PAY ESTIMATED TAXES

 

If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.

If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return.

WHO DOES NOT HAVE TO PAY ESTIMATED TAXES

If you are an employee you can avoid making estimated taxes payment by requesting the employer to withhold more taxes from the paycheck .

If you do not have tax liability you do not have to make estimated payments.

HOW TO FIGURE ESTIMATED TAXES

To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year

Also you can start with the prior year return and adjust the income and expenses based on the current year projection  and figure the projected taxable income .

WHEN TO PAY ESTIMATED TAXES

 

For estimated tax purposes, the year is divided into four payment periods.. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.

UNDER PAYMENT OF ESTIMATED TAXES

If you did not pay enough tax throughout the year you may have to pay a penalty for underpayment of estimated tax. Most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. Special rules are applicable for farmers and fisherman .


 

US taxation of foriegn owned buisness

The United States has two regimes for taxing a nonresident alien (NRA) and a non-U.S. corporation (foreign corporation). First, NRAs and foreign corporations (collectively referred to as foreign taxpayers) are generally taxed at a flat 30 percent rate (or lower treaty rate) on gross income from U.S. sources that is fixed or determinable, annual or periodic (FDAP) income. ¹ Second, where an NRA or foreign corporation is engaged in a U.S. trade or business, all U.S.-source income (including capital gains) and certain classes of foreign-source income, that is "effectively connected" with the conduct of such U.S. trade or business, are taxed at regular U.S. rates on the net amount of such income. ² If a U.S. trade or business exists, then all U.S.-source income, other than fixed and determinable or certain capital gains, is deemed to be effectively connected to the U.S. trade or business and is therefore taxed at regular U.S. rates.

NRAs and foreign corporations engaged in a U.S. trade or business are taxed essentially the same as domestic taxpayers, but only on the income that is effectively connected with the conduct of their U.S. trade or business. Provided timely tax returns are filed, foreign corporations are entitled to claim a foreign tax credit.

 Further, a foreign corporation may not be subject to the personal holding company tax, is allowed deductions only to the extent the income taxed is effectively connected with the U.S. business. In addition, timely tax returns (Forms 1040NR and 1120F) must be filed by NRAs and foreign corporations to claim deductions under

A foreign corporation doing business in the United States as an unincorporated operation (i.e., a branch) may also be subject to a branch-level tax of 30 percent (or lower treaty rate) on its earnings and profits effectively connected to its U.S. trade or business.

US Corporation doing buisness abroad

In a global economy, a U.S. corporation must compete in both U.S. and foreign markets. The latter is not a single, homogeneous market, but a multitude of national and regional (e.g., the European Union, the North American Free Trade Area) markets. Foreign markets present U.S. corporations with diverse business opportunities, varying from the export of products, technology and services to the development of indigenous foreign operations. While business opportunities govern a U.S. corporation's decision to enter a particular foreign market, the structuring of its foreign operations provides the corporation with various tax planning opportunities.

The structures available to a U.S. corporation contemplating doing business in a foreign market are-

•       doing business without a foreign legal presence;

•       foreign branch;

•       foreign partnership;

•       foreign corporation; and

•       foreign trust.

It is common for a U.S. corporation to use different structures in different foreign markets. Furthermore, the structures are not mutually exclusive and may be used in combination in a particular market.

(A) Doing Business Without a Foreign Presence

A U.S. corporation typically can make export sales, provide services, license technology or lease tangible property to unrelated dealers or customers without establishing a branch or affiliated business entity in a foreign market. The principal advantage of exporting without establishing such a local presence is that it is the simplest means of entering a foreign market. Its principal disadvantage is that the U.S. corporation may be operating with a competitive handicap in developing the local market if its activities are restricted only to those that can be carried on without an established local presence. Hence, as a foreign market develops, the U.S. corporation frequently will seek to establish a local presence to take advantage of the business opportunities.

(B) Foreign Branch

A foreign branch is part of the U.S. corporate legal entity, physically located in the foreign country. From a business perspective, a “branch” can describe anything from a sales office with just a few employees to a factory with several hundred employees. From a tax perspective, “foreign branch” describes an integral business operation carried on by a U.S. person outside of the United States.

Although branch operations typically are more substantial than simply exporting into a foreign market without a local presence, the business advantage of operating in branch form is simplicity. That is, it provides a local presence in the foreign market through an establishment that is less complex than the formation of a separate legal entity such as a corporation or partnership

C) Foreign Partnership

A foreign partnership (including a limited and general partnership) is a partnership created under the law of any jurisdiction other than the United States, except as provided in regulations. These regulations take into account factors other than where the partnership is created and apply only to partnerships created or organized after the regulations were issued . Whether a foreign partnership is subject to foreign tax on its income as an entity separate from its partners or the partners are subject to foreign tax on the partnership's income on a look-through basis depends upon the particular foreign country's laws

(D) Foreign Corporation

A foreign corporation is a corporation (including an association, joint-stock company, or insurance company) created under the law of any jurisdiction other than the United States or its states.

The use of a foreign corporate subsidiary offers the U.S. parent several foreign business and tax benefits. Like a foreign partnership, the foreign corporation may provide certain promotional benefits and operates as a separate legal entity for commercial law purposes

(E) Foreign Trust

A “foreign trust” is an entity characterized as a trust other than a trust treated as a domestic trust.. Any trust will be treated as a domestic trust if a court within the United States can exercise primary supervision over the trust's administration, and one or more U.S. persons control all substantial trust decisions.

 

What is Series LLC ?

 The right of an LLC to conduct business in a state other than the state of organization generally is obtained only by properly registering to do business in that state as a foreign LLC. Failure to register generally precludes a foreign LLC from conducting business in the state and can result in an inability to enforce a contract, to sue for collection of a debt, or to have other similar rights.In some states, a foreign LLC's failure to register before transacting business in the state can invalidate the limited liability of members or subject the LLC and its members to substantial civil penalties. Transacting business in a state can create a variety of filing and tax obligations for an LLC. The LLC may become liable for franchise fees or taxes, sales tax collection and payment and, of course, income taxes (on the LLC's owners) Failure to recognize when these obligations arise can result in substantial penalties for the noncompliant LLC.

  The use of single-member LLCs to hold single pieces of real estate or to conduct a single business, thereby isolating liability in a single-purpose entity has proven somewhat cumbersome and expensive since each single-member LLC must be registered in the state. However, that problem can be solved by the creation of a “series LLC” A series LLC is a single entity with multiple “buckets” or “series,” each of which is treated as a separate entity, even though each bucket or series is really part of the same entity. Different classes of members, different membership rights, and different managers can be created for each series, independent of any other series. Further, since each series is treated as a separate entity, cash distributions can be made from one series to its members without regard to the performance of any other series in the LLC. 

 

  Additionally, each series segregates liabilities. Consequently, security for the liabilities associated with one series in the LLC is limited to the assets of that series. However, to obtain this protection, each series must be maintained separately. Separate books and records must be kept, and the assets must be treated as separate assets from any other LLC holdings. Additionally, creditors must generally be advised that the “series” structure is being used by including the structure in the state filings. Another advantage of the series LLC is that only the parent entity needs to be registered to conduct business in a state. To date, Delaware, the District of Columbia, Illinois, Iowa, Kansas, Nevada, Oklahoma, Tennessee, Texas, and Utah have created this type of entity.

 Other attributes of a series LLC can include (a) a separate business purpose, (b) a limitation that a distribution or liquidation is applied solely to the individual “bucket” or “series” and not to any other bucket or to the LLC in general, and (c) a provision that a member's withdrawal from one series does not cause a disassociation from any other series or from the LLC. From an operational standpoint, the termination of a series will not cause the termination of the LLC.

 Note: To qualify as separate entities, each series of a series LLC must comply with certain requirements including identifying each series, holding the assets of each series separately, and maintaining separate records for each series.