A, U.S. Taxes
The United States is one of the few countries where non-residents are taxed on their worldwide income. The U.S. tax system consists of several types of taxes including:
1, Federal Income-Progressive federal taxes;
2, Personal Income-Progressive or fixed state taxes levied on income;
3, Capital Income-Federal taxes levied on income from stock and bond exchanges;
4, Wages-Federal taxes that employers usually deduct from employees' wages. These are people's contributions to Social Security and Medicare.
5. property-State taxes levied on real estate (land, buildings, factories, etc.). In some states it is also levied on valuables (cars, computers, equipment, jewelry, furniture, etc.).
6. Sales-State taxes levied on goods and services. Please note that sales tax is usually higher than the price stated on the price tag of the item, so don't be surprised when people ask to pay more than the price stated on the tag.
2. What are the income tax rates in the United States?
Before calculating annual income tax, people need to determine their taxable income. To find out, people need to deduct standard or other deductions from their gross income. Deductions are amounts that the government does not tax a person on. The standard deduction is a fixed amount that is adjusted each year. All non-taxable expenses (medical expenses, state and local income taxes, charitable donations, etc.) can be determined by alternative deductions. U.S. income taxes are calculated at progressive rates. Tax brackets are adjusted annually due to inflation. Among the main income tax rates are:
1. Income of $0 - $9700 at 10%;
2. Income of $9701 - $39,475 at 12%;
3. Income of $39,476 - 22% of 84,200;
4, Income at 84,201 - $160,725 at 24% tax rate;
5, Income at 160,726 - $204,100 at 32% tax rate;
6, Income at 204,101 - 510,300 at a 35% tax rate;
Income over $510,301 at a 37% tax rate. If your specific situation suits you, you can deduct selected tax credits (child tax credit, education tax credit, foreign tax credit, etc.) directly from your total tax liability. Keep in mind that people need to have a Social Security number or Taxpayer Identification Number when filing a tax return.
Taxes also depend on how long you have been in the U.S., i.e., financial resident status (resident alien, nonresident alien, or dual-status taxpayer). The U.S. fiscal year is usually the same as the calendar year. People can choose other time periods if they wish; the deadline set by the Bureau is still April 15th. Failure to file a complete tax return by this date results in an automatic extension to October 15th.
III. State and Local Taxes
In addition to federal taxes, most residents and nonresidents of the United States pay taxes to the state in which they live. The amount paid depends on the state in which people live, how long they stay in that state, their income, and so on. Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming are among the states that do not impose additional state taxes. Some cities and regions also levy local taxes on their residents. You should contact your local government to find out if these taxes are right for you.
Four, Alternative Minimum Tax
If your income is high, you may be subject to the Alternative Minimum Tax (AMT). The AMT is payable if adjusted gross income exceeds a set threshold (called the exemption amount.) This threshold varies from year to year as it is adjusted for current inflation. If income is below the exemption amount, don't worry about the AMT. however, if income is higher, you'll be subject to regular income tax or the AMT (whichever is higher). If you neglect to pay AMT when calculating your taxes, the state tax office can collect it from you after processing your annual tax return.
V. Self-Employment Taxes in the U.S.
In addition to the income tax paid by most wage earners, self-employed people are subject to a self-employment (SE) tax. When SE is paying for Social Security and Medicare, the U.S. SE tax is like a payroll tax on employed workers. You pay this tax if your net profit exceeds $400.00.The SE tax rate is 15.0% on net profit divided by 3% as follows: 4% for Social Security; 9% for Medicare.
Every self-employed person in the U.S. is required to submit annual taxes and pay quarterly estimated taxes. Estimated taxes include all tax liabilities (income tax, self-employment tax, alternative minimum tax, etc.) for which an individual is responsible and need to be estimated and paid throughout the year. Please note that tax quarters may consist of two, three or four months. The exact tax situation depends on the actual circumstances. The United States is traditionally a country of immigrants. When foreigners go to live in the United States, they must have a thorough understanding of the U.S. tax system, otherwise they will suffer greatly!