The purpose of today’s article is to help you understand everything about income tax in the USA, what is the rate used and how the income tax return is filed in the United States.
As in Brazil, the Income Tax Return in the USA is the annual statement of accounts submitted to the Internal Revenue Service (IRS) at the federal level and the Department of Revenue (DOR) at the state level.
Income tax is the presentation of everything that a person has earned and also spent during a period of time, which is a year.
Even though it is a recurring service for all individuals and companies that need to declare their income tax, a specialized consultancy in this matter is of utmost importance to make everything as simple as possible.
If you intend to settle in the country, seek specialized help to have greater security.
U.S. Income Tax and Tax Rate
In the United States there is the Federal Income Tax and the State Income Tax.
The Federal Income Tax is levied on all of a person’s earnings, and represents the largest source of income for the US government.
The income tax rate varies from 10% to 37% and is the same for all states in the United States, varying only according to the salary range of the taxpayer.
As in Brazil, the United States obeys a progressive table for the payment of income tax, i.e. the tax rate varies according to the income bracket the person is in.
On the other hand, the State Income Tax is another type of American income tax that is also levied on American earnings, but it does not have a fixed rate, it varies from region to region in the United States.
The collection of this tax is therefore done by the state of that taxpayer.
PARTICULARITY OF THE STATE OF FLORIDA
An important piece of information is that individuals who are residents of the state of Florida do not have to pay State Income Tax.
For corporations, the exemption does not apply.
This is one of the reasons why many foreigners settle in Florida – among other reasons, of course, such as the natural beauty of the state.
In case you have in mind to live in this state to start a business career. You will certainly need to know all the details of how to open a business in the USA.
All the income that a person has, regardless of the source, must be reported to the agency.
However, it is necessary to realize that some income is still withheld by the payer at the source, who will hand it over directly to the government. An example of this is work.
How is income tax filed in the USA?
Income Tax in the USA is done in the following way: first, all of your income is added up, and then all of your deductions (expenses) are taken.
After this process is completed, you must analyze whether or not the total amount of taxes owed to the government is less than the amount you have already paid to the government, to find out if you, in simple terms, “owe” the American government, or should be reimbursed by it.
It is also worth noting that in the United States, a taxpayer who has a spouse who is recognized by the state, can, if he/she wishes, file a joint annual income tax return with that spouse.
We should briefly discuss the models for filing income tax returns in the United States.
In simple terms, you can file as single, married (filing separately) or as head of household (filing jointly).
This status declaration is also important because of the deductions.
These deductions depend on the taxpayer’s status, for example if he is married or not and if he has dependents or not.
This is because the expenses to be deducted may also include those that are in the name of a third party (such as health and education expenses).
Income Tax in the USA – Individuals
There are two types of income tax in the United States: personal income tax and corporate income tax, just like in Brazil (IRPF and IRPJ).
For individuals, the deadline for filing income tax in the USA is April 15th of the year following the base year – that is, the year the tax is due. There is a possibility to extend the deadline if the taxpayer completes the extension request form, citing, among other things, the reason for the request.
WHICH INDIVIDUALS ARE REQUIRED TO FILE INCOME TAX RETURNS IN THE USA?
Income tax return filing in the United States is required for residents of the country, as well as for foreigners who have any financial / economic benefit in the country, as long as their income is above a minimum amount.
However, even if you earn less than the minimum amount, it is still advisable to file a tax return.
Finally, even if you are not currently residing in the United States of America, a person who has a green card (obtaining permanent residency in the US) can be taxed, as well as one who stays in the US for more than 183 days.
Income Tax in the USA – Corporate Tax
For businesses, income tax in the United States is normally due on December 31 at the close of the tax year. It must be paid by the first day of the fourth month following the close of the fiscal year, which is usually April 1st.
It is also possible to apply for the extension mentioned in the above topic.
The amount will depend very much on the company’s profit. Those companies that qualify as LLCs (Limited Liability Companies – like the “Ltda.” in Brazil) do not have to pay this tax.
The collection, in this case, will be made on the individual, after the profit is divided (with a rate varying from 10% to 37%).
If the company is a C CORP (similar to a corporation in Brazil), it will pay 21% federal income tax, and its shareholders will also pay, 10% and 37%.
Income Tax is not a simple matter, and specialized help on the subject is indispensable.
In this article we have tried to summarize and simplify as much as possible all the information about income tax in the United States, but there are many details that make a lot of difference in practice.
Therefore, to learn more about it, you can access the direct link from the U.S. Government about Income Tax Rate.
Therefore, to learn more about it, you can go to the US Government’s direct link on Income Tax Rate.