TCJA was limits excess business losses for noncorporate taxpayers. Excess business loss is disallowed as a deduction. The loss amount that is disallowed is the aggregate of all trade or business deductions/losses over gross income/gains from such trades or businesses, less a threshold of $250,000 (or $500,000 if married filing jointly; it will be annually adjusted for inflation).
The payroll of employees of U.S. companies is governed by federal, state, and local regulations. It is generally comprised of gross income before taxes, federal and state personal income taxes, social security taxes and Medicare taxes, disability insurance, net income, etc. The following is a detailed description of each component, frequency of payroll, payroll taxes, and Form W-2.
Physical presence was previously the only consideration where income tax nexus is concerned. But this standard was largely replaced by an economic presence/factor presence nexus concept by many states. Just like the sales tax nexus, the income tax nexus better fits the expanding use of e-commerce. States using the economic presence/factor presence nexus standard can impose tax on qualified out-of-state companies, even if they do not have a physical presence in the state.
Form 5472, the full name is the Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade and Business, is an information return (as opposed to a tax return). This article will briefly describe the types of reporting corporations, what the purpose of filing Form 5472 is;
The 1120-F tax return, the full name is the U.S. Income Tax Return of a Foreign Corporation, is a U.S. income tax return. This article will briefly describe what the purpose of filing Form 1120-F is, who needs to file Form 1120-F; what information needs to be disclosed on Form 1120-F, Form 1120-F’s deadlines, and penalties situations.
When a U.S. subsidiary pays dividends to its foreign company shareholders, it generally withholds 30% of the dividend income tax for the foreign company shareholders. The 30% tax on dividend income may be significantly lower when the foreign company 's shareholders’ country has a tax treaty provision with the U.S. In addition, foreign company shareholders are also required to report this dividend income to the IRS.
The IRS requires corporations and individuals to file annual tax returns with the correct information. When a corporation or individual discovers an error in a tax return filed, an amended tax return could be filed to correct the previous error information. This article will briefly describe under what circumstances corporations and individuals should consider amending their tax returns;
The IRS 1099 Form is a collection of tax forms documenting different types of payments made by an individual or a business to individuals who are hired typically not in the capacity as employee. Payroll employees of a company will instead receive a W-2 form.
The U.S. federal government levies an accumulated earnings tax on U.S. corporations when corporations’ accumulated earnings are deemed unreasonable and exceed normal levels. The tax policy encourages U.S. corporations to pay dividends to shareholders rather than retain corporations’ earnings.
What is the purpose of the Form 5471?Who must file Form 5471?What information is required to be disclosed on Form 5471?Form 5471 is used by certain U.S. citizens and residents who are officers, directors, or shareholders in certain foreign corporations. The form and schedules are used to satisfy the reporting requirements of Sections 6038 and 6046, and the related regulations, as well as to report amounts related to Section 965.