FAQ

A tax transcript is basically a summary of your tax return. The IRS issues the tax transcript. You can apply online if you have SSN. Please click the link tax transcript to apply.

FUTA stands for Federal Unemployment Tax which funds state unemployment programs. The employer is responsible for paying the FUTA premium and no deduction is made from the paycheque of the employee. To learn more, please visit our blog “Payroll processing in the United States.”

FICA stands for Federal Insurance Contribution Act taxes which funds Social Security and Medicare programs. The employer is responsible for deducting from each paycheque of the employee and add his contribution and remit to IRS. To learn more, please visit our blog “Payroll processing in the United States.”

Generally, states like Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose sales with some exceptions. To learn more about sales tax rates in the united states, please visit “Sales tax rate.”

States like Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming have no state income tax in the United Sates.

ITIN stands for Individual Tax Identification Number. An individual who does not have a social security number and he has either taxes payable or refundable can apply for ITIN. Usually you attach your income tax return with the ITIN application to IRS.

EIN stands for Employer Identification number. This number is issued by IRS. An entity once registered in the United Sates has to apply for EIN.

A registered agent is the agent of the corporation who is authorized to receive mail on behalf of the corporation. The registered agent is required to maintain a physical office in the state. To learn more about incorporating your business, please visit “Incorporation.

Yes. Many states in the United States allows a non-resident to incorporate and some state even allows to maintain a foreign address. To learn more about the available type legal entities/business structure, please visit “Business structure.”

No. As opposed to Canada this facility is not available in the USA. You can only incorporate at the state level. To learn more about the available type legal entities/business structure, please visit “Business structure.”

Only if you own more the $100k properties outside Canada. If you fail to declare the penalty is $2,500.00 every year. This applies to all Canadian residents for tax purposes. To learn more please visit “Reporting more than 100k properties outside Canada.”

Foreign tax credit is the deduction from your total taxes payable on your Canadian tax return. You can claim foreign tax credit if you have paid income tax to another country with whom Canada has a tax treaty.

If Canada has a tax treaty with another country, you will be eligible to claim foreign tax credit to avoid double taxation issues.

It depends on your tax residency status. If it is determined that you are resident of Canada for tax purposes, you file your income tax return in Canada.

All residents of Canada, for tax purposes, have to report their worldwide income in their income tax return, irrespective of their citizenship or immigration status. If your residency status is determined as a non-resident of Canada for tax purposes, then you do not have to report your worldwide income.

A U.S. Citizen or Resident Alien, Corporation, LLC, or Partnership must file an FBAR report every year and report your deposits held or your interest in foreign financial accounts every year. A Foreign financial account is an account that is held outside the United States. The threshold for reporting is aggregate value in all accounts when exceeding $10,000.00 at any time during the year. To learn more about this topic, please visit “FBAR reporting.”

Every U.S. Citizen and Green Cardholder has to file a U.S. tax return every year by the due date, irrespective of their residency status.

Profits/losses from the purchase and sales of stocks and options in the normal trading activities can be considered as business income or loss. Stocks and options purchased with an intention to hold can be considered capital transactions. The capital gain/loss is recognized on the disposition or on the close of the transaction. Only 50% of capital gain is added to your income for income tax purposes.

In the USA, there are several business structures that you can choose from. Each structure has its benefits and reporting requirements. For forming an LLC or Incorporating in the USA, each state has its requirements and tax rates. Which structure is right for you depends on several factors?

  • Your residency status in the United States
  • Type of products and services
  • Sales and Use tax on the products and services
  • Major customers
  • Your future goals
  • The current and expected volume of business
  • Offices, warehouse, and employees

There are many more great questions that you will need to contact your tax professional. RKB invests time in understating all your financial and taxation issues and provide you with timely and sincere advice to minimize your tax bills and grow your wealth.

If your income is effectively connected with a business, you are carrying in the USA. You must file an income tax return and pay taxes. Several factors will decide if your income is effectively connected with the USA. You can also avail the tax treaty benefits.

Several factors may decide, including your tie-up with Canada or the USA. Your status may be determined based on these factors as a resident, non-resident, or resident alien for tax purposes. If you are a US Citizen or Green Card holder, you must file your US tax return irrespective of your residency status. In Canada, you may not have to file your Canadian income tax return based on your residency status and income sources. You may have to file your tax return in Canada as well as in the USA. Your income may be under double taxation; however, you should be able to get foreign tax credits and avail of some tax treaty benefits, including income exclusion.

Both side of the border, whether CRA or IRS establishing the reasonability of the management fees lies on the taxpayer. CRA may only disallow your management fees; however, they may impose a penalty on this in the case of IRS.

Withdrawing money from the corporation as dividends, whether in Canada or the USA, will attract double taxation. Another option is to pay salaries from the corporation to the shareholders. However, withholding taxes must be paid on or before the due dates to avoid interest and penalties. In both situations, you need advice from an experienced tax professional to plan and implement since the beginning of the year.

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