The Tax Preparation Blog

Archive for the ‘Tax Rates’ Category

During my initial consultations with new clients, I am frequently asked about setting up Corporations and LLCs. Here are a few common questions/misconceptions about forming a corporation or LLC in a different state than you live in:

Q: I am a New York resident and business owner. I have been told that I can save a great deal of tax each year if I establish my company in a tax-free state. Is it really this easy to avoid New York State income taxes?

A: No, it is not that simple. The way New York handles multi-state tax issues is by allowing a credit against NY income taxes equal to the amount of income taxes paid to other states. If you are a full-year or part-year resident of NY and if any part of your income was taxed by another state, local government, or the District of Columbia, you may claim a credit against your NY State tax. Therefore, if your income is not taxed by the other state, your credit against NY income tax equals zero and you end up paying the full NY income tax rate.

Q: What about other benefits of establishing my business in another state such as the anonymity provided by Nevada Limited Liability Companies (LLCs)?

A: Though Nevada is heralded as a state that provides business owners anonymity, this only holds true for shareholders of a Nevada corporation, not a Nevada LLC. Members and managers of a Nevada LLC must be disclosed on annual reports that immediately become public information. Additionally, if you are involved in arms-length transactions with your clients and/or customers, they meet you face-to face and they know who you are. Therefore anonymity is only valuable in certain industries where that face-to-face contact is not prevalent. Further, by establishing your New York-based business in Nevada, you will have to undergo additional filing fees in order to do business and report your business activity in NY.

Q: With all the talk about establishing entities out-of-state, what is my best course of action?

Unless you are operating a large business, most small and mid-size companies are better off establishing their business in the state that they plan to do business in. This ensures that you do not have to shoulder the burden of additional reporting requirements, administrative provisions, state filing fees, accounting fees, and legal fees. Consult with both your attorney and your CPA before going online to setup a company in a different state.

2 county workers furloughed

Two Washington County employees were laid off this week as officials continue to pare down the 2010 budget. Clerk of Courts Brenda Wolfe said Tuesday that one employee in the legal division and another in the title division were officially laid off Monday. “It’s been a difficult year,” Wolfe said.

OMG!!! Barack Obama is a socialist! Chris Matthews smacks down Republican Tom ridge

Question: will there be TDS on a sale of house property by one NRI to another NRI?

NRI WANTS TO SELL A HOUSE PROPERTY SITUATED IN INDIA TO AN ANOTHER NRI. CONSIDERATION WILL BE PAID IN INR FROM HIS NRO ACCOUNT. WHETHER TDS TO BE DEDUCTED UNDER INCOME TAX ACT.? IF SO AT WHAT RATE?

Answer: No question of TDS at all. The buyer has to pay full amount to the seller. The seller has to show the gains as capital gains and has to pay tax. No question of TDS in this kind of transactions. I am 100% right in my answer.

For your information go through the TDS chart. It never says to deduct TDS on property at all.

http://www.incometaxmumbai.nic.in/taxpayer/tds.htm

Investing? How to avoid mistakes

Most people starting their careers feel liberated that they are finally earning money and, can actually spend it without seeking it from parents. They forget several important things, saving for the future, creating a retirement corpus and taxes.

Question: How much money do I need (salary) to live comfortably in Bangalore, there is four of us, 2 adults & 2 children

My income in US is US$80,000 before taxes…so you can figure out how we live in here (midwest university-town)
I have been offered a job in Bangalore, but is hard to make sense of money matter, “Indian rupees”, In Jan 2008 the exchange rate was roughly Rs 40 to USD 1. but what does that mean?
How much should I ask? In the USA my salary is US$80,000 a year,We live in the midwest in college-town, safe and sound. I have debt here, and I want to be sure that I’ll be able to live comfortable there while able to pay my bills here (car payment, mortgage about US$1700 a month in bills that I can stop paying + living in Bangalore)

Answer: yes you will be more than comfortable!!!

Four ways to tax Wall Street’s rich

With the House voting Dec. 3 to extend the estate tax at current rates, the fate of the tax now lies with the US Senate. At least 14 multimillionaire senators – and possibly far more – could be di…

(2006) Ron Paul: GOLD AND THE US DOLLAR [Part 4]

Question: Question about Ireland top marginal tax rate?

I’m studying for a quiz and I believe both these statements are true but my book says they are false but it gives the wrong multiple choice awnser to say they both are false. What do you all think?
1.In Ireland, the top marginal tax rate imposed on personal income has been but from 65 percent in 1984 to 42 percent by 2000.
True or False

2. In Ireland, the top corporate income tax rate has been reduced from 50% in 1986 to 12.5 % in 2003, by far the lowest rate among the members of the European Union.
True or False?

Thanks for your help

Answer: I am not in a position to give you the right course of action for the quiz. Sorry. But the following may help you to arrive at appropriate judgement.
From the notes quoted below it appears that the first Statement is close to the Truth as the highest marginal Payee income tax rate is 41%.
The second statement is True with greater accuracy because the Corporate tax on trading income is 12.5% (though higher on non-trading income).
Your book is right because in terms of accuracy of information contained in both the statements are not accurate 100%, so they are wrong. But if the idea is to judge on the basis of broad figures, the second statement is more closer to the Truth than the First Statement.
Notes:
1.In 2007 the standard income tax rate was 20% (payable on the first €34000 of taxable income, for a single person) and the higher rate was 41% (payable on the balance).
In addition to the above pay as you earn income tax – PAYE, another tax called Pay-related Social Insurance (PRSI) is also payable, which is similar to National Insurance in the United Kingdom. For employees, for the 2006 tax year, this consisted of 4% payable on annual earnings up to €46600 (though the first €127 earned in a week is exempt) and a 2% Health Contribution Levy). Earnings above €46600 were subject only to the 2% Health Contribution Levy. In addition, the employer is also liable to pay a PRSI contribution per employee, at 10.75% of the employee’s gross income, with reductions for lower earners.
The Health Levy does not convey any entitlement to medical treatment or the like and is in reality just another tax.
2. There are three rates of Corporation Tax in the Republic of Ireland:
12.5% for trading income
25% for non-trading income
The rate for Manufacturing, IFSC and Shannon Free Zone companies at 10% ended on 31 December 2005.

Finance and Banking

Key Points: Australian fund managers wishing to test investor demand for Shariah-compliant products should consider Shariah windows when making investment decisions.

Top 10 Reasons to Invest in Kosovo

Besides the business idea and its development, running a successful business means careful structuring and detailed planning. Especially in a time of global crisis, the location and the economic and financial environment of the chosen location are critical issues to be considered. Hard times are often a motive power that makes you see the weak points of an enterprise and makes you restructure it in a way to become more effective.

Australia is known with its complex tax system. There are three levels of assessment rules – federal, state and local. Its integration is a subject of discussions at present. At the federal level are imposed the income tax on individuals, the corporation tax on profits, the goods and services tax, the excise taxes, etc. At the state level are imposed payroll taxes, stamp duties on land transfers and other transactions, some taxes on land and properties, fire service taxes, etc. At the local level are imposed some taxes on land and properties.

Just the contrary Singapore is known as a location with business friendly tax regulations.

Some of the advantages of the Singaporean taxation could be outlined as follows:

CORPORATE TAX RATE

Australian corporation tax rate is a flat 30%.

In Singapore, the highest corporate tax rate stands at17%. Annual profits of first 300,000 SGD are taxed roughly at 8.5%.

Additionally, the Singapore tax legislation provides for another scheme of full exemption but only for new companies and only if they meet the following conditions: to be incorporated in Singapore; to be tax residents in Singapore and to have no more than 20 shareholders. In that case the qualifying company is given a full exemption up to 100,000 SGD of its chargeable income for its first three consecutive years of assessment.

TAXABLE INCOME SOURCES

Singaporean resident companies are chargeable to corporation tax on their profits arising from Singapore and on their profits arising from foreign countries when remitted to Singapore. The income earned and retained outside the country is not taxable. Additionally the dividends, the branch profits and the service income are exempt from assessment even when remitted to Singapore when they have been charged in a foreign state in which the certain tax rate is at least 15%. Furthermore, this rule is temporary changed for the year 2009 – for that year it is not necessary to fulfill any conditions in order to be able to apply the exemption.

Australian resident companies pay corporation tax on their worldwide profits, sourced within and outside of Australia. The remittance of the incomes is not a precondition for assessment.

DIVIDENDS

In Singapore the “one – tier” system is applicable. The corporate income is assessed on corporate level and this is final assessment. The dividends are tax exempt and there is no withholding tax with this respect.

In Australia the resident shareholders only receive tax credit when declaring the dividends in their personal tax returns. The credit is for the taxes paid by the company in respect of that part of the profits distributed to the said owners. The non-resident shareholders may not be liable to such credits.

DOUBLE TAX TREATIES

One of the ways of avoiding double taxation is the conclusion of treaties and agreements, regulating the assessment of certain incomes. Singapore has concluded nearly 70 treaties and Australia over 40. There is Double taxation agreement in force between the two countries as well.

GOODS AND SERVCIES TAX (GST)

The Singaporean standard GST rate is 7%, the Australian one – 10 %.

In Singapore a company is obligated to register for the purposes of GST act when the annual turnover is above or expected to be above 1 million SGD. GST registration threshold in Australia is 75,000 AUD.

Both tax systems provide for zero rates with regard to exports, where tax credit is still available.

Imports are taxable supplies in both locations, generally charged with the standard rates.

PROPERTY TAXES

The property taxation system in Singapore is centralized. The basic rate is 10% for industrial, commercial and let-out residential properties and 4% for owner-occupied residential properties. The rate is to be applied to the annual value of the item. The valuation is based on the market appraisal of the land and the estimated rent of other properties.

Australian system for property taxation includes land value taxes, other property taxes on real estates, stamp duties, water rates, etc. The rates and the payment terms differ in each state.

SOCIAL INSURANCE CONTRIBUTIONS

In Singapore the employers’ social insurance contributions are made to the Central Provident Fund and depend on the amount of the salaries and wages paid. The rates are between 0% and 14.5%.

The Australian retirement system is called Superannuation Guarantee fund, where employers are required to make compulsory contributions, calculated on the basis of the salaries and wages. At present the rate is 9%.

A payroll tax is also due by Australian employers over the amount of the wages above a certain threshold. Both the rates and the thresholds are appointed by the state governments, e.g. for New South Wales they are as follows: 5.75% where the wages exceed 638,000 AUD. When determining the assessable amount, groups of companies might be treated as one single enterprise if there are related operations.

According to a research published by the Info-communication Development Authority of Singapore, many companies located their business in Singapore over the past years, attracted by the competitive tax environment in addition to geographic advantages, economic and political stability and advanced infrastructure.

Sutherland Announces New Partners

ATLANTA & WASHINGTON—-Sutherland Asbill & Brennan LLP announces the election of eight new partners effective January 1, 2010. “Each of these attorneys has made significant contributions to our clients and to the firm,” said Sutherland’s Managing Partner Mark D.