Tax Accountant Company

USA Tax Accountant Company

We all know the United States of America is a federal republic. It has various local and state governments. USA has a very progressive tax system in the industrialized world, and the taxes are imposed at each level of government. These include taxes on Payroll, Income, Property, Capital Gains, Sales, Imports, Dividends, Gifts, Estates, and a few others. Federal, municipal, and state governments are responsible for collecting the various taxes and in 2010 the tax was amounted to 24.8% of GDP.

Taxes are imposed on the income of individuals and corporations, by the Federal, State, and some of the local governments. Individuals, like citizens and residents are taxed on their worldwide income. However, they are allowed some credit for foreign taxes. Tax accounting rules determine the incomes that are subjected to be taxed. Almost all incomes are taxed in the United States, regardless of its source. Financial Accounting rules are not responsible for determining the income that is subject to be taxed.

As per the rules, individuals are allowed to reduce a certain percentage of their taxable income by some of the non-business expenses, and personal allowances that include home mortgage interest, charitable contributions,  state and local income taxes, medical, and other expenses.

Federal, state and local income tax rules can be similar or different in determining taxable income:

  • The rates of Federal tax vary from 10% to 39.6%.
  • The rates of State and local tax rates vary by jurisdiction, from 0 % to 13.30%.

The United States of America imposes the same rates of tax on worldwide income even to its non-resident citizens as per Cook v. Tait, 265 U.S. 47 (1924). Some of the other taxes imposed by Federal, Local, and State governments are as follows:

Payroll Taxes include Social Security and Medicare taxes and are imposed by both Federal and all the state governments. The Payroll taxes are imposed at a combined rate of 15.3% and on employers and employees. Moreover, it is mandatory for employers to withhold income taxes on wages.

Property Taxes are imposed on realty only and are imposed by the local governments and some of the authorities depending upon the market value of the property. However, School and other authorities are governed separately. Depending the value of the property, annual median rates range from 0.2% to 1.9%.

Sales taxes are imposed on the price of retail sale of goods and services and are imposed by some localities and most states. The rates of Sales tax vary among various jurisdictions from 0% to 16%. Sometimes it even varies in jurisdictions, depending upon the particular services or goods taxed. The Seller pays the sales tax at the time of sale.

On the goods that are imported, the United States imposes tariffs (Customs Duties) that need to be paid before legally importing the goods. Depending upon the country of origin and goods, the rates of duty vary from 0% to 20% (or even more).

Gift Taxes and Estate taxes are generally imposed by the Federal government and some of the State governments. It is imposed on the transfer of property inheritance by lifetime donation or will. Just like income taxes, these taxes are imposed on worldwide property.

The taxation in the United States generally confuses an ordinary resident or citizen with several common questions that includes how to use personal allowance to reduce taxable income, how to get tax credits and reliefs, tax returns, deadlines, etc. When it comes to paying taxes, people waste a lot of their time in gathering information and sometimes they even waste their money in the same. It is always recommended to seek out a highly reputed and USA Tax Accountant Company that completely understands tax rules in the USA and can assist and guide you with the same.