Income Tax Return in USA
US Federal and State Income Tax for Businesses
A three-level direct taxation system is followed in the US, which is Federal, State and Local. Federal and in most cases the state tax is levied on the net income but they both widely vary in terms of tax rates, taxation mechanism, deductions granted, kind of income taxed and tax credit allowed.
Not to mention, even amongst states taxation systems vary to a great degree, some states have proportional tax while some states have a progressive tax system. Some states don’t have income tax at all like Florida, Nevada etc, while some tax only investments, interest and dividends like New Hampshire and Tennessee while other tax 13.8% of your annual income like New York.
Things to Consider while Filing Taxes
Both, income tax and business tax are subject to hundreds of regulations and variables. To list a few:
- Tax Cuts and Jobs Act and Tax Accounting Rules.
- What expenses to deduct?
- What is the limit of deduction of that particular expense?
- How much state tax can be deducted from federal tax?
- Whether to claim the standard deduction or itemize the deduction?
- Will the mortgage of the commercial property get deducted?
- Ascertaining the tax bracket on the basis of your total income from profession/occupation, estate, investments, capital gains, etc?
And these are the least intricate one and not even a quarter of all the variables involved. On top of all this, you also need to be smart in filing your taxes with legitimate tactics and man oeuvre expenditure accordingly so that you can save every penny, which is rightfully yours.
Federal Tax Rates
The marginal tax rate varies from 10% to 37% of taxable income. After 2018 amendments in Tax Cuts and Job Act, we now have seven marginal tax brackets on the federal level, that is, 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
State Tax Rates
State and local tax rates vary by jurisdiction, ranging from 0% to 13.30% of income, and many are graduated. In the US, the State Tax is either proportional or progressive. Below mentioned are the 9 states that have proportional tax system:
- Colorado (4.63%)
- Illinois (4.95%)
- Indiana (3.23%)
- Kentucky (5%)
- Massachusetts (5.05%)
- Michigan (4.25%)
- North Carolina (5.25%)
- Pennsylvania (3.07%)
- Utah (4.95%)
Rest, all the states have a progressive tax system, that is, the tax increase along with the income. Some states like Hawaii have 12 tax brackets while Kansas and Rhode Island have only 3 tax brackets, thus, as we mentioned at the very outset, state tax heavily varies from state to state.
We are a firm with a dedicated team for US taxation issues comprising of licensed Certified Public Accountants (CPAs) and IRS Efile Service Provider to handle all sorts of issues, from tax planning and documentation to filing returns. We have 8+ years of experience in handling complex tax situations and below are some type of tax returns we have often dealt with:
- Corporate Tax Returns
- Partnership Tax Returns
- S-Corp Returns
- Trust Returns
We have an international clientele comprising of 3500+ High Net Worth Individuals (HNWIs), startups and incumbent businesses. To know more about how we can implement our optimum and innovative solutions in your organization give us a call on 7727887799 (also available on WhatsApp) or drop us an email containing your business requirements at firstname.lastname@example.org and our team will reach out to you within 2 hours.
We do your Federal and State Tax Filings in the US, along with providing a range of other services to take full accountability as the virtual CFO to your business.
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