DEBT MANAGEMENT

Dear readers, every country has various forms of taxes which is considered as the source of income for the government. Taxes are collected in order to generate revenue of government’s annual budget and that can be used for welfare of the country. In recent days there has been a big controversy among the people of America that Tax Cuts Increase Revenue or not. If you are interested to know more about this topic then log on to http://www.obamaftw.com. As you all know recently Obama has announced second stimulus package and on this website you can find lots of information regarding Obama and the Stimulus Package, Revenue & the GOP/Republican party, Bush tax cuts & the deficit, etc. For more details visit their website.

More and more people in US file their tax return electronically. Year after year this number is increasing in future; IRS expects that every US tax payer and business will file electronically. What this will do for the country? First of all, it will eliminate tons and tons of papers. Secondly, it will free thousands of IRS processors who manually enter tax return data into IRS computers or scan them. A lot of people are still afraid of electronic filing. Why? Since an electronically filed return goes straight to IRS main frame, there is a belief that this kind of return could be audited more easily and more frequently by the IRS. Tax payers can’t control what kind of information is flowing to IRS. Taxpayers can’t control what kind of information is flowing to IRS computer. Nevertheless, more and more individual tax payers and businesses file electronically every year. So now you should have a good idea who exactly can be considered a resident alien. If you aren’t a U.S. citizen or a resident alien, that means you’re a nonresident alien and you’ll only have to pay taxes on income that you earned from American sources, for example, from trade or business conducted in the U.S. So if you are a non-resident alien for tax purposes and you did earn income in the U.S., Your income is divided into distinct categories:

Income that is effectively connected with trade or business in the U.S. Here, you are subject to the same tax rules as residents but without a right to use any deductions. Income that is not effectively connected with a U.S. business or trade. This income is taxed at a rate of around 30%.

You have to expect the unexpected from the IRS. IRS officials have the right to make independent decisions about any issue that has to do with taxpayers. For example, if you qualify as a resident according to the substantial presence test, the IRS may consider you a non-resident alien if:

1. You were in the U.S for fewer than 183 days during the current year.
2. You have a different tax home in other words you live and maintain a residence in another country.
3. You have a closer connection to that country than to the U.S that is you are the bono fide resident of the foreign country

Whether you’re a tax resident or a permanent U.S. resident you have to follow the same rules as U.S. citizens. This means you need to file an individual residential income tax return. You can select from a variety of different forms, depending on your income and whether you plan to take any tax deductions:

Form 1040, 1040A or 1040EZ. Before you choose the form, read the IRS instructions. Whichever form you choose, you need to mail it to your regional IRS service center – you will find the address on the form – by April 15 of the following year. for example if you are paying taxes for 2010, you have to mail in your return by April 15 201

Sometimes there are days that you don’t have to count as official days in the U.S. for the substantial presence test:

1. Days you commute to work in the United States from a residence in Canada or Mexico.

2. Days you are in the United States for less than twenty four hours, when you are in transit between two places outside the United States.

3. Days you are in the united states as a crew member of a foreign vessel.

4. Days you are unable to leave the United States because of a medical condition that develops while you are in the United States

5. Days you are in the country as an exempt individual

The most common taxes in US include income tax, property tax, real estate tax, social security tax, gift tax, and sales tax. Every person who earns income in the U.S has to pay income tax, despite his or her citizenship. This is why anyone who comes to America to study, work or starts a new life needs to know about U.S. Taxes. The federal taxing agency known as the Internal Revenue Service or IRS divides taxpayers into two groups business and individuals. Businesses are subject to different taxes, depending on their entity, character, location and income. Individual taxpayers are divided into residents, no residents and duel status aliens.

Each group has its own rules. Even if you aren’t a U.S. citizen, you are considered a resident for tax purposes if you meet one of two tests for the calendar year: the Green Card test or the substantial presence test. To meet the last test, you must be physically present in the United States for at least 31 days during the current year and 183 days during the presiding three year period that includes the current year and the two years immediately before that, counting all the days you were present in the current year and 1/3 of the days you were present in the first year before the current year and 1/6 of the days you were present in the second year before the current year.

Though you may not realize it at first, taxes are an important and complicated part of life in the U.S. This is true not only for Americans, but for anyone who stays in U.S for an extended period of time to study, be an intern, or do any kind of work that generates income inside of the country. Because taxes are so important, before you leave for the U.S., it’s a good idea to get all the information you’ll need to pay your taxes while residing abroad.

Many countries have tax treaties with the U.S. if you are going to be on an extended business trip or internship or are going to study, try to familiarize yourself with tax regulations for non-residents with various types of visas. That why, when you talk to U.S consular officials, you can ask them for a particular kind of visa based on this information.

For example, for employees of foreign governments and some international organizations, there are special international treaties governing taxes. There are many different types of taxes in the U.S. They are levied at different levels federal, state and municipal and the rules and amounts vary.