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Tax faq (en)

1. I opened a corporation in December of last year. Did not have any operations or activity. Do I need to file taxes for my business?

Yes and No

YES 

While opening your corporation you completed 2 steps process:

  1. Registration with the state you are doing your business
  2. Registration with the Internal Revenue Service to obtain your Employer Identification Number (EIN), common known as a TAX ID.

So, If you completed both registrations last year, opened a bank account and did not have any activity you are REQUIRED to file business taxes. The reason is, that IRS do not know that you did not have any activity, and they are expecting to receive your return.

If you will not do it you will receive a letter with a penalty, much later. Penalty is $190 per month for not

NO.

So, if you completed only first step in your registration and did not apply for your EIN (TAX ID) number last year, you are not obligated to file your business tax return.


2. As of today, July I would like to close my corporation, what are my action?

First of all you need to close your bank account, this will confirm that your business do not have any activity.

When you opened your corporation you completed two steps process, so, you need to do the same steps when you need to close your corporation.

  1. STATE: You need to fill our appropriate forms with the state you are doing business, informing that you are ceasing your business operations. You can do it anytime after you close your bank account. Of course, need to pay appropriate fees. Each state may vary.
  2. IRS: Closing your business with the IRS is a completely different process. You close your business at the time when you file your tax return. General rule is that business taxes are filed for a calendar year, until March 15th of the following year. So, if you are in July, you need to wait until the end of the year and file your Final tax return in January of the next year, until March 15th. This process applies to all situation, even if you ceased your business in February, you would need to wait all year, and in January file your final return. There are no additional fees to close your corporation with the IRS.

3. I’m not married and worked this year on a form 1099. Will I get a refund?

NO

You did not pay any taxes during the year, you are not getting back anything. People who have children might qualify for EIC refund, family who worked on W2 and paid taxes during the year might receive a refund.


4. I’m not married and worked half of the year on a form W2 and half of the year on a form 1099. Will I get a refund?

It is possible, depends how much of the Federal taxes you paid from your form W2. Take a look at window number 2, from your form W2.


5. My spouse did not have any income this year. Does she need to file a tax return?

YES

If you are married and your spouse did not make any income it is beneficial to you to do taxes together.


6. I married this year on December 30th. Do I need to file my taxes with my spouse?

YES

Based on the IRS guidelines, if you were married on December 31st, you are required to file your taxes Married Filing Jointly (MFJ) or Married Filing Separate (MFS).


7. Our student child worked on a form W2. Does he/she need to file taxes?

YES and NO

General Rule:

If your child received a form W2, and gross/total income (see field number 1 from your form W2), is LESS than $6,350 for 2017, and $12,000 for 2018 your child DO NOT require to file taxes. If income is more that above mentioned amounts, your child is required to file taxes.

NO, do not require to file taxes.

If your child received a form W2, gross/total income is not more that $6,350 for 2017, $12,000 for 2018.

Next step, please check field two from your form W2 “Federal Income Tax Withheld”. In this field, you can find zero, or $50, or even $500. So, your expected refund is based on this amount. If amount is zero, do not expect any refund. If it is $50, and you need to pay $75 to prepare taxes, no reason to file taxes.

YES, require to file taxes.

Next scenario, if your amount in the field number two is m

If your child is getting a refund he/she can choose to file taxes or not. Depends on the amount of a refund. For Example, if a refund is $15, and tax preparation is $50 of course you can skip and do not file taxes.

If your child owes money after his final review of the taxes, child have no option, he MUST file and pay taxes.


8. Our student child lived all year in the college. Will he/she be our dependent on our taxes?

Yes, because you provided a support to your child, he/she will be your dependent on your taxes. This is useful to you, as you will receive an additional credit for your child’s education. You must have a form of 1098 of your child’s educational institution.


9. I sold my apartment / property outside of the United States, and in my own country, from which I came, are my money being taxed, how can I go to the US?

US taxes are paid from the income you earned. Sold apartment, property is not your earnings income. In this case, there is no need to pay taxes on this amount. You can send money through the bank, make an “international transfer”.


10. I had a car crash last year, my car was completely destroyed. The insurance company has sent me a $ 7500.00 USD check. Do I need to pay taxes on this amount?

NO, you do not need to pay taxes on this amount. The money you receive from an insurance company is your compensation for any insured event and the fees will not be tax deductible.


11. I arrived in the US two weeks ago as a tourist, can I get a TAX ID number?

NO, you can’t receive the Tax ID personally in your name, but you can open a business or you can receive an Individual Tax Identification Number. ITIN – Individual Taxpayer Number (please see further questions).

The TAX ID number is issued for only two cases.

1) For enterprises

2) For people who have a Social Insurance Number, known as the Social Security Number (SSN).


12. I arrived in the USA two weeks ago as a tourist, can I open a business and get a TAX ID number?

YES.

You can open a business and get a TAX ID number.

Nice to help

Call (800) 913-0809 or send an SMS (224) 676-3577.


13. I arrived in the USA two weeks ago as a tourist, can I get an ITIN number?

YES, but the time of your arrival is important.

Depending on which time you arrived on time. An Individual Taxpayer Number is issued when it comes to paying taxes. US taxes are paid from earnings earned during the calendar year (earnings received during the period from January 1 to December 31). You should have received income in a calendar year, therefore, the Tax Office will issue you an ITIN number. You can only work one or two days.

For example:

John arrived in the US in March and worked for several months. He will be able to apply to the IRS for the ITIN number only next year in January, when it will be time to fill out a tax report.

Saul arrived in the US in December and worked for 5 days. YES, he can apply for an ITIN number in January.

The reason is that you need to submit a tax return to obtain an ITIN number.

Tax return rule: it’s done over the past year. Therefore, John will have to wait 9 months before he can fill out a tax return for the ITIN number.


14. What documents are required for receiving an ITIN number?

The receipt of the ITIN number requires your original passport, the amount you earned in a calendar year (maybe a few days) to make your mint declaration and money, pay taxes and services.


14a I have ITIN number. Can I get a credit card?

YES, you can apply for a credit card if you have ITIN number.


15. Do I need to send my original passport to the IRS for receipt of an ITIN number?

YES and NO

YES

If you fill out documents with an agency that does not have a license to do this, in this case you must send your original passport to the IRS. You will receive your passport back in return for 6-8 weeks.

NO

If you complete documents with a licensed office, you will not need to send your original passport. Your passport will be assessed and certified by a notary at the place.

Our office will be happy to assist you, we have all the necessary licenses for this procedure.

You can find our company’s license link directly from the tax office website.

Our company name T.I.P Inc. is located in Buffalo Grove, IL 60089.

https://www.irs.gov/individuals/international-taxpayers/acceptance-agents-llinois


16. We are a family of four. My spouse and I have social security numbers, and our children do not have and are not eligible for SSN. Can they apply for the ITIN number?

YES, your children have the right to receive ITIN numbers because they are your dependents. Please review the previous questions for more details, when and for what document.


17. I received a letter from the IRS to update my ITIN number. Do I need to do this? Does the ITIN number have an expiry date?

YES, since 2017 in January, the IRS introduced a rule to update ITIN numbers. If you have an ITIN number and have not been taxing for at least one year in the last three years, your ITIN number is now over, and you must complete the entire renewal procedure from the start. This means either sending your passport copy to the IRS or meeting a professional.

Call (800) 913-0809 we will be happy to help.


18. Can I open corporation if I do not have SSN?

YES,

In order to start your business without SSN, you need to apply for an EIN (Employer Identification Number).

Call us (800) 913-0809 or email us: contact@unitedstatestaxservices.us to apply your EIN.


19. What is difference between INC and Corp?

When you register a business, you use a legal form Corp or Inc. Corp is reduction from Corporation, Inc is reduction from Incorporated. In terms of legal structure, compliance obligations, limited liability or tax structure, there is no difference between the two.

This Reductions are used for the euphony of the company name.

For example, the official name our company is T.I.P. Inc not T.I.P. Corp.

Try pronounce both and you’ll see that second name is more harder to pronounce.


20. 1040x Corrected Tax return. True Story #1

(All names are changed)

Important! You can correct your taxes for the last three years!

Clients Alice and Erik came to our office by a recommendation from their friend. For the last couple years they were using another accountant. Erik was telling Alice for a while that they need to look for a second opinion and they were glad they came to our office.

When we looked at their taxes, we immediately noticed that they were not signed by the accountant who prepared their taxes. It was sent to the IRS stating, that Alice and Erik did their taxes on their own. So, when we evaluated their taxes we found that Alice and Erik did not claim the biggest refund available for the Earned Income Credit. Alice and Erik have a child and did not receive a refund for two years. After we amended their returns, they received a check from the IRS for $4296.00


21. 1040x Corrected Tax return. True Story #2

(All names are changed)

Important! You can correct your taxes for the last three years!

My wife was telling me for a while to try another accountant. I googled, and your office came up the closest to my home, so I decided to try. This is what Mike told me when he came to our office. Mike and his spouse were doing their taxes with an old friend. When I looked at Mike’s taxes for the last three years I immediately noticed that he left money on the table for the IRS. Mike has a daughter, who is in college and had some income in those years as well. Mike supported his daughter 100%, and she lived in his home as well. The problem with their taxes was that their old accountant did not indicate that Mike supports his daughter, and that his daughter lives with Mike. After all our corrections, Mike received a check from the IRS for $3696.00. He was so upset that his friend did not do his taxes correctly and he was thankful to his wife who pushed him to look for another tax professional.


22. 1040x Corrected Tax return. True Story #3

(All names are changed)

Important! You can correct your taxes for the last three years!

I’m new in the country and did only one tax return for my business and my personal. However, I did not like the accountant who prepared my taxes. She was rude to me and did not explain anything, can you please look into my taxes? This is how our meeting started with Sam.

When we analyzed Sam’s taxes we noticed that he has a Small Business Corporation. Next thing we noticed was that he had total income of $28000 and had only $2500 in expenses. Expenses included only his equipment purchases. This short look immediately caught our attention and we could see that his taxes must be amended. I asked him if he had a cell phone for his business, did he have a car, any repairs, a home office, office supplies, parking fees, and fees for tollways. He confirmed that of course he incurred all of these expenses! The next step was to calculate these expenses and amend his return. When the process was completed, Sam received a check from IRS for $5152! You can only imagine how excited he was!


23. 1040x Corrected Tax return. True Story #4

(All names are changed)

Important! You can correct your taxes for the last three years!

Maria and Kyle came to our office regarding their immigration process, and of course brought their taxes for the last three years. Looking at them, I asked a question: Are you married? Yes, they answered. Next, question was when you get married, answer was 2 years ago. I was shocked when I looked at their tax return. On their tax return it was indicated that Maria is single. She told me a story about her accountant, and said he did not ask them any questions, did not give any advice or make any comments during tax return preparation. Just short questions, with yes and no answers.

So, in addition to the incorrect status claimed on their tax return, another error was recognized. Maria worked as self-employed and did not show a single expense on her tax return. In their words, she made $18000 a year, and did not claim a single dollar for her expenses. Maria paid taxes from total of $18000. We were able to correct her and Kyle’s taxes. As a result, they received a check from the IRS in the amount of $2569. This is a significant amount for a young family!


24. 1040x Corrected Tax return. True Story #5

(All names are changed)

Important! You can correct your taxes for the last three years!

Mark attended one of our seminars and heard something so important that he was not able to sleep that night. When you have a corporation, you need to do taxes for your corporation and your personal taxes as well. And it is understandable, he is new in the country and his tax professional who did his taxes for the last two years did not explain all of this. Mark was concerned that he did not have any documents for his corporation taxes, and he realized that he did not file a single tax return for his corporation. Penalties can be up to $2600 a year, just for not filing a corporation tax return.

Now, Mark is in our office and we analyzed his taxes.

He received a form 1099 for his corporation, and his prior accountant showed all corporation income on his personal tax returns for two years! When we converted and amended his personal tax return and moved all his income to a corporation, Mark received a check for $2180.00. Now he can relax, his corporation income is separate from his personal, and he have filed his corporation tax return as required by the IRS.


25. If I want to receive more than $204 of pension, should I go to work and pay more taxes?

Spouses worked in the USA 15 years. A husband paid taxes for 276k of income and a wife for 98k of her income. An estimated husband’s pension will be $822, and a wife’s pension will be $ 204. They both are 61 years old and have only 4 years left until the pension.

The main wife’s question is if I want to receive more than $204 of pension, should I use the opportunity go to work as self-employed to earn more, and to pay more taxes for achieving the bigger amount of the pension?

The answer is no, it is not a good idea. In this case, you won’t achieve a much larger amount of your pension. We would like to give you advice: use your pension wisely, do not miss the precious time and enjoy the free time of your life.


26. I have the checkbook with my old mail address. Will I have problems with using my checks?

No, you won’t have problems. Your old mailing address does not effect on using checks if your bank account is still the same. The most important is if you’d have money on your bank account.


27. Can I Deduct Home Office Expenses Under the New Tax Law?

Before the Tax Cuts and Jobs Act went into effect, work-at-home employees with a home office could deduce unreimbursed job expenses that exceeded 2% of your AGI (adjusted gross income). That is no longer the case.

If you own a business which you operate from your home office, then you might still qualify for the deduction. You will need to file Schedule C for a sole proprietorship with your tax return to be eligible for the deduction.


28. What is the Definition of a Home Office?

The definition of a home office under the Tax Cuts and Jobs Act is an exclusive place for your self-employment. This space must be the primary location for your business or a separate structure that you use for it.

The size of your company is not a requirement for eligibility. As long as you are operating within the scope of self-employment, then you can deduct the direct expenses which relate to your home office as you could in previous years. That includes any equipment, supplies, furniture, and maintenance expenses.

You are also eligible to continue deducting a portion of your expenses which relate to your home based on the amount of space that your office occupies. If you prefer, the Internal Revenue Service also offers a $5 per square foot claim for up to 300 square feet if you prefer to take the simplified deduction instead of tracking your expenses.


29. What If I am a Remote Worker?

If you are a work-at-home employee, then the Tax Cuts and Jobs Act impacts your tax responsibilities. Even when you have a home office because that is what your employer wants, you are unable to deduct these expenses on your return.

Anyone who operates as a freelancer, independent contractor, or sole proprietor will typically stay eligible.

If you have any questions about your specific situation, then our team would be happy to help find the answers you need about your tax return. Contact us today with your concerns, and together we will make sure you can deduct the business expenses for which you qualify to file your taxes correctly.