Foreign Tax Credit
Foreign Tax Credit The foreign tax credit is a type of tax credit the IRS provides to some taxpayers. It helps to prevent double taxation. In this article, we will explain how the foreign tax credit works and how to properly claim it. Tax Credit vs. Tax Deduction First, it is important to understand the difference between tax credits and tax deductions. A tax deduction only lowers your taxable income. This means you are [...]
Payroll for the Self-Employed
Payroll for the Self-Employed Payroll for the self-employed can be complex. It is important to understand how it works. It can greatly reduce your tax burden. In this article, you will learn how payroll for the self-employed works and how you can implement it. Self-Employment Tax If you make more than $400 through your business, you will be subject to self-employment tax. This tax is 15.3% of your income. It includes both the employer [...]
Foreign Earned Income Exclusion
Foreign Earned Income Exclusion The foreign earned income exclusion is a tax exclusion to help prevent US citizens and resident aliens from being subject to double taxation. In this article, we will go over the basics of what the foreign earned income exclusion covers. Foreign Earned Income First, it is important to understand what foreign income includes and what it does not include. The IRS defines foreign income as “wages, salaries, professional fees, or other [...]
Taxation for Resident and Nonresident Aliens
Taxation for Resident and Nonresident Aliens Taxation for resident and nonresident aliens differs from that of U.S. citizens. In this article, we will go over the basics of taxation for resident and nonresident aliens. Resident vs. Nonresident A resident alien is someone who is not a U.S. citizen but has a green card that allows them to work in the country. Or they have lived in the U.S. for at least 183 days over [...]
5 Investment Strategies That Can Lower Your Taxable Income
5 Investment Strategies That Can Lower Your Taxable Income If you consistently owe taxes each year, you may want to try using investments to lower your taxable income. These investments allow you to set aside funds in a way that will reduce the total amount of your income that the IRS can tax. In this article, we will explain how to use these 5 investment strategies that can lower your taxable income. Save for [...]
Taxation of Unemployment Benefits
Taxation of Unemployment Benefits With so many people receiving unemployment benefits during the past two years, many are concerned about the taxation of unemployment benefits. In this article, we will go over the basics regarding the taxation of unemployment benefits. What Is Taxable All the unemployment benefits you receive are includable in your gross income. This means all benefits you receive are taxable as ordinary income. However, unemployment benefits are not subject to Social [...]