Читать книгу Taxation of Canadians in America - David Levine - Страница 6

Income taxes are based on income and are imposed at the federal level, most state levels, and some local city levels within the US. Each state or city may define taxable income differently; however, most states refer to the federal law for determining taxable income. Common examples of income that may be taxed differently by a state than by the federal government are Social Security income, interest income from US treasury obligations, and pension benefits from that state’s governmental workers. Cities typically tax income earned within that city. Cities that impose a separate tax are generally limited to the states of Ohio, Pennsylvania, and New York. In the US, you must file separate returns to the federal, state, and city governments, similar to filing separate Canadian federal and Quebec provincial returns.

In the US, individuals, estates, trusts, and certain corporations are subject to income tax. Partnerships and corporations that make an election to be treated as a small business (known as making an “S election”) are not taxed. Partnerships and S corporations are what are called “flow through” entities. This means that the income, expenses, and ultimately the income tax flows through to the individual partners or shareholders. Nonresidents of the US are not allowed to be shareholders of an S Corporation.

Regular corporations (sometimes referred to as “C corporations”) are subject to double taxation because the corporation pays tax on the income and when a dividend is paid, the individual pays tax on the dividend. The corporation does not receive a deduction for the dividend and the individual does not receive a credit for tax paid by the corporation.

Federal and many state income tax rates are graduated, meaning that at higher levels of income you pay progressively higher levels of tax. The tax rate that corresponds to your highest level of income is known as your marginal tax rate. For individuals, the income level at which the various tax rates apply, varies by your filing status.

For the 2011 tax year, individuals are subject to federal graduated tax rates from 10 to 35 percent; the 35 percent tax rate applies to taxable income of more than $379,150 for couples filing jointly and single individuals. Also for 2011, corporations are subject to federal graduated rates of tax from 15 to 35 percent; the 35 percent tax rate applies to corporate taxable income of more than $18,333,333. State income tax rates vary from 0 to 11 percent. State and local taxes are generally deductible in computing federal taxable income.

The Federation of Tax Administrators website www.taxadmin.org/fta/rate/ has information on the latest tax rates, surveys, and rankings.