US Income Tax Guide US Income Tax Guide

Tax Residency

All individuals except nonresident alien individuals are generally subject to income tax. An individual is a nonresident alien if such individual is neither a citizen of the United States nor a resident of the United States.

An alien individual is a resident of the United States with respect to any calendar year if such individual:

– is a lawful permanent resident of the United States at any time during such calendar year,
– meets the substantial presence test or
– makes the first time election.

The tax liability of nonresident alien individuals is limited to income from sources within the United States.

Taxable Income

Gross income means all income from whatever source derived, including (but not limited to) the following items:

(1)Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2)Gross income derived from business;
(3)Gains derived from dealings in property;
(9)Income from life insurance and endowment contracts;
(11)Income from discharge of indebtedness;
(12)Distributive share of partnership gross income;
(13)Income in respect of a decedent; and
(14)Income from an interest in an estate or trust.

Withholding Taxes

Withholding tax is imposed on salary and wage income, tip income, certain gambling winnings, pensions, and retirement distributions.

Withholding tax may also apply to nonresident alien individuals with respect to their income from sources within the United States.

US Tax Rates

Taxation begins at EUR 9,984 (single individuals). For married couples, the filing threshold for joint returns increases to EUR 19,968.

10%$10,275 or less
12%$10,275 – $41,775
22%$41,775 – $89,075
24%$89,075 – $170,050
32%$170,050 – $215,950
35%$215,950 – $539,900
37%$539,900 & more
Tax rates 2022

0%,15%, and 20% Rates Apply to most Long-term Capital Gains. The effective tax rate on capital gains and qualified dividends, as well as on other investment income, increases by 3.8% for higher-income taxpayers subject to the additional tax on net investment income.

Regional Taxes

Most individual U.S. states collect a state income tax in addition to the federal income tax,. Some local governments also collect income tax. Forty-three states and many localities in the United States impose an income tax on individuals. Eight states impose no state income tax. The top tax rates in the individual states range from 0% -approx. 13%. The highest top tax rate is charged in California.

Income Tax Schedule

January 18, 2022 — Balance of 2021 estimated tax has to be payed.

January 31, 2022 — Form W-2 from each employer for whom the employee worked in 2021 and Form 1099-NEC from each business for whom the taxpayer worked and received at least $600 in payment.

April 18, 2022 — Filing for 2021 income tax return and payment of the tax liability.

An automatic six-month filing extension to October 17, 2022 may be obtained by filing Form 4868. However, even if an extension is permitted, interest will still be charged for taxes not paid by the original April 18 deadline and late payment penalties will be imposed unless at least 90% of the tax liability is paid by the original deadline.

For a taxpayer living and working outside the U.S. or Puerto Rico on the April 18 deadline there is an automatic two-month extension, until June 15, 2022, for filing the 2021 return and paying any balance due. However, despite the extension to June 15, interest is still charged on payments made after the original due date.

October 17, 2022 — Filing deadline if an automatic six-month filing extension using Form 4868 was received.

US Social Security Systems

The federal Old-Age, Survivors, and Disability Insurance (OASDI) program is the basis of the US social security system. It is administered by the Social Security Administration. The Social Security Act encompasses several social welfare and social insurance programs.