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Tax Implications for U.S. Tax Residents

Tax Implications

Taxes are an important part of life. For U.S. tax residents, understanding tax implications can be confusing and complicated. Understanding what taxes you need to pay, when you need to pay them, and how much you need to pay can be a daunting task.

Before even getting started, you need to know if you are considered a U.S. tax resident. U.S. tax residents are any United States citizens, green card holders, or those who pass a substantial presence test.

Filing Status

The filing status of a tax resident is essential. It determines the amount of taxes owed, the types of deductions and credits available, and other important factors. Taxpayers can choose between filing as single, married filing jointly, married filing separately, head of household, or qualifying widow(er) with a dependent child. Choosing the right filing status is important to ensure you are not overpaying or underpaying taxes.

Deductions and Credits

In addition to filing status, taxpayers must consider factors such as deductions and credits. A deduction reduces the amount of income that is subject to taxation, while a credit is a dollar-for-dollar reduction of taxes owed. Common deductions and credits for tax residents include the standard deduction, itemized deductions, dependent exemptions, and the earned income tax credit. Make sure you understand which deductions and credits you are eligible for in order to maximize tax savings.

External Income

If you have income from outside of the U.S., things can get more complicated. You must report worldwide income and make informal disclosures for non-U.S. assets. If you do not report, you may face monetary penalties of up to $25,000 or even face criminal issues. With external income comes the possibility of double taxation. Our expert team of professionals is equipped to help you mitigate this risk. We consider foreign tax credits, foreign income exclusion, and tax treaties with countries around the world.

Understanding U.S. tax implications for tax residents is essential to ensuring that you are paying the correct amount of taxes. The U.S. tax code is constantly changing, and those changes affect your taxes. Taxpayers should understand how the Internal Revenue Service handles various issues such as audits, collections, and appeals. At Harding Bell International, we provide specialized accounting and tax services to handle even the most complex filings to federal and state authorities. Contact us today to get started.


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