Tax types and taxable persons
Taxes in the USA. The tax burden in the USA is based on the place of residence in the respective state or city. There are states with low tax rates (such as Delaware) and those with high tax rates.
In addition, there are cities or municipalities that collect high tax rates or duties – e.g. Marco Island near Naples, Florida. This community has a very high property tax rate; Preferably millionaires live there.
With regard to taxes, a distinction is made between
-Residents, i.e. US residents
-Non-residents, i.e. people are living abroad. This includes those who have been within the United States for less than 183 days in the past three years.
No difference is made whether the taxpayers are “aliens” (legal foreigners) or American citizens.
The following is only a brief overview of US taxes. As tax legislation is constantly changing, it is essential to consult a specialist!
As in Europe, income is taxable in the USA. The income tax is – depending on the annual income – between 10% and 38.6% of the annual income. The maximum rate is reached with an annual income of 307,500 US dollars (as of 2002).
There are numerous ways to reduce income, and you should definitely hire a specialist to do this. Up to an annual income of US $ 62,550 for a married couple assessed together, no taxes are paid in the USA. For children under 18, this amount is $ 6,050.
Medical bills, donations to political or charitable institutions are just as deductible as repair work on or in the house, be it owner-occupied or rented.
Value Added Tax
VAT is charged in almost all US states. This “consumption tax” (often also called “sales tax”) is variable, i.e. it is determined by the respective state and is between 0% (State of Delaware) and 8.75% (California and Texas) of the value of the goods. It is counted on the excellent price.
So don’t be surprised if you have to pay more at the checkout than what is stated on the price label. Sometimes everyday necessities are exempt from sales tax, such as shoes or clothing in the state of Pennsylvania.
Tax incentives for property purchases
The purchase of real estate is also tax-subsidized in the USA. If you sell a property within 60 months, then $ 250,000 per person is tax-free, or $ 500,000 for a married person. The prerequisite is that the house or apartment was the seller’s primary residence for at least 24 months within the last 60 months. If this is not the case, 15% “Federal Tax” is due on the profit (minus the tax exemption), plus local taxes, which are based on the state or municipality.
In the case of rental income in the USA from a foreigner living abroad, there is a choice: either submit a flat rate of 30% of the rental income as tax (WITHOUT tax return) or submit a regular tax return.
Taxes on real estate (comparable to German property tax in Germany) are much higher in the USA than in Germany. Depending on the size and location, houses are due in the tax of 8,000 to 10,000 US dollars per year, and often well above that. In areas that have seen a building boom and rising real estate prices in the last few decades, more and more elderly residents are being driven out of their homes due to the high property taxes: They can often no longer pay the very high property taxes.
For non-residents, a “flat tax” of around 30% is applied to income. Again, the following applies: involve experts! Binding information on tax matters is available on the homepage of the American tax authority Internal Revenue Service IRS.
Regulations for the self-employed
As a self-employed person in the USA, you need a so-called “Employer Identification Number”, or EIN for short. Depending on the income, the tax must then be paid either quarterly or monthly.
Your personal tax return must be submitted annually by April 15th. Be submitted to the IRS tax authority.
Providing answers in tax matters…
The tax authority IRS has published its own publication for foreigners with all the important information. This is the IRS Publication 519 (US Tax Guide for Aliens).
Further important information on the subject of taxes in the USA can be found on the homepage of the US Embassy in Berlin.
In particular, all-important questions are dealt with here, such as Deadlines that must be observed, from what income one is taxable in the USA, which forms must be filled out for which purpose, how real estate profits must be taxed, etc.
The branch of the American tax authority IRS, which is based in Frankfurt at the consulate, can also answer questions about taxes in the USA. It is responsible for the following countries: Germany, Estonia, Iraq, Iran, Italy, Yemen, Qatar, Latvia, Lebanon, Lithuania, the Netherlands, Austria, Poland, Romania, Slovakia, Syria, the Czech Republic, Hungary and the former Soviet republics.