United States: a guide to the tax regime

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United States: a guide to the tax regime. How does the US tax regime work? If you are about to move to the USA and want to know more about the tax regime applicable to individuals or companies, in this article, you will find all the information you need.

If you are thinking of moving to the United States, or are curious to know how taxation in the United States works, in this article we will see what are the features related to the taxation of individuals and companies.

In the United States, any person who produces or sells goods or services, and likewise, anyone who is a member of a partnership is subject to a tax regime. Taxation in the United States occurs at both the state, local and federal levels.

Taxation is calculated, as in Italy, on an annual basis, according to the chosen solar or fiscal calendar.

In the case of the individual entrepreneur (Sole Proprietor), the tax period for keeping the accounts linked to the company must coincide with the individual one. Almost all taxes that a business pays to state and local governments are deductible from income for federal tax purposes.

Now let’s see in greater detail how the tax levy on individuals and individual and collective entrepreneurs takes place.

The United States and the tax system: general framework

The Federal Constitution of the United States of America establishes, in article 6, its supremacy over the laws of individual states and, with regard to tax matters, prohibits the introduction, by any single state, of taxes that go against the principles general taxation on imports and exports, as well as regulatory provisions that introduce discrimination in trade between the different Federal States and of these with foreign countries.

The United States tax regime hinges on a system with three levels of taxation:




Taking into account the aforementioned limits, the state tax administrations manage local taxes and those on consumption, which are fixed by the individual national congresses, by virtue of the provisions declined by the individual constitutions.

The Internal Revenue Code (IRC) is the legislative text that since 1954 brings together all the Tax Acts (tax laws) approved by Congress after being examined first by the House of Representatives, and eventually amended by the Senate, and then promulgated by the President ( the last profound version of the IRC dates back to 27 September 1986 with the Tax Reform Act drafted under the government of the then President Ronald Reagan).

In addition to this code, the Regulations (i.e. the ministerial administrative regulations) and the Revenue Rulings and the Letter Rulings (which are responses published by the Internal Revenue Service, the American Tax Administration) take on relevance, taking a position on the interpretation of certain laws and regulations following particular questions received from the taxpayer, and which play a fundamental role in this sense in the interpretative process of jurisprudential rulings.

In the next article, we will explain personal income tax, the income tax of legal persons, state and local taxes.

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