As a company owner it is common to employ family members, such as a spouse. The employment tax requirements family members can vary to those that apply to general employees.
Below is a summary of the considerations you should take as a married couple running a business.
How you married partner earns their social security benefits
A spouse will be considered as an employee for tax purposes where there is a employer/employee relationship. In this instance the employee spouse is subject to income tax and FICA (Social Security and Medicare) withholding.
I both partners can be regarded as having an equal say and presence in the affairs of the business; a partnership exists and so the business’s income should be reported on a Form 1065, U.S. Return Partnership Income.
Married Couple both carrying on the trade or business
Qualified joint ventures between married couples filing a joint return are not generally treated as a partnership for federal tax purposes. All items of income, gain, loss, deduction and credit are divided between the spouse in accordance with their respective interest in the venture. Each spouse must take into account his or her respective share of these items as a soul proprietor, Therefore, it is anticipated that each spouse would account for his or her respective share on the appropriate form, such as a Schedule C.
For the purpose of determining net earnings from self-employment, each spouse’s share of income or loss from a qualified joint venture is taken into account.
As an accountant with over 10 years experiences accounting for US Expats and non-resident aliens based in the UK, we are expert in advising about all matters surrounding US tax.
This article is aimed to break down the US tax rates, penalties and interest US Expats and non-resident aliens should be aware of.
Succeeding President Donald Trump’s signing of the Tax Cuts and Jobs Act (TCJA) in 2017, the US transfer tax system has seen its most significant reform in over 30 years. Transfer tax comprises gift tax; on property transferred during lifetime, and estate tax; imposed on property transferred at death, and under the TCJA, the exclusion rates of these taxes have doubled from $5.49 million to $11.18 million for individual US citizens. These increased tax inclusions are very generous to US citizens, protecting the majority of them from transfer tax, but these new laws do not apply to non-US citizens or those non-domiciled (non-US persons for ease of reference) meaning they remain subject to estate and gift tax.
Following on from yesterdays article ‘Do you need to file a US Tax Return? (For those living outside of the U.S.’, we progress to break down the filing and paying aspects of US tax as a US expat or resident Alien.
U.S. Tax can be a daunting subject for Americans within the U.S.A, let alone for those living outside of America with U.S. tax obligations. This article aims to help you establish whether you are required to file a tax return.
With the passing of the recent US Expat tax deadline in mind, we have put together an article summarising some of the main penalties that Americans living in the UK may be subject to if they are not compliant. We also offer advice on how to avoid these penalties.
The Tariffs introduced on imported goods, by President Trump back in March, have shaken the fashion world.
US expats are required to file a US federal tax return in order to disclose their worldwide income. If you’re a US expat who lives in a low-tax country and earns above the Foreign Earned Income Exclusion threshold, you are likely to owe US tax.
Donald Trump's 2017 tax reform has had and will continue to have huge implications for US expats who have an investment in non-US businesses. The two main new laws in place relating to Controlled Foreign Corporations (CFCs): any non-US business that is at least half owned by US shareholders, each of whom owns at least 10%.
Many actors are considered self-employed when it comes to filing their taxes. When filing your regular year-end 1040 income tax file, you will also be required to file a 'Schedule C' and state all the 1099s you received throughout the year. There are many unique deductions actors are allowed to take advantage of - these should be reported on the 8829 form for home office deduction. Further to this, you will liable to self-employment tax in addition to federal income tax. Paying estimated quarterly taxes may be necessary on Form 1040-ES for some, but even if this isn't mandatory (your tax liability does not exceed $1,000), it can be a great way to budget throughout the year.