U.S. Tax Laws and Tax System

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U.S. Income Taxes

(Last updated, February 2011)

Individual Income Tax: The U.S. individual income tax rates for 2011 are 10%-35%.
However if under the AMT, Alternative Minimum Tax, method the tax payable exceeds the tax payable under the regular income tax method, the AMT calculation is effective.
The AMT method is based on the gross income with reduced tax deductions and credits.

Tax Rate Schedules for Individuals and Trusts 2011 ($)

Single Taxpayers
Taxable income: Tax: On amount over

Over	But not over	Tax	+%	On amount over
$0	$8,500	$0.00	10	$ 0
8,500	34,500	850	15	8,500
34,500	83,600	4,750	25	34,500
83,600	174,400	17,025	28	83,600
174,400	379,150	42,449	33	174,400
379,150	-----	110,016.50	35	378,150

Married Individuals Filing Joint and Surviving Spouses

Taxable income: Tax: On amount over

Over	But not over	Tax	+%	On amount over
0$	$17,000	$0.00	10	0$
$17,000	$69,000	$1,700	15	17,000
$69,000	$139,350	9,500	25	69,000
$139,350	$212,300	27,087.5	28	139,350
212,300	378,150	47,513.5	33	212,300
379,150	-----	102,574	35	379,150

Married Individuals Filing Separate

Taxable income: Tax: On amount over

Over	But not over	Tax	+%	On amount over
$0	$8,500	$0.00	10	$0
8,500	34,500	850	15	8,500
34,500	69,675	4,750	25	34,500
69,675	106,150	13,543.75	28	69,675
106,150	189,575	23,756.75	33	106,150
189,575	-----	51,287	35	189,575

Heads of Households in U.S.

Taxable income: Tax: On amount over

Over	But not over	Tax	+%	On amount over
$0	$12,150	$0.00	10	$0
$12,150	46,250	1,215	15	12,150
46,250	119,400	6,330	25	46,250
119,400	193,350	24,617.5	28	119,400
193,350	379,150	45,323.5	33	193,350
379,150	-----	106,637.5	35	379,150

Estates and Trusts in U.S.

Taxable income: Tax: On amount over

Over	But not over	Tax	+%	On amount over
$0	$ 2,300	$0.00	15	$0
$ 2,300	5,450	345	25	2,300
5,450	8,300	1,132.5	28	5,450
8,300	11,350	1,930.5	33	8,300
11,350	-----	2,937	35	10,700

The U.S. federal corporate tax rates for 2011 are 15%-35%, depending on the annual taxable income.
Corporations may be taxed under certain conditions with the 20% AMT method.

U.S. Corporate Income Tax Rates-2011

Taxable income over	Not over	Tax rate
$0	$50,000	15%
50,000	75,000	25%
75,000	100,000	34%
100,000	335,000	39%
335,000	10,000,000	34%
10,000,000	15,000,000	35%
15,000,000	18,333,333	38%
18,333,333	..........	35%

Personal Service Corporations in U.S.

Personal service corporations are subject to a flat tax of 35% regardless of their income.

Personal Holding Company in U.S.

Personal holding companies are subject to an additional tax on any undistributed personal holding company income.

Year	Rate
2011	15.0%

Accumulated Earnings Tax U.S.

In addition to the regular tax, a corporation may be liable for an additional tax on its accumulated taxable income in excess of $250,000 ($150,000 for personal service corporations).

Year	Rate
2011	15.0%

Capital Gains: Capital gains of corporations are added to the regular income. There is a rollover relief for sale of business assets.
For individuals long term capital gain, When holding a qulified capital property more than 12 months (before selling), the tax rate is generally 15%, zero for low income earners, subject to certain conditions.
Short term capital gain is added to ordinary income and is taxed at regular tax rate.

Residence U.S.

A company is U.S. resident if incorporated in the U.S.
Both, resident companies and individuals pay taxes on their worldwide income, with relief given under certain conditions for foreign taxes paid, if any.
Individuals can invest in U.S. resident companies from abroad, but need to apply for a EB5 visa first.

The U.S. Tax Deductions

Losses are carried forward 20 years. There is a carry back of losses for 2 years under certain terms.
Consolidated tax returns are allowed under certain terms and limitations, mainly a minimum 80% holding of one subsidiary by the parent company.
Thin Capitalization-Interest expenses paid to related parties are not allowed when the debt to equity ratio is not substantiated by the payer.

Withholding of Tax at Source

The withholding of tax at source from the following payments to non residents payee is as follows:
Dividend- 30%.
Interest- 30%.
Royalties- 30%.

Income tax treaty with the country of the nonresident may reduce the withholdings.

Social Security

Social Security includes OASDI, Old Age, Survivor Disability Insurance, and Medicare.
The rate of OASDI is 6.2% for employers and 4.2% for employees, up to a ceiling of $ 106,800 for 2011.
Medicare tax rate is 1.45% for each ,the employer and the employee. There is no ceiling for Medicare tax.
Self employed pay 10.4% on OASDI on amounts up to $ 106,800 for 2011 and 2.9% for Medicare with no ceiling.

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