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Tax Systems

There are many different tax systems worldwide. Individuals may have difficulties interpreting what tax system is a work. Uncertainties of the common tax systems or what tax system should be used if you are a dual citizen often lead to questions like the ones answered below by the thousands of Experts.

What are the most commonly used tax systems worldwide?

Virtually every country in the world has some form of taxes. The primary tax system worldwide are personal income taxes, corporate taxes, social security and payroll taxes, domestic goods and services taxes, trade taxes, tax rates, property taxes, import and export taxes, and nontax revenues from seigniorage and public enterprises.

Items that will change depending on what country would be things like the percentage of tax, the mix of the tax, and what they deem as taxable. Addition they may call a certain tax by a different name. Sales tax might be called a VAT (value added tax) in some countries.

If I work on an unincorporated territory. Do I have to pay into the federal tax system?

U.S. possessions are islands that the U.S. owns but have not made into a State of the United States. U.S. possessions are divided into two groups. One group has their own governments and tax systems. This group includes the possessions; Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, and The Commonwealth of the Northern Mariana Islands. The second group does not have their own government or their own tax systems. This group consists of; Midway Island, Wake Island, Palmyra Island, Howland Island, Johnston Island, Baker Island, Kingman Reef, Jarvis Island, and some other U.S. owned islands.

People who are in the second group that do not have their own tax system are subject to the income taxes and withholdings of the U.S. federal income taxes.

Does the Trust have to pay Federal and State Estate Income Taxes at the time of death on the value of transferred assets contained within the Trust?

It is possible that two different tax systems would be in the mix. If it is an irrevocable trust and has its own tax Identification number then it pays its own income taxes per the tax rates created for trusts. If it is not an irrevocable trust then the income, gains, etc. go through to the grantor. Estate taxes are transfer taxes that are due from the estate.

How does dual citizenship of the United States and Brazil affect taxation of earned income in the United States?

Dual citizenship does not affect taxation of earned income in the United States. Any income earned in the U.S. is taxable in the U.S. even if you are a non-resident alien. If you are trying to figure out which country of your dual citizenship is considered your primary regarding taxations of all your income then you would typically refer to the mutual bi-lateral tax treaty. Currently the U.S. and Brazil are still in negotiations of this treaty.

One of the items considered when a country deems themselves as primary would be where the individual has their primary home. This would surround determinations like vital interests and where the habitual home is. Often times the amount of years in the primary home comes in to play as well.

If I exercise stock options and end up triggering Alternative Minimum Tax (AMT) for 2011, how does that impact deductions?

What you are referring to are two separate tax systems. The regular tax system and the AMT tax system. They each have their own rules of what is included into the taxable income as well as what can be deducted.

Obtaining correct information and insight about tax systems can help when faced with circumstances involving one or more tax systems. Experts can helps answer what kind of tax systems are used worldwide or if wages working in a possession of the U.S. is taxed under the federal tax system. Get the answers fast and affordably by asking an Expert.

Ask a Tax Professional

Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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Experience:  10 years experience
16356563
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Recent Tax System Questions

  • I have stock options in a company that are not exercised. I

    I have stock options in a company that are not exercised. I also have shares that I have owned for over 1 year, and the AMT was already paid when I exercised them.
    I am planning on leaving my job at the end of the year, which means I will have to exercise the options within 90 days and realize a gain/income. I will need to sell some of the shares I own (I assume this is what I should do so the sale of these shares would be long term cap gains) to cover the AMT tax.
    I am currently long on the company and would like to keep as many shares as I can. Although I will probably sell a little more for a cash reserve.
    So I need to know how many shares I will need to sell to cover the AMT I will incur from exercising the options.
    I am trying to create a spreadsheet where I can vary things like share price, shares sold, etc..
    Do these formulas seem like they would give me a reasonable estimate ?
    How can I find the correct tax rate?
    Assume no employment income for next year (would also like to be able to calculate with variable amounts of employment income as a secondary question).
    Assume married with 170K AMT deductible
    Assume the exercise is income several times the AMT deductible
    (#shares * share price) - (#shares * strike price) = Exercise income
    #shares sold * share price = sell income
    Exercise income + Sell income = total income
    Total Income - AMT Deductible = taxable income
    taxable income * Tax rate = tax liability
    thanks
  • I exercised 1000 ISO shares in 2012 at price $3.40 per share

    I exercised 1000 ISO shares in 2012 at price $3.40 per share and sold it in the 2013 holding less than a year.
    At the time of my exercise, Market fair value of the share was $18.48. In the 2012 tax return, Adjusted sales value of (18.48-3.40)*1000=$15,080 was added to my AMT income and I was taxed based on my AMT income that year. Then in 2013, the Adjusted sales value of (18.48-3.40)*1000=$15,080 was added to my W2 statement. My ordinary basis on the schedule D of the 2013 return is $18.48 per share (3.40 cost + $15.08 adjustment from the w2 form).
    Should my AMT basis be $18.48 (ordinary basis) + $15.08 (last year AMT adjustment)= $33.56 per share
    or $3.40 (price per share) + $15.08 (last year AMT adjustment) = $18.48 per share?
    Please advise.
  • Hello, I am unemployed due to being a caregiver to my disabled

    Hello, I am unemployed due to being a caregiver to my disabled wife and son. long story. also chapter 7 discharged in 8/2014. I am a resident of NJ. our joint income wife disability and my small pt wage is 20k. However buying a home in florida for 110k. taking cash out of my 401k. plan is to take 10% tax hit. i know about 10% pre 59 draw. so my overall 401k 2014 deduction will be 120k minus 12k tax and 12k pre 59 draw penality. after doing some quick math based on nj 2014 tax rate and fed rate i am thinking about hitting 110k with draw with a 7% hit and adding an additional 10% to exisitng 10% tax for a total so I don't get killed in april. does this make sense to cover myself?
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