Are states with only sales tax, and no income tax, regressive? 

Answer by A Quora admin: It is not an absolute, but if a state has no income tax then obviously the state will tend to rely on sales tax and property tax for revenue.  Both sales and property tax tend to hit lower income families more than the typical income tax. But the regressive nature […]

What differences in accounting work are there between a sole proprietorship and a single-member LLC with S-Corp status? 

Answer by A Quora admin: You are correct that the major difference is paying yourself a reasonable salary and paying payroll taxes on those wages.  You will have to file a separate tax return for an S Corp as opposed to a sole proprietorship which is just a schedule C on your personal tax return. […]

I want understand the tax for an LLC, which is owned by 2 partners. Is there any additional tax like a self-employee tax or income tax fo… 

Answer by A Quora admin: If you and your partner own a US LLC, it is by default taxed as a US partnership.  Unless you have made an election to have your LLC taxed as a corporation, then the partnership needs to file a Form 1065, US partnership return and report each partner's share of […]

How are “virtual” international internet-based service businesses taxed? 

Answer by A Quora admin: If you own a single owner LLC then unless you file an election to be taxed as a corporation, the tax authorities look through the LLC to you.  The LLC is what is known as a disregarded entity for tax purposes.  What that means is your income primarily is taxable […]

IRA Mix-Up: My IRA was still linked to a bank account that was already closed, but contributions were somehow still pulled from it. What … 

Answer by A Quora admin: You need to do two things: Contact the bank where the closed account was and see if you have an overdraft.  If you do, they will expect you to cover the funds that were drawn.  If the draft was rejected then you need to go to step 2. Contact the […]

I’m planning to establish LLC. I’m concerned if offices (not registered agent) in two different states constitute operations in interstat… 

Answer by A Quora admin: I am not sure if your question is am I engaged in interstate commerce or do I need to register in another state if I have an office or physical location there. Interstate commerce is generally defined as shipping tangible goods across state lines and really has no relevance to […]

How does VAT work and what is its advantages from sales taxes? 

Answer by A Quora admin: VAT or Value Added Tax works by adding a layer of tax at every point in the life cycle of a product that is produced and sold.  The value added part comes in because the tax is based on the incremental increase in value or essentially gross profit at each […]

Under an S corporation, can you deduct business expenses with respect to the foreign earned income exclusion? 

Answer by Wray Rives: Your earnings through the S Corp do not qualify for the Foreign Earned Income Exclusion.  The salary you receive from the S Corp may qualify, assuming you individually qualify otherwise.  S Corp pass through income is not earned income and does not qualify for the exclusion, so you can still deduct […]

US Tax: Does a non-US-resident, non-US-citizen individual which works in a foreign country and provides an intangible service to a compan… 

Answer by Wray Rives: Just having a US bank account and receiving payments into that account does not alone subject you to US taxation. US citizens and residents are subject to taxation on worldwide income; however, non-US residents are only subject to US tax on income that is considered US source income.  Providing services from […]

Is the housing allowance for American expatriates in the UK considered taxable income? 

Answer by Wray Rives: It is possible that some of your foreign housing allowance may be excluded from regular income tax.   You calculate your daily housing expense and deduct a base housing cost standard which is equal to 16% of the Foreign Earned Income Exclusion.  For 2014, you would add up your total foreign housing […]