Who Are Exempt Individuals Under US Tax Residency Laws ?

exempt individualsExempt individuals are certain types of individuals whose physical presence in USA is not counted fro tax residencey purpose .In earlier articles on tax residency , readers were informed that for determining the tax residency , a substantial presence test is done to determine if the person concerned was in USA for specific number of days .It was also stressed that certain physical presence days are not counted or exempt days for determination of tax residency under Internal Revenue Code. Apart from exempt days , US tax law provides that number of days of presence of certain individuals may may not count for determining the number of days of substantial presence in USA. This benefit is allowed to very limited number of persons referred as exempt Individuals. 

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How is Unemployment Compensation Taxed Under US Tax Law ?

unemployment compensationIn the United States , a worker receives unemployment compensation or  benefits equal to between 40-50% of their previous pay generally . This is on account of Federal Unemployment Tax Act (FUTA), which authorizes the Internal Revenue Service (IRS) to collect an annual federal employer tax. This tax funds the program to compensate  workers who have become unemployed through no fault of their own. As a rule , if anyone receieves  unemployment compensation during the year, he/she  should receive Form 1099-G that shows the amount of unemployement compenation paid to him .

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IRA Contribution Limit : 4 Good Points to Know About

IRA Contribution LimitIndividual Retirement Agreements or IRAs are investment tools for tax savings by employed persons. So, an employee can save by opting for traditional IRAs or participating in IRA (Roth) . But the Internal Revenue Code provides for IRA contribution limit . In other words,one can save in these retirement savings instruments only up to an extent . If you exceeds the limit, you will have to pay tax on excess contribution. So here are five most important points on IRA or IRA(Roth) contribution limits

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Taxation of Alimony Under Internal Revenue Code Simplified

taxation of alimoneyAlimony is the amount associated with divorce . A painful arrangement , but that is a fact of life. Another fact is that the IRS desires its share out of such money received by you .In other words alimony is taxable income in recipient’s hand. At the same time, the payment of alimony is also deductible for the person paying . Yes, the amounts paid under divorce or separate maintenance decrees or written separation agreements entered into between you and your spouse or former spouse are considered alimony.However Internal Revenue Code provides a number of condition that must be consulted before you can claim the payment for separation as deduction from taxable income of the tax year.

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Qualified Educational Expense Explained Through 8 FAQs!

qualified educational expenseIn orde to claim education credit or deduction, one of the most important condition is that the exepnse on education should be within the Qualified Education Expense defined under Internal Revenue Code. So what does the term Qualified Educational Expense mean ? Generally , a  qualified education expenses are amounts paid for tuition, fees and other related expenses for an eligible student.A close examination reveal that there are many conditions that needs to be satisfied before one can claim an expense for the purpose of educational credit. So here are five frequently asked questions which will cover almost all the necessary issues related to qualified educational expense.

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When A Dependent Must File Tax Return ?

dependentUnder US Tax code , a tax payer gets tax exemption , deductions and tax credits for the qualified dependents. for example , you may have qualified child dependents or parents who are claimed as dependent in your return. They may have independent source of income i.e they may have earned income or unearned income . As per 26 US Code ,  the claim of tax relief on account of dependent in your return also enjoins upon the dependent to check if filing of tax return is obligatory under the law. Internal Revenue Code provides different parameters for -single dependents and married dependents- deciding about the condition of filing tax return by them.

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