These are the 5 topics that I share with you in this post:
Discover the Top 5 Passive Income: Increase Your Earnings Without Effort
Tax Risks associated with the lack of Documentation of Bank Transactions
What am I going to do with my $10 million?
How to react to a suspicious or fraudulent letter about your taxes?
What kind of taxes should you pay as an investor in the United States?
1 - Discover the Top 5 Passive Income: Increase Your Earnings Without Effort
Passive or residual income is income that is obtained without having to work actively for it, such as interest, rents, royalties, dividends, etc. These income are the key to achieving financial freedom, as they allow you to cover expenses without depending on a job or other people.
What are the types of passive income?
Income directly related to a trade or business in the United States: These are those that derive from the performance of economic activities in US territory, such as selling goods or services, renting properties, providing advice, etc.
Fixed, determinable, annual or periodic income (FDAP): These are those that are received regularly and predictably, such as interest, rents, royalties, dividends, etc.
What is the Top 5 Passive Income?
There are various ways to generate passive income and among the best options are:
Dividends: Dividends are regular payments made by companies to their shareholders, which come from the company’s profits. By investing in shares of solid and stable companies, you can benefit from these payments without having to lift a finger. You should keep in mind that these income will be subject to a 30% withholding at source, unless there is an exemption or a treaty that reduces or eliminates such withholding. In addition, if you sell the shares, you will have to pay the capital gains tax.
Real Estate: Real estate investment is another popular way of generating passive income. Buying properties to rent them long term can be a steady source of income. However, you should keep in mind that these income will be subject to federal and state income tax, and that you will have to file Form 1040-NR. In addition, if you sell the property, you will have to pay the capital gains tax.
Content Creation: In the digital age, content creation can become a significant source of passive income. From writing e-books, recording podcasts, to creating online courses, there are numerous ways to monetize your knowledge and creativity. For example, suppose you have developed an online course on digital marketing strategies. If you sell it for $200 and manage to sell 100 courses per month, you would be generating $20,000 per month in passive income.
Affiliate Programs: Affiliate programs allow entrepreneurs and content creators to earn commissions by promoting products or services from other companies. For example, suppose you have a blog about technology and promote a laptop that costs $1,500 through an affiliate program with a 5% commission. If you manage to get ten people to buy the laptop using your affiliate link, you would earn $750 in passive income without having to deal with direct sales or customer service.
Patents and Intellectual Property: If you have a creative mind and have developed a unique invention, obtaining a patent can be an excellent way to generate passive income. Suppose you create an innovative device and decide to patent it. Then, you grant the right of manufacture to a company that pays you $10,000 per month in royalties for the use of your patent.
Take advantage of the power of passive income and take your finances to the next level!
2 - Tax Risks associated with the lack of Documentation of Bank Transactions
Are you an entrepreneur or investor with financial interests in the United States?
If so, it is essential that you know the tax risks associated with the lack of documentation of your international bank transactions.
Tax risks are those events or situations that can negatively affect the tax situation of a person or company, generating a higher payment of taxes, penalties, interest or even legal processes.
These risks can arise from:
External Factors, such as changes in legislation, market fluctuations or natural disasters B. Internal Factors, such as errors in accounting, non-compliance with obligations or lack of planning.
The prevention of tax risks consists of adopting measures to identify, evaluate and mitigate the possible scenarios that may compromise the security and efficiency of taxation.
Why is documentation of bank transactions crucial?
The proper documentation of bank transactions is essential to demonstrate the legitimacy of your financial operations and avoid tax problems. Imagine that you are an investor who transfers $100,000 from an account abroad to an account in the United States to finance a commercial project. If this transfer is not properly documented, you could face suspicions of tax evasion or money laundering. The absence of concrete evidence can lead to investigations, fines and a costly bureaucratic process.
There are various risks that arise from inadequate documentation of bank transactions, one of the most common being double taxation, where the same income or transaction is taxed by more than one country. For example, if you receive $50,000 from a company based in Europe and do not have documentation to prove that you already paid taxes on that income in your country of origin, you could face the obligation to pay taxes again in the United States.
Another risk is the loss of tax benefits. If you are a foreign investor in the United States and make investments in local companies, you could be entitled to certain tax incentives. However, if you do not have solid documentation to support your eligibility for those benefits, you could lose them and face a higher tax burden.
In conclusion, the tax risk associated with the documentation of bank transactions is an important concern for entrepreneurs and investors, however, by taking preventive measures and maintaining adequate documentation, you can protect your international finances and avoid unnecessary complications.
Remember that being well informed and having the support of tax experts will help you successfully navigate the global financial world.
3 - What am I going to do with my $10 million?
Since I have my goal very clear, the second step is to really know why I want that amount of money. In other words, I have to really know what I am going to do with my $10 million because when things get tough, because they will get tough, I have to know why I should not give up during this great journey.
So, what am I going to do with my $10 million?
The first thing I have to do, since it is my obligation as a father, husband, son, brother and leader of my company, is to share the money with my family and my work team. Tell me!
Who wouldn’t want to help their wife, parents, children, siblings, grandparents and the same work team that is supporting you in this great goal of generating $10 million? Because my goal is to pay them at least $100,000 a year for supporting me on this path.
4- How to react to a suspicious or fraudulent letter about your taxes?
If you are a taxpayer who does not live in the United States, you may receive a letter from the government or an agency that you do not know asking you for information or notifying you of something about your taxes.
How to recognize a true IRS letter?
The IRS is the agency of the US government that is responsible for collecting federal taxes and enforcing tax laws. This agency sends letters or notices for various reasons, such as:
You have a debt or a refund higher or lower.
The IRS has doubts about your tax return or needs to verify your identity.
The IRS needs more information or has made changes to your return.
The IRS notifies you of delays in processing your return or informs you of your rights as a taxpayer.
If you receive a letter from the IRS, the first thing you have to do is read it carefully and make sure it has the following elements:
Your name, address and taxpayer identification number (ITIN).
The date and number of notice or letter.
The year and type of tax return to which the letter refers.
A clear and detailed explanation of the reason for the letter and the instructions for responding or resolving the matter.
A toll-free number to talk to the IRS if you have any questions or need help.
The signature of an authorized IRS employee.
In addition, you should keep in mind that the IRS never communicates by email, text messages, social networks or phone to ask you for personal or financial information, nor to threaten you with legal or criminal actions.
If you receive a suspicious communication that claims to be from the IRS, do not pay attention or give any data. Better report it to the IRS following the instructions that you will find on their website www.irs.gov
What to do if the letter is true?
If you verify that the letter you received is true, you must follow the instructions given by the IRS. Depending on the case, you may have to:
Pay the debt or request an installment payment plan if you cannot pay everything.
Correct any errors or omissions in your tax return and send a corrected return.
Give the IRS the information or documentation they ask for.
Accept or claim the changes that the IRS made to your return.
Request a refund or a tax credit that you are entitled to.
It is important that you respond to the IRS letter within the deadline they give you, which is usually 30 to 60 days. This way, you can avoid extra charges for penalties and interest, as well as protect your appeal rights if you disagree with the objections they presented. If you need more time to respond, you can request an extension from the IRS.
5 - What kind of taxes should you pay as an investor in the United States?
If you are a foreign investor who wants to invest in the US market, it is important that you know the different types of taxes that you may have to pay, as well as the possible ways to reduce your tax burden.
What is the federal income tax?
This is the tax that applies to the income you earn in the United States, whether active or passive.
Active income is income that comes from an economic activity carried out in the United States, such as a business or a job.
Passive income is income that comes from sources such as interest, dividends, royalties or rents.
Foreign investors who only earn passive income in the United States are generally not required to file a tax return in the United States, as long as the withholding agent (for example, the bank or the broker) has withheld the corresponding tax and paid it to the Internal Revenue Service (IRS).
However, if you earn active income in the United States, or if you have any type of permanent presence in the country, you will have to file a tax return and pay federal income tax according to your tax category and your level of income.
What is the capital gains tax?
The capital gains tax is the tax that applies to the difference between the sale price and the purchase price of an asset, such as a stock, a property or a work of art.
Capital gains are classified into two types:
Short-term capital gains are those that are obtained by selling an asset that has been held for less than a year, and are taxed as ordinary income.
Long-term capital gains are those that are obtained by selling an asset that has been held for more than a year, and are taxed at a preferential rate that ranges from 0% to 20%, depending on your level of income.
What is the property tax?
The property tax is the tax that applies to the estimated value of a real estate property, such as a house, an apartment or a land. The property tax is collected at the local level, that is, by the counties or municipalities where the property is located. The property tax rate varies according to the location, type and use of the property, and is paid annually or semiannually. Foreign investors who own real estate properties in the United States are subject to property tax, just like domestic investors.
What is the state income tax?
The state income tax is the tax that applies to the income you earn in a certain state, whether active or passive. The state income tax is collected at the state level, that is, by the governments of the states where you earn income. The state income tax rate varies according to the state, type and amount of income, and is paid annually or quarterly. Foreign investors who earn income in the United States are subject to state income tax, just like domestic investors.
What is the room or vacation tax?
The room or vacation tax is the tax that applies to renting a room or a real estate property for a short period of time, usually less than 30 days. The room or vacation tax is collected at the local or state level, depending on the location and type of accommodation. The room or vacation tax rate varies according to the destination, type and price of accommodation, and is paid per night or per reservation. Foreign investors who rent their real estate properties in the United States as tourist accommodations are subject to the room or vacation tax, just like domestic investors. The room or vacation tax is calculated by multiplying the rental price by the room or vacation tax rate. The rental price may include other charges such as cleaning, service or commission.
Did you know you can pay 0 taxes in the U.S. with 30 days of free accounting?
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Antonio Coa, CPA
Tax Specialist &
Antonio Coa, LLC
Whatsapp: (561) 814-4558