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The taxation system followed in the USA is very unique and innovative. It is levied by states, local, and the federal government. Let’s start with the basics of US Taxation. Mainly there are two direct taxation laws followed in the USA, these are:

State Income Taxes

Respective State governments charge an income tax that is based on the calculations stated by the state taxation policies. This means that the tax charge would differ from state to state as each state has its own autonomous tax system.

Federal Income Tax

This income tax is imposed by the IRS or Internal Revenue Service based on the annual income of the payer. This is applied to any form of revenue the entity generates, including their capital gains or even salary.
Both of these tax laws apply to businesses, trusts, organizations, estates, and also individuals. These laws ensure that the taxes paid are based on business activities, transfer, property, transactions, import, and income. There are only a few exemptions for these. Various governmental bodies and levels have this immunity from paying taxes.

Tax Rates

The tax rates differ in the US as there are so many states. New Jersey, Oregon, California, Minnesota, and Hawaii are known to have the highest rates for state income tax. While 7 states have no state tax at all. 9 other states follow a flat tax rate system. This means that every citizen will pay the same percentage. However, the tax rates range from 0% to 13%; or more in a few cases. It will depend on where you live in the USA.

Due Dates

Every year, the income tax-paying or filing deadline remained fixed for all payers. It is 15th April, however, under the current pandemic situation the date was extended to 15th July. This extension has been applied to all corporations, individuals, and trusts. The taxpayers will have to clear their dues and returns by then. 


Frequently Asked Questions

Generally, there are no restrictions on foreign ownership of a company formed in the United States. The procedure for a foreign citizen to form a company in the US is the same as for a US resident. It is not necessary to be a US citizen or to have a green card to own a corporation or LLC.
Not without proper documentation. Being a director, as well as a shareholder, of a US corporation is allowed without a visa, but being an officer and performing your duties within the US is generally not allowed. Working for your corporation or LLC within the US without a valid work visa is not allowed and punishable with some significant fines and possible deportation.
You don’t need to be a US citizen to own a US business. You don’t even have to step foot in the US to own an LLC or corporation, but you’re not allowed to work without a valid visa. If you want to work for the business you own, you’ll need to obtain a visa.
Processing times vary by state. Usually you’re looking at between two days to two weeks depending on if you pay for expedited processing. It should be noted that processing times also change depending on how backed up the Secretary of State offices are.