2021 New Year’s Tax Resolutions that you must abide as an NRI in the US.

by | Dec 31, 2020 | 2021 Tax Returns, NRI, NRI business, NRI Norms

Planning for your taxes is very important and proper planning would help you in avoiding any further interest payment to the IRS due to missing tax deadlines.

With the annual fresh start which comes along with the New Year is approaching very rapidly, this is one of the best opportunities for the NRIs in the US to make certain resolutions. These resolutions can be related to finances and taxes as well. Tax Resolutions for a year can also be helpful in planning for the achievement of financial goals during a particular year.

If you are an NRI in the US, then it’s time for you to make your New Year Tax Resolution. Let us check out the major points which must be considered while making your New Year Tax Resolution for the year 2021.

Gathering your tax-related documents

Since you are a taxpayer in the country, you must gather the below-mentioned documents immediately before the tax season arrives.

  1. Income from the employment – Form W-2 meant for you and your spouse.
  2. Income from Investment – Various forms such as 1099 and K-1s.
  3. Income obtained from the State and other local Income Tax refunds – Form 1099-G.
  4. Alimony received is taxable – For those divorce cases which have been finalized before 1st January 2019.
  5. Income obtained from home businesses – Home expenses, Office expenses, Home size, Office size.
  6. Income obtained from the business – profit or loss statement.
  7. Benefits from Social Security – Form SSA-1099.
  8. IRA –Form 1099-R.
  9. Income obtained from the sale of the property – Original cost and the cost of improvement, Canceled Debt Information(Form 1099-C).
  10. Income or expense from rental income.
  11. Miscellaneous income – This includes scholarships, jury duty, Medical Savings Account, winnings from gambling, etc.

Income Adjustments.

You must be aware of these adjustments as they can help in the reduction of your taxable income. You must make these adjustments thus increasing your tax refund.

  1. Interest on Student loan
  2. Contributions made to the IRA
  3. Energy Credits
  4. Health insurance payments made by self-employed people
  5. Expenses of educator
  6. Contributions made to Medical Savings Account
  7. The alimony paid which is tax-deductible
  8. SEP, SIMPLE, and other pension plans purchased by self-employed people

Itemized Tax Deductions and Credit.

There are some tax credits or deductions which would be helpful in reducing the tax burden. If you have made a good tax plan then you must track this throughout the entire year.

If you are availing of the below-mentioned tax credits and deductions then you must have the related documents as well.

  1. Education cost – Form 1098-T and other documents to support education expenses
  2. The charity has done –The cash amount donated and the value of the donated property, expenses made out of your pocket
  3. Costs related to adoption – The Social Security Number of the child, legal, medical costs, and costs related to transportation
  4. Childcare cost – The name of the provider, address, the tax id, and the amount that has been paid
  5. Casualty and losses due to theft – Reimbursement of insurance, the amount of damage occurred
  6. Home Interest paid – Form 1098
  7. Dental expenses

Recovery Rebate Credit.

You can be able to claim the Recovery Rebate Credit if the below-mentioned criteria are met.

  1. You have not received Economic Impact Payment for this year
  2. If Economic Impact Payment was less than $1200 if you are filing your tax returns as Single individuals or $2400 if you are filing your tax returns jointly and are married.

EITC/ACTC Refund Availability.    

Before mid-February, the IRS will not issue any refunds if you are claiming the Earned Income Tax credit or Additional Child Tax Credit. The IRS has instructed the employer to hold the entire refund amount if a portion is not being associated with the EITC or ACTC. Most of the people would receive their EITC or ACTC related funds by the first week of March if there are no further issues related to the tax return.

Conclusion.

So, as an NR in the US, you must be aware of these factors and make New Year resolutions that would be helpful in obtaining the tax returns conveniently.

All you need to know about Paycheck Protection Program as an NRI in the US.

by | Dec 21, 2020 | NRI, NRI business, NRI Norms

All you need to know about Paycheck Protection

Program as an NRI in the US.

What is the Paycheck Protection Program?

The Paycheck Protection Program is a type of loan which has been created for helping businesses in the maintenance of their workforces during these adverse pandemic times. All types of loans taken by the business would be forgiven by the US Small Business Association (SBA) if the major criteria of retention of employees are met and the funds are being utilized for those business expenses which are eligible.

The Paycheck Protection Program (PPP) was a program of $350 billion whose major intent is to provide the small businesses in America with cash flow assistance of 8 weeks through 100% federal loans. In late April 2020, the Paycheck Protection Program was expanded by an addition of $310 billion into the funding of this program. The deadline for applying for the Paycheck Protection Program has expired since 8th August 2020 but there can be an extension if there is another relief bill that is signed into law.

Major highlights of the Paycheck Protection Program.

  • The Paycheck Protection Program loans would have an interest rate of 1%.
  • The benefits of the Paycheck Protection Program can be availed by all the small businesses of America.
  • No personal guarantees or collateral are needed for those businesses which are availing of this program.
  • The Paycheck Protection Program loan has a maturity rate of 2 years and an interest rate of around 1%.
  • No fees would be charged from the small businesses either by the Government or by the lenders who are availing of this loan.

What is the working procedure of the Paycheck Protection Program?

Small businesses that have around 500 employees or even fewer employees, other independent contractors, sole proprietors, or those NRIs who are self-employed are eligible for availing the benefits of the Paycheck Protection Program.

  1. Sole proprietors would need to submit Schedule C from their tax returns filed which would provide details of the net profit that has been obtained from the proprietorship.
  2. Those NRIs who are independent contractors must submit Form 1099-MISC along with the Schedule C.
  3. The NRIs who are self-employed need to submit their payroll tax filings which have been reported to the IRS.

 The Paycheck Protection Program loan would be completely forgiven if the fund from the loan would be utilized for interest on mortgages, payroll costs, utilities, and rent as well.  There is no necessity for making the loan payment until the forgiveness application of the NRI has been processed or 10 months after the covered period of the loan ends.

 How much money can be borrowed by the Paycheck Protection Program loan? 

  1. In case of being a small business, you would be eligible to receive a loan which would be up to 2.5 times the average monthly payroll costs for the previous year.
  2. In the case of the NRI being self-employed or a sole proprietor, the loan amount that can be obtained is mainly calculated based on the payroll cost of the proprietor incurred in the last year. The full amount is up to $100,000 which can be the maximum limit that can be claimed by the small businesses.

 What is the loan period for the PPP loan?

 The loan period is for 8 weeks from the date of loan origination. This is the actual date on which the NRI borrower would receive the loan amount in actual. The interest payments on the Paycheck Protection Program loan will be deferred by around six months. This loan is due in two years and no penalty is charged for pre-paying the charges. However, the loan period has been extended to around 24 weeks.

 How can your Paycheck Protection Program loan be forgiven?

 By loan forgiveness, the loan can be turned into a non-taxable grant. The entire loan or a part of the loan which would be received by small businesses under the Paycheck Protection Program can be forgiven if the owner would keep all the full-time employees on their payroll or if you are re-hiring your employees again within 24 weeks of receipt of the loan.

 For the loan amount to be forgiven a minimum of 60% of your loan should be utilized in funding the business payroll and the employee benefit costs as well. Only 40% of the amount that has been forgiven could be used for the non-payroll expenses like the payments of mortgage interest, payments of rents, utilities, etc. Forgiveness will not occur until the end of the 24-week employment period occurs after the loan amount has been received.  Businesses must ensure that they must keep proper records and have proper bookkeeping as proof of the business expenses that have been incurred during the loan tenure.

 Conclusion

 So, the Paycheck Protection Program would be of great help for those who have incurred losses in business due to the pandemic and these coronavirus relief plans are evolving at a constant pace.

Tax scam alert for NRIs in the US.

by | Nov 18, 2020 | NRI, NRI business

Tax scam alert for NRIs in the US.

Tax scams can lead to huge loss of money as well as personal information. The tax scammers usually make use of mails or telephones for creating scams that can involve individuals and businesses also. Tax scam alert for NRIs is a common occurrence in the US now. NRIs should always keep in mind that the IRS would not contact the taxpayers by mails, text messages, or through social media channels. IRS impersonators can also intimidate the common people by preparing fabricated bills for tax.

Tax scammers remain active throughout the year and the IRS urges the NRI taxpayers to be very careful about phishing emails and scams. The IRS would usually initiate contact with the taxpayers with the help of regular mail which can be delivered by the United States Postal Service. There would be special circumstances when the IRS would contact an individual or a business such as an overdue tax bill for the security of a delinquent tax return. Taxpayers would usually receive communication from the IRS in the form of notices or letters.

The IRS does not.

NRI taxpayers must keep in mind that the IRS would not do the following activities:-

  1. The IRS would never make calls to make NRI taxpayers for making immediate tax payments using a specific payment method which can be a prepaid debit card or a gift card. As a general rule, the IRS would mail the bills due to the taxpayers who have taxes due.
  2. The IRS would not demand the NRI taxpayers for payment of taxes without even raising any question on the tax amount which is due.
  3. NRI taxpayers must always keep in mind that the IRS would never threaten them about bringing in the police, immigration, or other law enforcement officers for not being able to pay the taxes on time. Moreover, NRI taxpayers should also remember that the IRS would not be able to revoke their driving license or immigration status. Any type of threat like this is a very common tax scam for Americans and they must be aware of these occurrences.

 What the IRS does?

 The IRS would resort to the below-mentioned methods to obtain the tax payments if any due for the NRI taxpayers. 

  • Collection.

     The employees of IRS might come to your home or your workplace without any prior announcement for the collection of the tax due. However, the IRS employees will not make a demand for immediate payment of the taxes to any source other than the U.S. Treasury. The IRS would also assign private debt collectors for some of the taxpayers. The Private Collection Agencies would never ask the NRI taxpayers for payment through a gift card or a prepaid debit card. 

  • Conduct audits.

 The IRS can conduct audits and would also call NRI taxpayers for setting up appointments. The IRS can also call the taxpayers to discuss items related to the taxes. However, this would happen only when the IRS has attempted to provide notification to the taxpayers through mails. After the mailing, the IRS auditor would call the taxpayers for setting up discussion calls. 

  • Criminal investigations. 

Criminal investigations can be carried out by the IRS for tax purposes and this can lead to investigators visiting the taxpayer’s house or business. But, these investigators are agents for law enforcement and would not be asking for any payment from the taxpayers.

 Whom to contact?

If an NRI taxpayer suspects a tax scam or feels that he is being harassed by some impersonator, then he must take the below-mentioned actions.

  1. The taxpayer can contact the Treasury Inspector General for Tax Administration to report about the tax scam.
  2. The NRI taxpayers can report the tax scams to the Federal Trade Commission. The taxpayer can use the FTC Complaint Assistant on the FTC.gov website.
  3. Any email which claims to be from the IRS or claims to contain IRS related components can be reported to the Electronic Federal Tax Payment System.

Conclusion.

So, with the number of tax scams and frauds increasing very speedily taxpayers must remain alert and inform about anything suspicious to the IRS.

 

 

Survival business strategies for an NRI in the US during the pandemic

Survival business strategies for an NRI in the US during the pandemic

by | Aug 17, 2020 | COVID 19, Employee management, entrepreneurs, NRI business

Survival business strategies for an NRI in the US during the pandemic

The pandemic COVID-19 has caused a major impact on businesses across the country. The Government has been urging the Americans to stay indoors to control the further spread of the pandemic; however, the productivity and the economy have been affected.

Businesses are finding it difficult to maintain their workflow and financial stability during these challenging times. The NRI businessmen and entrepreneurs in the US are facing a lot of challenges due to lower revenues and profits. Be it an established business, a start-up or a small business reconsideration of business strategies is the only way for business survival in the country during current times.

So, let us talk about some of the strategies that NRI businessmen in the US can implement for their business survival.

a.Secure liquidity

One of the major challenges which are being faced by businesses currently is access to cash. In these challenging times, overhead costs like payroll, rent, and utilities leave very meager cash with the owners. In addition to these, lack of revenue from services that are slowing down is making the entrepreneurs distressed.

NRI business owners must take up efforts to provide immediate liquidity and keep the business solvent. Government organizations like the “Small Business Workforce Stabilization Fund” would help in providing financial assistance to those who are facing a financial crisis due to the pandemic. This program can also provide immediate cash flow to the vulnerable businesses by keeping their employees on payroll and allowing the business to grow after the customers return.

b.Planning in advance

It is difficult to estimate by when this pandemic would pass; so to be prepared with a plan would be beneficial for business. NRI businessmen can make a plan for 3-18 months depending on the nature of the business and the estimated time needed for the things to be normal. The businesses can immediately stop certain flexible expenses such as hiring, travel, and marketing expenses.  Strategies should be made to focus only on essentials such as sales, renegotiation of fixed expenses such as rent, salaries, etc. Businesses must consider a revision of their revenue goals and timelines of manufacturing along with the creation of a new operating plan.

c.Employee management

For those businesses which have to think about making decisions such as employee layoffs, the most suitable option could be to reduce salaries of the highly paid employees and to retain those employees who cannot afford to lose their job. The Federal Government has also formulated a relief plan which would help small scale businesses in affording their payroll and cover expenses easily such as paid sick leave, loan repayment, and paid FMLA. It is advisable to carry out employee management according to the Government directives and businesses must also try to offer extra compensation to their employees whenever necessary.

Moreover, the employee s must be engaged during these times and the productivity should be maintained. The entrepreneurs must guide the employees and should try to help those employees who are facing any kind of mental issues. The morale within the employees must be kept high and this is feasible by being connected with them digitally through various applications like Zoom, Skype, etc.

d.Turn digitization into an advantage

The major challenge of this pandemic for businesses is not only to sustain their productivity by the digitized operations but also to focus on the plethora of new opportunities that have come up for the workforce through digitalization. Digitalization can be considered as a catalyst that would help in changing the business model creatively. Transferrable manpower and increased productivity of remote working would be beneficial for businesses.

e.Maintaining transparency and keeping stakeholders informed

Customers are the ones who keep the business running and without customers, a business would not be able to flourish. Since, the pandemic COVID-19 has created a crucial issue which we all are facing together and so, staying transparent with the customers and keeping them updated about the situation is necessary. If the business is communicating clearly with the customers it would help the customers to be more empathetic and understanding.

Moreover, stakeholders also play an important role in the success of a business. The NRI businessmen must seek business advice from their investors or from other external experts to make plans and strategies. It is necessary to discuss the impact of the current situation on the business with the stakeholders.

Conclusion

Hence, during these distressful times, it is necessary to stand by each other and provide assurance to each other. These tips mentioned above would be helpful in keeping business functional and intact during these times of pandemic.

References

  1. https://www.uschamber.com/co/start/strategy/small-business-resources-for-surviving-coronavirus
  2. https://www.expresscomputer.in/guest-blogs/survival-during-pandemic/53864/
  3. https://hbr.org/2020/03/what-small-businesses-need-to-survive-the-coronavirus-crisis
  4. https://www.weforum.org/agenda/2020/07/here-are-3-ways-for-businesses-to-survive-and-thrive-through-covid-19/