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Filing 1040nrez

Filing 1040nrez Publication 505 - Additional Material Prev  Up  Next   Home   More Online Publications
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Tax Information For International Businesses

Foreign Account Tax Compliance Act
FATCA will increase information reporting by foreign financial institutions, non-financial foreign entities, and certain U.S. persons holding financial assets outside the United States.

2012 Offshore Voluntary Disclosure Program
The IRS offers an offshore voluntary disclosure program to help people get current with their taxes. The current program is open for an indefinite period until otherwise announced.

Transfer Pricing Audit Roadmap Now Available
The Transfer Pricing Audit Roadmap is a toolkit organized around a notional 24 month audit timeline. It provides recommended audit procedures and links to reference material. It is not intended as a template. Every transfer pricing case is unique and requires the exercise of judgment and discretion.

Help with Tax Questions - International Taxpayers
If you've looked around our site and still didn't find the answer to your general tax question for International Taxpayers, we'd like to help.

Qualified Intermediaries (QI)
A Qualified Intermediary (QI) is any foreign intermediary (or foreign branch of a U.S. intermediary) that has entered into a qualified intermediary withholding agreement with the IRS. A QI is entitled to certain simplified withholding and reporting rules.

U.S. Withholding Agent Program
Focus enforcing compliance through examinations and voluntary compliance of withholding tax on foreign payments. Responsibilities include coordinating exams and training exam teams, consulting with internal/externals stakeholders, and providing guidance to ensure consistent treatment for taxpayers.

Internal Revenue Service International Visitors' Program (IVP)
The purpose of the International Visitors Program is to introduce the Internal Revenue Service as one of the world's premier tax systems to interested countries.

Income from Abroad is Taxable
There have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with bank accounts in Liechtenstein. The IRS' interest, however, extends beyond bank accounts in Liechtenstein to financial accounts anywhere in the world. The IRS reminds you to report your worldwide income on your U.S. tax return and lists the possible consequences of hiding income overseas.

U.S. Citizens by Birth or through a U.S. Citizen Parent
All persons born in the United States are U.S. citizens. This is the case regardless of the tax or immigration status of a persons parents. Furthermore, a person born outside the United States may also be a U.S. citizen at birth if at least one parent is a U.S. citizen and has lived in the United States for a period of time.

U.S. Citizens and Resident Aliens Abroad
This section covers tax topics for U.S. citizens or resident aliens living overseas.

Taxation of Nonresident Aliens
The U.S. source income of nonresident aliens is subject to U.S. taxation.

Taxation of U.S. Resident Aliens
A resident alien's income is generally subject to tax in the same manner as a U.S. citizen.

Foreign Students and Scholars
Aliens temporarily present in the United States as students, trainees, teachers, researchers, exchange visitors, and cultural exchange visitors are subject to special rules with respect to the taxation of their income.

Tax Withholding on Foreign Persons
This section covers tax withholding topics for payments made to U.S. citizens abroad or aliens employed both in the United States and abroad. This section also covers tax withholding and reporting rules on payments of U.S. source income made to foreign persons.

Tax Treaties
Tax treaties may allow residents of foreign countries to be taxed at a reduced rate, or to be exempt from U.S. income taxes on certain items of income they receive from sources within the United States.

Taxpayer Identification Numbers (TIN)
A Taxpayer Identification Number (TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws.

Taxation of Foreign Athletes and Entertainers
This section describes the special rules which affect the taxation of foreign athletes and entertainers who have income sourced in the United States.

Alien Taxation - Certain Essential Concepts
This section describes certain essential concepts involved in the taxation of aliens.

Classification of Taxpayers for U.S. Tax Purposes
This section will help you determine if you are a "Foreign Person" or a "United States person" for U.S. tax purposes.

Determining Alien Tax Status
If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet the Green Card test or the Substantial Presence test.

Taxation of Dual-Status Aliens
You are a dual-status alien when you have been both a resident alien and a nonresident alien in the same tax year.

Special Categories of Alien Workers
For U.S. tax purposes, Au Pairs and Farm Workers may be treated differently than others.

Report of Foreign Bank and Financial Accounts (FBAR)
If you own a foreign bank account, brokerage account, mutual fund, unit trust, or other financial account, then you may be required to report the account yearly to the Internal Revenue Service.

Employees of Foreign Governments or International Organizations
The wages paid to employees of foreign governments and international organizations are not usually taxable, but may be taxable in the case of U.S. citizens and resident aliens.

New Developments in International Taxation
This section provides the latest news on international taxes.

Miscellaneous International Tax Issues
This section covers subjects not previously discussed.

Frequently Asked Questions - International Taxpayers
Frequently Asked Questions for Aliens and U.S. Citizens Living Abroad

Page Last Reviewed or Updated: 25-Mar-2014

 

The Filing 1040nrez

Filing 1040nrez 7. Filing 1040nrez   Figuring Gross Profit Table of Contents Introduction Items To Check Testing Gross Profit AccuracyExample. Filing 1040nrez Additions to Gross Profit Introduction After you have figured the gross receipts from your business (chapter 5) and the cost of goods sold (chapter 6), you are ready to figure your gross profit. Filing 1040nrez You must determine gross profit before you can deduct any business expenses. Filing 1040nrez These expenses are discussed in chapter 8. Filing 1040nrez If you are filing Schedule C-EZ, your gross profit is your gross receipts plus certain other amounts, explained later under Additions to Gross Profit. Filing 1040nrez Businesses that sell products. Filing 1040nrez   If you are filing Schedule C, figure your gross profit by first figuring your net receipts. Filing 1040nrez Figure net receipts (line 3) on Schedule C by subtracting any returns and allowances (line 2) from gross receipts (line 1). Filing 1040nrez Returns and allowances include cash or credit refunds you make to customers, rebates, and other allowances off the actual sales price. Filing 1040nrez   Next, subtract the cost of goods sold (line 4) from net receipts (line 3). Filing 1040nrez The result is the gross profit from your business. Filing 1040nrez Businesses that sell services. Filing 1040nrez   You do not have to figure the cost of goods sold if the sale of merchandise is not an income-producing factor for your business. Filing 1040nrez Your gross profit is the same as your net receipts (gross receipts minus any refunds, rebates, or other allowances). Filing 1040nrez Most professions and businesses that sell services rather than products can figure gross profit directly from net receipts in this way. Filing 1040nrez Illustration. Filing 1040nrez   This illustration of the gross profit section of the income statement of a retail business shows how gross profit is figured. Filing 1040nrez Income Statement Year Ended December 31, 2013 Gross receipts $400,000 Minus: Returns and allowances 14,940 Net receipts $385,060 Minus: Cost of goods sold 288,140 Gross profit $96,920   The cost of goods sold for this business is figured as follows: Inventory at beginning of year $37,845 Plus: Purchases $285,900   Minus: Items withdrawn for personal use 2,650 283,250 Goods available for sale $321,095 Minus: Inventory at end of year 32,955 Cost of goods sold $288,140 Items To Check Consider the following items before figuring your gross profit. Filing 1040nrez Gross receipts. Filing 1040nrez   At the end of each business day, make sure your records balance with your actual cash and credit receipts for the day. Filing 1040nrez You may find it helpful to use cash registers to keep track of receipts. Filing 1040nrez You should also use a proper invoicing system and keep a separate bank account for your business. Filing 1040nrez Sales tax collected. Filing 1040nrez   Check to make sure your records show the correct sales tax collected. Filing 1040nrez   If you collect state and local sales taxes imposed on you as the seller of goods or services from the buyer, you must include the amount collected in gross receipts. Filing 1040nrez   If you are required to collect state and local taxes imposed on the buyer and turn them over to state or local governments, you generally do not include these amounts in income. Filing 1040nrez Inventory at beginning of year. Filing 1040nrez   Compare this figure with last year's ending inventory. Filing 1040nrez The two amounts should usually be the same. Filing 1040nrez Purchases. Filing 1040nrez   If you take any inventory items for your personal use (use them yourself, provide them to your family, or give them as personal gifts, etc. Filing 1040nrez ) be sure to remove them from the cost of goods sold. Filing 1040nrez For details on how to adjust cost of goods sold, see Merchandise withdrawn from sale in chapter 6. Filing 1040nrez Inventory at end of year. Filing 1040nrez   Check to make sure your procedures for taking inventory are adequate. Filing 1040nrez These procedures should ensure all items have been included in inventory and proper pricing techniques have been used. Filing 1040nrez   Use inventory forms and adding machine tapes as the only evidence for your inventory. Filing 1040nrez Inventory forms are available at office supply stores. Filing 1040nrez These forms have columns for recording the description, quantity, unit price, and value of each inventory item. Filing 1040nrez Each page has space to record who made the physical count, who priced the items, who made the extensions, and who proofread the calculations. Filing 1040nrez These forms will help satisfy you that the total inventory is accurate. Filing 1040nrez They will also provide you with a permanent record to support its validity. Filing 1040nrez   Inventories are discussed in chapter 2. Filing 1040nrez Testing Gross Profit Accuracy If you are in a retail or wholesale business, you can check the accuracy of your gross profit figure. Filing 1040nrez First, divide gross profit by net receipts. Filing 1040nrez The resulting percentage measures the average spread between the merchandise cost of goods sold and the selling price. Filing 1040nrez Next, compare this percentage to your markup policy. Filing 1040nrez Little or no difference between these two percentages shows that your gross profit figure is accurate. Filing 1040nrez A large difference between these percentages may show that you did not accurately figure sales, purchases, inventory, or other items of cost. Filing 1040nrez You should determine the reason for the difference. Filing 1040nrez Example. Filing 1040nrez   Joe Able operates a retail business. Filing 1040nrez On the average, he marks up his merchandise so that he will realize a gross profit of 331/3% on its sales. Filing 1040nrez The net receipts (gross receipts minus returns and allowances) shown on his income statement is $300,000. Filing 1040nrez His cost of goods sold is $200,000. Filing 1040nrez This results in a gross profit of $100,000 ($300,000 − $200,000). Filing 1040nrez To test the accuracy of this year's results, Joe divides gross profit ($100,000) by net receipts ($300,000). Filing 1040nrez The resulting 331/3% confirms his markup percentage of 331/3%. Filing 1040nrez Additions to Gross Profit If your business has income from a source other than its regular business operations, enter the income on line 6 of Schedule C and add it to gross profit. Filing 1040nrez The result is gross business income. Filing 1040nrez If you use Schedule C-EZ, include the income on line 1 of the schedule. Filing 1040nrez Some examples include income from an interest-bearing checking account, income from scrap sales, income from certain fuel tax credits and refunds, and amounts recovered from bad debts. Filing 1040nrez Prev  Up  Next   Home   More Online Publications