Glossary

S-U

S

Self-employment tax
The self-employment tax rate is 15.3 percent of self-employment profit. The self-employment tax is calculated on Schedule SE-Self-Employment Tax. The self-employment tax is reported on Form 1040, U.S. Individual Income Tax Return.

Single filing status
If on the last day of the year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree and you do not qualify for another filing status.

Sin tax
A tax on goods such as tobacco and alcohol.

Social Security tax
This tax funds benefits for retired workers and their dependents as well as for the disabled and their dependents. Also known as the Federal Insurance Contributions Act (FICA) tax.

Specified US Person
A US citizen or resident alien, privately owned US Corporation or US Owned Foreign Entity.

SSN
Social Security Number that is issued in the United States for individuals.

Standard deduction
Reduces the income subject to tax and varies depending on filing status, age, blindness, and dependency.

“Substantial presence test”
To meet the substantial presence test, you must have been physically present in the United States on at least 31 days during the current year, and 183 days during the 3 year period that includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count all of the days you were present in the current year, and one-third of the days you were present in the first year before the current year, and one-sixth of the days you were present in the second year before the current year.

Substantial US Owner
A US owner that has a more than 10% interest in an NFFE

Support
For dependency test purposes, support includes food, clothing, shelter, education, medical and dental care, recreation, and transportation.
It also includes welfare, food stamps, and housing provided by the state. Support includes all income, taxable and nontaxable.

T

Tariff
A tax on products imported from foreign countries.

Tax Code
The compilation of the majority of the US tax laws passed by Congress.  Title 26 of the US Code.

Tax credit
A dollar-for-dollar reduction in the tax. Can be deducted directly from taxes owed.

Tax cut
A reduction in the amount of taxes taken by the government.

Tax deduction
An amount (often a personal or business expense) that reduces income subject to tax.

Tax evasion
The intentional failure to pay or underpay taxes.

Tax exemption
A part of a person’s income on which no tax is imposed.

Tax Gap
Experts define the tax gap as the difference between what taxpayers owe and what they voluntarily pay.

Tax liability (or total tax bill)
The amount of tax that must be paid.

Tax shift
The process that occurs when a tax that has been levied on one person or group is in fact paid by others.

TDF90-22.1 Form
Report of Foreign Bank and Financial Accounts (FBAR). If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing this form.

TIN
Tax identification number, includes both EIN and SSN’s for US taxpayers.

U

US Account
A financial account held by one or more specified U.S. persons or U.S. owned foreign entities including an individual account, where the
natural person is a U.S. person or an entity which is >=10% owned (directly or indirectly) by a U.S. person

US Asset
A U.S. asset includes:
1. Any asset of a type that could give rise to a pass-thru payment
2. FFI’s debt or equity interest in a domestic corporation treated solely as a U.S. asset
3. Full or 100% of the interest = U.S. Asset value
4. Certain interests in other financial (non-custodial) accounts held with another FFI in a U.S. asset
5. Where the FFI is compliant and publishes the PPP.  Asset value = Value of interest x Lower Tier FFIs PPP
7. Where the FFI is compliant but does not calculate a PPP.  Asset value = value of interest x 100%
Any PFFI that engages a patter of selling or transferring assets before quarter end and re-acquiring the same or similar assets following the quarterly testing date with the intent of manipulating the PPP will be treated as having the PPP determined without regard to those transactions.

US Indicia
Data which is indicative of an account is a US Account, for example where the account holder has a US place of birth, US passport, green card, US address, substantial US presence, regular payments to or from a USFI

US Owned Foreign Entity
Any foreign entity that has one or more substantial U.S. owners (one holding 10% or more of the issued share capital).

US Person
An account holder who is a US citizen or taxpayer. Includes US entities and other qualifying persons such as Green Card holders.

US sourced income
Income that is derived from sources within the United States, this includes:
1. Dividends received from a U.S. issuer
2. Rent paid over property used in the U.S.
3. Interest paid by a U.S. borrower
4. Salaries and/or wages
5. Premiums
6. Annuity income derived from U.S. investments
7. Gross proceeds from the sale or other disposition of a security

User fees
An excise tax, often in the form of a license or supplemental charge, levied to fund a public service.

Use tax
A tax that is paid directly by the consumer of a good, product, or service.

USFI
US Financial Institution – a Broker or Dealer, Investment Fund, Investment Adviser, Bank, Trust Companies based in the USA

USRPHC
United States Real Property Holding Corporation.

Did you Know?

  • Fact Seven

    Thanks to FATCA banks must disclose their American account holders to the IRS or local tax authority.
  • Fact Six

    The IRS is actively looking for non compliant US persons.
  • Fact Five

    It takes an average of 16 hours to do IRS Form 1040.
  • Fact Four

    There are over 500 IRS tax forms.
  • Fact Three

    Since 1916, illegal income has been taxable.
  • Fact Two

    US persons must file tax
    returns no matter where they live and work.
  • Text One

    7 million Americans abroad
    only 500,000 compliant

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