US Taxes - Chicago

http://advancedamericantax.com/

Contents

• Quick Intro to US Taxes for Non US persons

• LLC vs No LLC

• Federal

• State

• City

• Further questions

Intro to US Taxes

• More complex than UK and Australia

• Can be 3 or 4 layers of taxes, depending on location. E.g. Federal, state, city, local…

• Unless you elect otherwise, 30% of gross rental income will be withheld by rental agency (known as FDAP)

• Unless you elect otherwise, 10% of gross selling price will be withheld by buyer, you (as a Non Resident Alien), sells to a US person (known as FIRPTA)

• If you spend more than a certain number of days on US soil, it could trigger “substantial presence” which means that all your world wide income would be subject to US tax (yes that includes your SG income)

LLC vs Non LLC

• American LLC or an American LLC fully owned by SG private limited

• Depends on whether you’re investor vs an owner occupier

• Advantages –• The shield of limited liability in an increasingly litigious society• Many commercial lenders prefer LLCs• Owning real estate through an LLC can offer real estate investors far better asset protection from

creditors than they would have if they owned real estate in their own name• Potentially avoid FIRPTA ("Foreign Investment in Real Property Tax Act“)• Protect identity of non American owners• Potentially avoid estate and gift taxes• Once the property is sold, the U.S. corporation can potentially be liquidated and the cash repatriated to

the foreign corporation without any U.S.-level withholding tax (which holds true in the case of a foreigncorporation terminating its U.S. operations, as well, and distributing the proceeds).

• Disadvantage – higher compliance costs (incorp, filings, record keeping etc)

Federal Rates - Income

Individuals Corporate

Income including rental income

Federal Rates – Capital Gains

Individuals Corporate

State Tax Rates - Illinois

http://tax.illinois.gov/taxrates/Income.htm

City Tax Rates - Chicago

• Real Property Transfer Tax (7551) –• $5.25 per $500.00 of the transfer price, or fraction thereof, of the real property or the beneficial

interest in real property. • In general, The Buyer is responsible for $3.75 and the Seller is responsible for $1.50.

• Annual Property Taxes – in Cook county, annual property taxes are calculated using a complex formula but are very roughly 2% of the estimated market value

http://www.cityofchicago.org/city/en/depts/fin/supp_info/revenue/tax_list/real_property_transfertax.html

Estate Taxes

• Federal – estates over $60,000 subject to taxes at graduated rates up to 40%

http://www.cityofchicago.org/city/en/depts/fin/supp_info/revenue/tax_list/real_property_transfertax.htmlhttp://www.illinoisattorneygeneral.gov/publications/calculator/2013calc/taxtable.htm

• State – estate tax goes up to 16%

Fees for tax compliance

Typical fees would be –

• ITIN or tax numbers to enable tax filings – S$400

• Annual US returns for individuals start at S$800

• Annual US returns for companies start at S$1500

• Incorporating a US LLC – S$2000

• State returns S$400

Any Questions?

• Visit http://advancedamericantax.com/

• Derren@HTJosephCPA.com

• SG: +65 9720 1040 or HK: +852 8172 1040