💼US Payroll – Step 4: Set Up Benefits & Deductions :- 1️⃣ Pre-tax deductions – 401(k), HSA, commuter benefits 👉 Example: Employee puts $200/month into 401(k) before taxes. 2️⃣ Post-tax deductions – Insurance, other after-tax items 👉 Example: $50/month for optional life insurance. 3️⃣ Employer contributions – Company match, benefit share 👉 Example: Employer matches…
💼US Payroll – Step 3: Choose Pay Frequency & Payroll System :- 1️⃣ Decide Pay Period – Weekly, biweekly, semi-monthly, or monthly 👉 Example: Most US companies pay biweekly (every 2 weeks). 2️⃣ Select Payroll Software/Service – Automates tax calculations, deposits & filings 👉 Example: Gusto, ADP, QuickBooks Payroll. 3️⃣ Set Up Company Details –…
💼US Payroll – Step 2: Collect Employee Documents :- 1️⃣ Form W-4 – Federal tax withholding Confirmation from Employee, (plus state forms if required). 👉 Example: This tells you how much tax to deduct from paychecks. 2️⃣ Form I-9 + ID – To verify work eligibility in the US. 👉 Example: Passport, or Driver’s License…
💼US Payroll – Step 1: Get Set Up :- 1️⃣ Apply for EIN (Employer Identification Number) :- Think of this like your company’s “Tax ID number” from the IRS. 👉 Example: Just like you need a NTN in Pakistan, your business needs an EIN in the US. 2️⃣ Register with State Agencies: – -For state…
💡 Form 8938 (FATCA) – Specified Foreign Financial Assets :- If you are a U.S. taxpayer and your foreign financial assets exceed certain thresholds, you must report them on Form 8938 (attached to your Form 1040). 📌 Main Points :- • Applies to U.S. citizens, residents & certain entities. • Report bank accounts, stocks, bonds,…
FBAR vs Form 8938 – What’s the Difference? 📌 FBAR (FinCEN Form 114):- • Report foreign bank/financial accounts. • File online with FinCEN (not IRS). • Threshold: $10,000 total at any time in the year. • Due: April 15 (auto extension to Oct 15). 📌 Form 8938 (FATCA):- • Report specified foreign financial assets (bank…
💡 Itemized Deductions vs Tax Credits – What’s the Difference? 📌 Itemized Deductions → reduce your taxable income:- Examples: • Medical expenses • State & local taxes • Mortgage interest • Gifts to charity 👉 If your deductions are higher than the standard deduction then you select itemize. 📌 Tax Credits → reduce your tax…
💡 Schedule SE (Form 1040) – For the Self-Employment Tax :- If you work for yourself, you don’t have an employer to withhold Social Security & Medicare taxes — so you pay both parts yourself through Schedule SE. 📊 Self-Employment Tax 📌 Rate: 15.3% of your net earnings (12.4% Social Security + 2.9% Medicare) 📌…
💡 Common IRS Forms That Report Taxpayer Income (with Form 1040) Each of these forms can indicate potential sources of gross income for tax reporting:- 1)📄 W-2 – Wage and Tax Statement 2)🎰 W-2G – Certain Gambling Winnings 3)💹 Form 1099-B – Proceeds from Broker & Barter Exchange Transactions 4)💸 Form 1099-C – Cancellation of…
💡 Notable Changes for Tax Year 2025 (Income tax returns to be filed starting tax season 2026) Standard deductions AND Marginal Tax rates:- These updates apply to income tax returns filed in 2026 (for the 2025 tax year) 🧾 Standard Deductions: *Single / Married Filing Separately: $15,000 (increase of $400 from 2024) *Married Filing Jointly:…
