Income tax bracket threshold for zero tax in the US and regarding no income at all (1) I am trying to find out whether one has to file any income tax if they are an American citizen permanently living abroad but having literally no income? (2) While trying to search about this on the internet, I wondered why is there no tax bracket with 0% or nil income tax (the UK doesn't tax income upto £12,500 for example). This means that people earning below that threshold are exempt from paying tax. Is there no such Nil or 0% tax thing in the US? So many countries have this minimum threshold income where no filing of income tax is required. Even countries like India have such policy. But I can only see that in the US you have to pay 10% tax minimum no matter how less you earn. I would really appreciate if you could help me regarding those 2 questions. Thank you:)
Q2: US tax brackets are based on your taxable income, which is computed by applying various adjustments and deductions to your &quot;actual&quot; gross income. In particular, most taxpayers are entitled to apply a standard deduction which is currently about $12,000 for a single taxpayer. So if you are a single taxpayer with a gross income of, say, $10,000, then after taking the standard deduction you have a taxable income of $0 (it cannot go negative) and therefore you owe $0 in taxes. The overall effect is somewhat similar to having a 0% tax bracket.
Don't even think of going there. If you refuse to pay taxes with this argument, the IRS will take this as a "frivolous tax return", and give you a fine of up to $5,000. If you are trying to argue that this is illegal, you only make things worse. The IRS gets about 20,000 to 30,000 frivolous tax returns every year, so every argument you could come up with they have heard a dozen times.
On the first page of https://www.gov.uk/duty-free-goods/overview you find: "You can bring some goods from abroad without having to pay UK tax or ‘duty’ (customs charges), as long as they’re for your own use." And on the next page "... will use them yourself or give them away as a gift". This clearly doesn't cover anything that you bring into the UK to sell it. And a bit further on the site it says "You must tell customs (known as ‘declaring’) on arrival in the UK if you have goods: ... that you plan to sell". Since you are asking here, it is quite obvious that you intend to sell :-) You said "e.g. say this guys comes every month from Russia to France for unrelated business, each time he fills up his luggage with the maximum allowed amount of goods that comply with custom laws". If this guy sells the stuff to you, then the maximum allowed amount of goods to import without paying taxes is zero. Once he is willing to pay taxes, there is no limit. Obviously regularly importing things from Russia or France and selling in the UK at a profit means that he is running a business in the UK, which means he would have to register a business, pay corporation taxes etc. It's all a matter of degree; for small amounts nobody cares (up to some limit you don't need to register a business or pay taxes; I don't know the details).
Yes, you can borrow tax-free Bitcoin (or really, any currency not your home currency) is a security like a stock or bond. Whenever you take a loan using a security as collateral, that is not a taxable event, and so you do not owe taxes on the money you borrowed. Perfect world, you pay it back and this is not taxable either: the loan/repayment is a non-event to the tax authorities. (Although interest might be tax deductible). When this goes wrong: you default If you default and keep your collateral, at some point, the lender decides you'll never pay, and forgives aka &quot;writes off&quot; the loan. This forgiveness is considered ordinary income and it is taxable in the year forgiven. In the US this is waived if you can show that you were insolvent at the time of default. When this goes wrong: forced sale of collateral The collateral is still your property. The bank just has a lien on it or other form of control, like it's in your brokerage account in their bank such that they can flag it, force sale, and intercept funds. When the bank forces sale of your collateral to pay your debt, that is a sale of the security for tax purposes. The proceeds go to you (as far as the tax person is concerned), even though the bank certainly will intercept the proceeds. So the tax liability goes to you. Note that standard capital gains rules apply, so if you owned it less than 1 year when you signed up for the loan, yet the bank forced the sale after 1 year of ownership, then it counts as holding the security longer than 1 year for tax purposes. (e.g. qualifying for the lower &quot;long term capital gains&quot; rate in the US).
The IRS requires taxpayers to swear under &quot;penalties of perjury&quot; to their statements and figures given concerning their income. Since obviously this constitutes a potential incrimination The privilege against self-incrimination applies to giving testimony that reveals that you have committed a crime, not to doing something prospectively in a way that does not violate criminal laws. The solution is that you may truthfully report the amount of income that you have on your tax return. Ordinarily, the information that you had a certain amount of income, without a specific description of its source, would not in and of itself be incriminating. So, it is not &quot;obvious that this constitutes potential incrimination[.]&quot;, at least in the general case. There might be some circumstance in which merely filling out the information on a tax return required by law and signing it under penalty of perjury would be incriminating, although this is far more narrow that your question suggests. In those circumstances, the solution would be to file an unsigned tax return accompanied by a disclaimer stating that you are not signing it under penalty of perjury as it would be potentially incriminating for you to do so would on a signed and attached explanation that explicitly claims the 5th Amendment privilege. There is actually an IRS form for doing that or similar things on: IRS Form 8275. This would result in serious civil tax penalties, but would probably protect you from a criminal tax law violation (at least for the failure to file offense, not necessarily from the failure to pay offense).
In the U.S.: To my knowledge all states and jurisdictions that with a "sales tax" technically have a "use" tax, which means the tax liability falls on the purchaser. However, they require "businesses" (whose exact definition varies by jurisdiction) to collect and remit that tax on behalf of "consumers" (which can also vary, e.g., to exclude businesses that resell). Historically consumers have avoided paying use taxes by purchasing from out-of-state businesses that are not subject to their home states' laws on withholding the use tax: while technically a violation of the tax law neither consumers nor states have had an interest in calculating or auditing use taxes owed, except in the case of very large and unusual transactions. There is a large effort underway by states and "brick-and-mortar" stores that lose business to this virtual "mail order tax exemption" to subject out-of-state businesses to the requirement of collecting use taxes on behalf of the state. A few online businesses (notably Amazon) have acquiesced to this demand. To answer your question: In the U.S., an individual who is not making a "business" of selling items or services is generally exempt from the requirement to collect sales tax. It is the purchaser who has the legal obligation to declare and pay tax on such transactions. But purchasers rarely do.
You ask them explicitly, maybe adding that you need that info specifically to calculate tax. IP address is not reliable because your customers could be using VPN, Tor, or be on vacation overseas. (By the way, "IP" on a website about law would more likely be understood as "Intellectual Property", not "Internet Protocol address".)
The difficulty is that tips are, by statute, considered a form of wages rather than a form of self-employment income for the tipped employee for income tax purposes (in contrast, employers don't have to keep track of tips for minimum wage purposes, tipped employees just have an extremely low minimum wage+). (If it was self-employment income, withholding and paying self-employment tax which is paid in lieu of FICA taxes, would be solely the employee's problem and none of the employer's business.) A comment notes, probably correctly, that: If wages plus tips do not add up to the full regular (non-tipped) minimum wage, the employer must pay the difference. This is not well-enforced, however. So, employers have a duty to report to the IRS and withhold taxes from their best estimate of combined wages and tips in a manner authorized by IRS regulations. If they don't, the employers face stiff penalties from the IRS for failing to withhold taxes. There are tax regulations and other forms of official guidance governing when it is permissible to infer tips on cash payments in this fashion. It isn't truly &quot;wage theft&quot;. The employee still gets whatever the actual tip is, and the employer still doesn't get the tip itself. Instead, what the employer does is withhold taxes for the benefit of the employee (and with respect to FICA an equal share of employer obligations withholding) based upon estimated wages and tips combined. The income tax withholding is annually reconciled (in theory anyway) against actual taxes owed on the annual tax return. If you maintain good records, you might get audited, but you'd probably win. If you maintain sloppy records or don't keep track at all, you'd probably lose in an audit. To reconcile the error in income tax reporting in federal tax law, the waiter files a 1040 with the W-2 from the employer. The waiter reports the amount withheld in one box. The waiter reports the correct amount of wages and salary and tips rather than the incorrect amount in the wage and salary box. The waiter files a supplement to the tax return page explaining the that W-2 is inaccurate. The waiter calculates tax and shows entitlement to a refund, and the IRS either writes a check or audits after which the IRS or if there is no agreement the tax court decides who is right. Cash tips should be logged daily by the waiter and regularly deposited. (I've done this before personally, with success in the audit process, in cases of erroneous 1099s for my personal taxes.) Reconciling errors in FICA withholdings is rather more difficult, but erroneous overwithholding still provides a benefit to the employee, and the employee's survivors, in the long run in that case. This is done in the form of larger Social Security benefit checks that are based on the inflated wage and tip estimate and the actual FICA taxes paid. If the employee actually receives more cash tips than reported by the employer and doesn't correctly increase the amount in a tax return, the tipped employee is actually engaged in petty tax evasion (and, in practice, excess cash tips are rarely reported). The circumstances under which a fixed percentage may be properly set and what it should be are too technical for an answer here. Systemically, the problem with the applicable regulations is that the inferred tip percentage is benchmarked against the tips paid on credit card payments, per IRS guidance and permission, but actually, customers tip at lower percentages of the bill when paying in cash than when paying via credit card. This is a flaw in the law, but it doesn't represent impropriety on the part of the employer.