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Can you help me understand US taxes?

Can you help me understand US taxes?

Old Sep 30th 2007, 7:18 pm
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Default Can you help me understand US taxes?

Hi, my wife and I have been active in the Aquaman EB5 thread and are flying to Florida in about 10 weeks to decide do we go there for the rest of our lives, leaving the UK. (we are 75-80% convinced subject to going back)

I have spent the past hour searching google and the IRS website to try to find the following, but have had no joy!:-

1. What income tax do people pay in the state of Florida..... ? (I saw 1st approx £8000 PP is tax exempt but cannot find what you pay after that? (there seems to be no state tax there)
I have now found the federal tax guide...... do you just have to pay federal taxes in florida?

2. If you buy a house, live in it for say 2-3 years and for example sell for a $70,000 profit, do you have to pay capital gains tax? (you don't pay tax on your principal residence in the UK)

3. How can I find a trust worthy accountant in Florida who can maybe advise us more when we are out there especially to do with taxes when running your own business (partnership)?

4. Finally any tips on how to go about getting a US private health insurance quote? (hard to find links from the UK)

Thank you for any help as this is important for anyone like us taking the big leap.

Mikeycartmen

Last edited by Mikeycartmen; Sep 30th 2007 at 7:22 pm.
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Old Sep 30th 2007, 7:43 pm
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Default Re: Can you help me understand US taxes?

Florida is one of the few states that has no personal state income tax. Of course, federal taxes are assessed, regardless.

Here are some links for the home sales tax rules. Basically, there is a two-year rule with a partial exemption ($250k). http://taxes.about.com/od/taxplannin...e_sale_tax.htm
http://www.irs.gov/newsroom/article/...105042,00.html

Accountants are everywhere. Make some friends who are entrepreneurs or small business owners, and they should be able to help you.

For tax treatment for a small business, an LLC is often an ideal way to go. You get the liability protection of a corporation, but the "passthrough" tax treatment of a partnership (read: no double taxation.) They are generally cheap to set up and maintain, you can often do it without an attorney with standardized forms provided by the state or else by using a self-help book available at your local bookstore. I highly recommend anything published by Nolo Press (look for its website), and you should have a look at the Secretary of Corporations website for whichever state in which you end up establishing your office.

Although you will hear come-ons and advertising pitching the benefits of Delaware-based corporations, that is generally not necessary for a small business and a waste of your time and money to pursue. Larger businesses can benefit from a Delaware filing, but the small independent entrepreneur need not bother.

For insurance quotes, look in the phone book or online for a broker who sells health plans. Find one who sells them for more than one carrier, so that you can get a variety of options. Generally, you will get the same price quotes from whomever you contact, so deal with someone who is competent and can give you good advice.

Health insurance is one of the worst things about the United States. If you have pre-existing health conditions, expect to be in for some problems. If you are healthy, then cross your fingers and try to stay that way.

And once you choose a policy, stick with it, so that it will be harder to cancel you later if you do fall seriously ill. (They would sooner see you die than pay copious amounts to heal you; it's harder for them to argue pre-existing conditions as an exclusion if you've had the same carrier for awhile.) I'd highly recommend getting a policy that includes payment of non-generic drugs, as the cost of brand-name medications alone could bankrupt you should you need them. The new exotic drugs have patent protection, which means there is no generic available for such drugs, so the prices will sky-high if you need to pay for them yourself.

Best of luck.
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Old Sep 30th 2007, 8:10 pm
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Default Re: Can you help me understand US taxes?

Originally Posted by RoadWarriorFromLP View Post
Florida is one of the few states that has no personal state income tax. Of course, federal taxes are assessed, regardless.

Here are some links for the home sales tax rules. Basically, there is a two-year rule with a partial exemption ($250k). http://taxes.about.com/od/taxplannin...e_sale_tax.htm
http://www.irs.gov/newsroom/article/...105042,00.html

Accountants are everywhere. Make some friends who are entrepreneurs or small business owners, and they should be able to help you.

For tax treatment for a small business, an LLC is often an ideal way to go. You get the liability protection of a corporation, but the "passthrough" tax treatment of a partnership (read: no double taxation.) They are generally cheap to set up and maintain, you can often do it without an attorney with standardized forms provided by the state or else by using a self-help book available at your local bookstore. I highly recommend anything published by Nolo Press (look for its website), and you should have a look at the Secretary of Corporations website for whichever state in which you end up establishing your office.

Although you will hear come-ons and advertising pitching the benefits of Delaware-based corporations, that is generally not necessary for a small business and a waste of your time and money to pursue. Larger businesses can benefit from a Delaware filing, but the small independent entrepreneur need not bother.

For insurance quotes, look in the phone book or online for a broker who sells health plans. Find one who sells them for more than one carrier, so that you can get a variety of options. Generally, you will get the same price quotes from whomever you contact, so deal with someone who is competent and can give you good advice.

Health insurance is one of the worst things about the United States. If you have pre-existing health conditions, expect to be in for some problems. If you are healthy, then cross your fingers and try to stay that way.

And once you choose a policy, stick with it, so that it will be harder to cancel you later if you do fall seriously ill. (They would sooner see you die than pay copious amounts to heal you; it's harder for them to argue pre-existing conditions as an exclusion if you've had the same carrier for awhile.) I'd highly recommend getting a policy that includes payment of non-generic drugs, as the cost of brand-name medications alone could bankrupt you should you need them. The new exotic drugs have patent protection, which means there is no generic available for such drugs, so the prices will sky-high if you need to pay for them yourself.

Best of luck.
Hi Roadwarrior

Thanks for the help.

We are looking to take over a profitable gas station, so I appreciate your advice about looking into creating an LLC.

Unfortunately I am not yet in the US, so do not have access to a phone book for Accountants or Health Insurance companies, however I appreciate your tips.

Do you know about any capital gains on buying and selling your property that you may live in for a couple of years?

Thanks

Mikeycartmen
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Old Sep 30th 2007, 8:18 pm
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Default Re: Can you help me understand US taxes?

If you are taking over a gas station, you will most likely have employees. If you are providing health insurance for them, then you may just a group plan for the business, and make yourself and your spouse two of the employees covered by the policy. This may actually be better for you, as you should have less stringent underwriting of the policy if you are covering a group of employees.

You can do an online search for phone directories and for agents advertising policies. Again, if you are covering a group, your insurance needs will likely be somewhat different.

Info on the capital gains of a home sale is provided in those two links above.
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Old Sep 30th 2007, 9:54 pm
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Default Re: Can you help me understand US taxes?

Just a note - property values have FALLEN a lot in many parts of Florida - big capital gains str not the worry there just now. Of course, that could reverse, but......
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Old Sep 30th 2007, 11:42 pm
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Default Re: Can you help me understand US taxes?

Make sure you do your due dilligence. gas stations can be tricky propositions

check out www.thecreativeinvestor.com if you haven't owned one in the usa in the past
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Old Oct 1st 2007, 12:14 am
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Default Re: Can you help me understand US taxes?

Originally Posted by Mikeycartmen View Post
Do you know about any capital gains on buying and selling your property that you may live in for a couple of years?



Mikeycartmen

Short answer is no, you won't. If you live in a house for 2 years as a couple or family, you are eligible for a $500,000 exemption. So unless the property market takes off even more crazy than before, or you're into buying multimillion dollar homes, it won't affect you.
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Old Oct 1st 2007, 10:35 am
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Default Re: Can you help me understand US taxes?

Originally Posted by RoadWarriorFromLP View Post
If you are taking over a gas station, you will most likely have employees. If you are providing health insurance for them, then you may just a group plan for the business, and make yourself and your spouse two of the employees covered by the policy. This may actually be better for you, as you should have less stringent underwriting of the policy if you are covering a group of employees.

You can do an online search for phone directories and for agents advertising policies. Again, if you are covering a group, your insurance needs will likely be somewhat different.

Info on the capital gains of a home sale is provided in those two links above.

Hi Roadwarrior

Thanks, I appreciate the tips. I will look into this more whan i am in Floriday in December.

Mikeycartmen
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Old Oct 1st 2007, 10:38 am
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Default Re: Can you help me understand US taxes?

Originally Posted by Tracym View Post
Just a note - property values have FALLEN a lot in many parts of Florida - big capital gains str not the worry there just now. Of course, that could reverse, but......
I have been reading about this. We propose to rent for 6-12 months so we have plenty of time to find the right property/area. Definitely won't be buying until we know the market has stabilised. I sell properties for a living in the UK.

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Old Oct 1st 2007, 10:42 am
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Cool Re: Can you help me understand US taxes?

Originally Posted by BritGuyTN View Post
Make sure you do your due dilligence. gas stations can be tricky propositions

check out www.thecreativeinvestor.com if you haven't owned one in the usa in the past
I appreciate the link. I have already done some serious research and am aware of some dodgy brokers that may try to sell some badly performing gas stations.

We will be hiring our own surveyor to survey a site and then get a certified accountant to go through the books of the gas station we like, IE no way hosea unless the gas station is squeeky clean!

Still got a lot to learn, but am making sure we don't rush into anything withouth having everything checked befoehand.

Thanks

Mikeycartmen
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Old Oct 1st 2007, 10:46 am
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Thumbs up Re: Can you help me understand US taxes?

Originally Posted by Dan725 View Post
Short answer is no, you won't. If you live in a house for 2 years as a couple or family, you are eligible for a $500,000 exemption. So unless the property market takes off even more crazy than before, or you're into buying multimillion dollar homes, it won't affect you.
Hi Dan 275

Thanks for clarifying.......do you get an exemption if say you spend $350,000 on a new home, keep it for 3-4 years and then (if the market goes up) sell it for £425,000, does the 2 year exemption cover me for the gain here, or is it only if you sell in 2 years? Sorry, just need to understand a bit more.

Also, do you become exempt ONLY if you buy another property? (we may decide say 3-4 years down the line to come back the UK....... however I doubt it!) Just want to know the worst case scenario here.

Thanks

Mikeycartmen
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Old Oct 1st 2007, 10:53 am
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Default Re: Can you help me understand US taxes?

Originally Posted by Mikeycartmen View Post
Hi Dan 275

Thanks for clarifying.......do you get an exemption if say you spend $350,000 on a new home, keep it for 3-4 years and then (if the market goes up) sell it for £425,000, does the 2 year exemption cover me for the gain here, or is it only if you sell in 2 years? Sorry, just need to understand a bit more.

Also, do you become exempt ONLY if you buy another property? (we may decide say 3-4 years down the line to come back the UK....... however I doubt it!) Just want to know the worst case scenario here.

Thanks

Mikeycartmen
Here are the IRS rules - see "Excluding the Gain" section. I just glanced at it, but it appears for a married couple you're allowed to make $500,000

http://www.irs.gov/publications/p523/ar02.html#d0e1939
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Old Oct 1st 2007, 1:08 pm
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Default Re: Can you help me understand US taxes?

Originally Posted by Mikeycartmen View Post
no way hosea unless the gas station is squeeky clean!
I don't have a clue what it's like in Florida, but in NY/NJ, there's a significant organized crime presence in the gas station/fuel distribution market. IIRC, part of it comes because diesel fuel for home heating is untaxed, while diesel for transportation is taxed.

If you've worked in that sector in the UK, this might not be a surprise, I guess.
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Old Oct 1st 2007, 1:44 pm
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Default Re: Can you help me understand US taxes?

Originally Posted by Mikeycartmen View Post
I appreciate the link. I have already done some serious research and am aware of some dodgy brokers that may try to sell some badly performing gas stations.

We will be hiring our own surveyor to survey a site and then get a certified accountant to go through the books of the gas station we like, IE no way hosea unless the gas station is squeeky clean!

Still got a lot to learn, but am making sure we don't rush into anything withouth having everything checked befoehand.

Thanks

Mikeycartmen
good

I own some multi-family commercial property and owners are often shady as crap and good accounts and pro-formas can be easily manipulated.
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Old Oct 1st 2007, 3:30 pm
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Default Re: Can you help me understand US taxes?

Originally Posted by Mikeycartmen View Post
Hi Dan 275

Thanks for clarifying.......do you get an exemption if say you spend $350,000 on a new home, keep it for 3-4 years and then (if the market goes up) sell it for £425,000, does the 2 year exemption cover me for the gain here, or is it only if you sell in 2 years? Sorry, just need to understand a bit more.

Also, do you become exempt ONLY if you buy another property? (we may decide say 3-4 years down the line to come back the UK....... however I doubt it!) Just want to know the worst case scenario here.

Thanks

Mikeycartmen
You will be covered by the exemption. You have to have lived for 2 years in the property out of the last 5. Keep your primary property 2 years, you and your wifes exemption = $500k. Buying another property has got no bearing on it whatsoever.
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