W Consulting & Co

Whether you need to file federal and state taxes depends on several factors, such as your income level, filing status, and type of income. In general, if your income exceeds certain thresholds, you are required to file taxes.

In 2023, here is the summary of whom should file federal tax returns.
State tax return filing requirements vary by state and are determined based on factors such as income, residency, and the source of income. In general, if you are a resident of a state and your income exceeds a certain threshold, you may be required to file a state tax return. Additionally, if you earned income in a state where you are not a resident, you may also be required to file a state tax return in that state.

Here are the state tax return filing requirements for a few states:

• California: Individuals must file a state tax return if their income exceeds $21,561 for single filers and $43,127 for married filing jointly.
• New York: Individuals must file a state tax return if their income exceeds $4,000 for single filers and $8,000 for married filing jointly.
• Texas: There is no state income tax in Texas, so there is no requirement to file a state tax return.
• Florida: There is no state income tax in Florida, so there is no requirement to file a state tax return.
• Illinois: Individuals must file a state tax return if their income exceeds $2,350 for single filers and $4,700 for married filing jointly.

If you have foreign assets, you may be required to report them on your tax return. The reporting requirements depend on the type and value of the assets. Here are some examples:

• Foreign bank accounts: If you have a foreign bank account with financial interest or signature authority with the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year, you may need to file a Report of Foreign Bank and Financial Accounts (FBAR). The FBAR is filed separately from your tax return and is due by April 15th or has automatic extension until October 15th each year.
• Foreign financial assets: If you have foreign financial assets with a total value of $50,000 or more, you may need to file Form 8938, Statement of Specified Foreign Financial Assets, with your tax return. 
• Foreign trusts: If you have an interest in a foreign trust, you may need to file Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, with your tax return. 
• Foreign corporations and partnerships: If you own stock in a foreign corporation or have an interest in a foreign partnership, you may need to file Form 5471 or Form 8865 with your tax return. 

Federal Form 1040NR: Nonresidents who own U.S. real estate are required to file U.S. federal income tax returns if they have rental income, capital gains from the sale of the property, or other U.S.-sourced income effectively connected with a U.S. trade or business.

State Income Tax: Nonresidents may also be subject to state and local taxes, depending on the location of the property.

Withholding Tax on sale of real estate: Nonresident individuals who sell U.S. real estate are also subject to a withholding tax on the gross sale price of the property, unless an exemption applies. The withholding tax rate is generally 15% of the gross sale price.

Withholding Tax on rental income: In general, the withholding tax rate on a nonresident's rental income is 30% of the gross rental income, but it may be reduced under an income tax treaty between the United States and the nonresident's country of tax residence.

Nonresident landlord pays tax of 30% of gross rent received, which means the rent tenant paying is withheld 30% of the rent payment for taxes and tenant send the withheld tax to the IRS. Nonresident landlord gives the tenant Form W-8BEN.

To avoid 30% withholding tax, nonresident landlord can file W-8ECI to prove the real estate activates are like a business, not like a passive investment. With Form W-8ECI, nonresident landlord file a tax return Form 1040NR with the IRS at graduated tax rate on net income. As such, nonresident landlord can avoid complicated process to request and a long wait for a refund.