Federal Taxation in Nevada
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Information sharing with IRS: Nevada is the only state that does not share information with the IRS. Nevada has no state income taxes on individuals or companies. However, Nevada is now considered the worst state to do business in by the non-partisan Tax Foundation. Recently, annual list and business license fees were increased.
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Federal Taxes for your Nevada LLC: Federal taxes are filed with the IRS. Most LLCs in Nevada with default tax elections are “tax-reporting” not “tax-paying” entities.
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Gambling and Income Reporting
When you win a big slot jackpot, the casino withholds 24% when you claim your prize. It also provides an IRS form to report your winnings. Gambling winnings are taxable and the IRS must be informed.
Income from online sales can be reported to the IRS as hobby income if the sales activity qualifies as a hobby, i.e. sale without intention of making money. For example, a recreational photographer selling a photo on eBay should report the sale as hobby income.
- Owning a Foreign Bank Account
While owning a foreign bank account is legal, there are additional reporting and tax requirements that US persons should be aware of to remain in IRS compliance and avoid fines and penalties. One catalyst for the IRS to learn about unreported foreign income is through FATCA – the Foreign Account Tax Compliance Act. Over 300,000 Foreign Financial Institutions actively report to the IRS.
- Tax Filing in Nevada
It is advisable to report any Nevada income to the IRS, as failure to do so could result in penalties. While Nevada does not have a business income tax, some localities levy taxes. For example, Reno imposes a 2.5% tax on net profits.
- Tax Return Requirements
Does Nevada require you to file a tax return?
Since Nevada does not collect an income tax on individuals, you are not required to file a NV State Income Tax Return. However, you may need to prepare and e-file a Federal Income Tax Return.