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Archive for Manasa Nadig

Expiring ITINs? What You Should Know!

Manasa Nadig ITIN

Many come to the United States on various work Visas and eventually bring their spouse and children to join them. Now these family members may not qualify for Social Security Numbers (SSN) and they have to apply for an Individual Taxpayer Identification Number (ITIN). The member of the family here on the work visa and consequentially an SSN can claim dependency credits and also be able to file jointly on their U.S. tax return with their spouse if conditions have been met and they qualify.

The 2017 Tax Cuts and Jobs Act now requires all applicants for Employer Identification Numbers to have either a Social Security Number or an ITIN. Non-resident individuals doing business in the US as a partner in a US partnership also require an ITIN to file their US tax returns and to be able to claim back taxes paid on their behalf by the US partnership.

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Offshore Voluntary Disclosure Program (OVDP) Update

Manasa Nadig - OVPD

It has been exactly a year to the day Part I of this post went up. The Internal Revenue Service decided to put an end to the Offshore Voluntary Disclosure Program (OVDP) on September 28th, 2018. That was just a precursor of the tumultuous changes to come at the Internal Revenue Service.

In November of 2018, the IRS released a Memorandum with updated procedures regarding voluntary disclosure both domestic and foreign submitted to them after September 28th, 2019. Notwithstanding the closure date, the IRS has the discretion to apply the new procedures to domestic voluntary disclosures received on or before September 28th, 2018.

Procedures Under The New OVDP

1.   All taxpayers, whether offshore or domestic need to submit a preclearance request on Form 14457 for screening to Criminal Investigation {CI} to determine eligibility. This can be requested via Fax or Mail to the IRS Criminal Investigation unit in Philadelphia.

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Plans To Retire Abroad? Here’s What You Need To Know!

Manasa Nadig- Traveling Abroad

Twenty Eighteen was a tumultuous year my friends and unfortunately my blog posting went on hiatus. I have a perfectly good excuse I must say, it was my big FIVE-OH birthday last year!! Yes, yes, I did hit that number in spite of my various attempts to stop Father Time! Besides starting a copious collection of AARP invitations promising me travel bags and blue-tooth speakers if I joined their ranks, I traveled a lot in 2018. One trip over early Fall was to Bilbao, Spain. We took the train from Madrid to Bilbao, the first thing to greet us at the Train Station was the stained glass facade (in the picture above), I was in Basque heaven after that, I was hard pressed to leave but work beckoned back home after a lovely week of the famous Bilbao hospitality. That got me thinking…how wonderful it would be to retire abroad! Wouldn’t it?

If you did decide to retire abroad, you should keep the following points in mind:

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What’s New On The 2018 Form 1040NR: Small Changes, Big Impact!

Manasa Nadig -Form 1040NR

Do train stations make you wistful? My husband and I lived on the East Coast when we first moved to the US and sometimes took the train from Baltimore to DC. Passing the town of Riverdale, MD got us all excited because like every other Indian teenager of our generation, we had grown up on a rather unhealthy dose of Archie comics!

Well, it was around this time that I discovered Tax Law and found it quite fascinating. I started to prepare our own taxes which involved Form 1040NR’s, India-US Treaty knowledge and the rest is rather choppy history which is reserved for another post because today we need to talk to about this 2018 Form 1040NR.

For the longest time ever this foreign cousin of the good ol’ Form 1040 had a rather mundane existence, nothing usually changed on it. Tax geeks got all excited when the Form 1040NR finally entered the digital age in 2017, we had hardly settled down from that when the BIG 2017 Tax Reform happened and everything pretty much is different now.

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The 20% Qualified Business Income Deduction: Section 199A

Manasa Nadig - Section 199A

2018 has been all about Tax Reform, you would probably have to be living in a cave in the United States if you did not hear about this. In this post we will talk about the biggest change that came out with the Tax Cuts and Jobs Act: Section 199A. This section allows owners of flow through entities such as Sole Proprietorships, S Corporations or Partnerships a deduction of 20% of the income earned by the flow-through.

The Internal Revenue Service dropped the proposed Regulations on Section 199A on August 8th, 2018, all of its 184 pages can be accessed here. A lot of different interpretations have been tossed around; everyone was hoping that the guidance would clear up the ambiguity. There is still much that needs to be addressed but unlike the story of the four blind men and the elephant, a solid shape is emerging out of the mist!

Caveat: Today’s post is a small introduction to this new section. There is much more information to be culled from the 184 pages.  My goal in this post is helping you glean some knowledge about Section 199A and will talk to experts about the mechanics of qualifying for the deduction.

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Tax Cuts And Jobs Act (TCJA): Changes For American Expatriates

Many American citizens who live outside the US have for years raised concerns about the United States’ Citizen-Based-Taxation System. They may have been hopeful when tax reform was being proposed but have been disappointed that their concerns have been ignored. The new tax reform bill Tax Cuts and Jobs Act called TCJA (pronounced tick-jah) has brought about massive changes in the way individuals are going to be taxed but not much has changed for American Expatriates.

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Tax Reform Changes How You Itemize

The media is abuzz with Tax Reform news, here to allay your confusion regarding the cut to some deductions and tax rates is my latest blog post. The media is abuzz with Tax Reform news, here to allay your confusion regarding the cut to some deductions and tax rates is my latest blog post.

The tax rates change has been the most publicized but there are many deductions on the chopping block that will drastically change how you prepare your taxes and/ or your bottom line.  Read more

When Can A Non-Resident Spouse Be Treated As A Resident?

As the tax reform debate rages on currently, I do not see much in the proposals changing for US citizens living abroad. As this story unfolds, I think it is a good thing that US citizens/ resident aliens living abroad are not affected. We shall wait and watch. For all the latest news-stay tuned!

As it happens many times for those US citizens who have moved abroad and married someone who is a citizen of their resident country, when times comes to file a tax return, they have to use the “Married Filing Separately” or the “Head of Household” filing status. Both of these may not be as advantageous as the “Married Filing Jointly” filing status tax-wise.

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Foreign Freelance Income & What Does Maradona Have To Do With It?

Just when I was planning on publishing my post on foreign free lance income and tax consequences- the big news headline of 2017 dropped! Today special prosecutor, Robert Mueller brought charges against Manafort & Gates for money laundering and foreign bank accounts among any other things. While those fireworks continue and you think that you may not be in the same league as them, let me assure you that many U.S. citizens who live abroad and have freelance income do not understand its tax implications.

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Cryptocurrency: A Story And Tax Consequences

Thinking about writing about Bitcoin, I remembered my maverick of an Economics teacher back in high school in Mumbai, India whose very thick south Indian accent meant we did not know what he was saying more than half the time. He started off the chapter on currency by having everyone in class remain standing till we came up with a definition for “Money”. Thankfully someone said “medium of exchange” real quick!

Although the underlying meaning of currency remains the same, the simple concept of a medium of exchange has undergone several upgrades particularly so with the cryptocurrency or digital payment systems known more commonly as Bitcoin.

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U.S. Expat Mistakes : Part III

The same vein runs through most expat conversations. U.S. taxes are burdensome and compliance is difficult. Keeping up with the rules and regulations takes up a big chunk of the expats’ time.

Many financial institutions in countries which have Inter-Governmental Agreements {IGAs} with the U.S. find keeping up with U.S. Bank Secrecy Act reporting requirements so cumbersome that they  do not want U.S. citizens to be their patrons.  Read more

U.S. Expat Mistakes: Part II

I have been on many online forums, message boards, and groups for U.S. citizen expats over the past few years. Most posts you see are ones with frantic U.S. citizens overwhelmed with U.S. tax rules & regulations they have to keep up with. This, in addition to keeping up with their resident country’s tax laws, must drive one crazy. These forums provide quick answers; no wonder they are so popular! Read more