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Archive for Expatriate Taxes

U.S. Taxes On Foreign Income: Who Should File A U.S. Expatriate Tax Return?

Olivier Wagner- Filing An Expatriate Tax Return

While many Americans abroad wonder if they have to pay US taxes on foreign income, the real question is about filing tax return itself. Many of US citizens living overseas do not owe any taxes to IRS. However, it doesn’t mean they don’t have to report their income on Form 1040. Majority of US expats confuse the filing threshold with Foreign Earned Income Exclusion. The latter one doesn’t determine your filing liabilities. It is there to exclude all or part of your foreign-source wages and self-employment income from U.S. federal income tax. Yet you need to file federal tax return and form 2555 to use Foreign Earned Income Exclusion.

There are a few things to remember about US tax filing obligations. First of all, determine if you are a U.S. person for tax purposes, as you do not necessarily need to have a US passport to possibly have US tax filing obligations. You may even need to file even if you don’t earn any money yet you are married to someone who has income. Yes, we know that US taxes can be quite complicated!

Tax Tip 1: Even though we have already mentioned FEIE above, don’t rush to select Foreign Earned Income Exclusion on your US expat tax return. In many cases, choosing Foreign Tax Credit is more beneficial. Tax professionals prefer the latter for a number of reasons.

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United States Dual Citizens Receive Punitive Tax

Attention Please

We bring your attention to the commentary on the post this week  written by John Richardson of Citizenship Solutions in Toronto, Canada called “The United States Imposes A Separate And Much More Punitive Tax On U.S. Citizens Who Are Residents Of Other Countries”.

We appreciate the commentary to Johns post and ask our readers to add their own stories to educate the public of the impact of these laws have on dual citizens. The real financial impact is causing hardship and stress for many Americans who live and reside in other countries and have done so for years.

You can read the story and commentary at this link.

 

Expatriates Are Very Upset With The United States IRS: 120+ Comments Educate You Why

John Richardson On Expatriate Taxes

We continue to receive commentary on the article written by TaxConnections Member John Richardson of Citizenship Solutions. His blog post on USA Of The 21st Century Is Like Britain In The 19th Century has hit a nerve with many expatriates around the world. The blog post and the 120+ comments that follow explain what is happening to those who happened to be born here but do not live in the United States. There is more to learn that will leave you at the edge of your seats so stay tuned to this post.

Read this post that has 120+ comments and growing by the day and please forward to expatriates you know to add commentary.

https://www.taxconnections.com/taxblog/the-usa-of-the-21st-century-is-like-britain-in-the-19th-century/#.XH3XiKJKiJB

Please add your commentary below to continue to educate others on the consequences of United States FATCA tax laws on your life.

Written By TaxConnections CEO, Kat Jennings

 

WOW! A Big Reaction To The Article Posted Yesterday Called “USA Of The 21st Century Is Like Britain In The 19th Century”

John Richardson About Americans Citizens Abroad

Yesterday, we posted an article called The USA Of The 21st Century Is Like Britain In The 19th Century written by John Richardson of Citizenship Solutions in Canada. John is an internationally recognized expert on the subject of dual citizenship and accidental Americans. The post created a significant amount of reaction and response which I want to bring to your attention today. It is important to understand the impact of U.S. tax laws and how they are affecting Americans who moved long ago to another country, or may have just been born here but do not reside in the United States.

It is a great article and the commentary continues to highlight the issues faced by many. You can read the article and the comments at this link:

https://www.taxconnections.com/taxblog/the-usa-of-the-21st-century-is-like-britain-in-the-19th-century/#.XHkuBqJKiJA

Your comments are welcome to continue enlightening the world.

Kat Jennings, CEO TaxConnections

 

U.S. Expatriates Can Claim Foreign Tax Credit Filing Form 1116

Olivier Wagner - Form 1116
What Is Form 1116 And Who Needs To File It?

When talking about US taxes and taxation of US citizens who live abroad, you may have heard of Foreign Tax Credit and the possibility to offset the US tax owing by using the taxes paid to another country. That way you can narrow the tax owing down to zero!

Most of the US international tax experts prefer claiming Foreign Tax Credit (Form 1116) on client’s U.S. tax return rather than preparing form 2555 (Foreign Earned Income Exclusion), since it is more beneficial. Read further to learn why FTC is a better way to save money on your US expat taxes.

Here are 5 quick facts about IRS Form 1116 and US tax returns:

  1. You claim Foreign Tax Credit on your US expat taxes by filing Form 1116
  2. You attach this form to a Form 1040, your individual US tax return
  3. The credit reduces your US tax liability on expat income dollar for dollar
  4. You cannot take Foreign Tax Credit against income which you have previously excluded by the Foreign Earned Income Exclusion
  5. And you can’t receive a refund of foreign taxes paid through your US tax return

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IRC Section 965 Transition Tax – Part 10

John-Richardson- Investigating the Transition Tax

Individuals Subject to U.S. State Tax Jurisdiction, the Response of New York State

This is the tenth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by taxpaying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen.

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IRC Section 965 Transition Tax – Part 9

John-Richardson- Investigating the Transition Tax

From The “Pax Americana” To The “Tax Americana”

This is the ninth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by taxpaying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen.

Introduction – The purpose of this post is …

to demonstrate that the “transition tax” is an example (particularly egregious) of the principle that (1) not only does the United States impose “worldwide taxation” on the “tax residents” of other countries, but  (2) it imposes a separate tax regime on certain “tax residents” of other countries that is different and far more punitive than the regime imposed on Homeland Americans. Yes, you read correctly!

It is the “Tax Americana”– a “form” (no pun intended) of an “empire” which is colonizing other countries through taxation.

A recent and most important example of the “Tax Americana” is the “transition tax” : A U.S. resident who has undistributed earnings in a U.S. corporation will NOT be subjected to the “transition tax”. A Canadian resident who has undistributed earnings in a Canadian corporation will be subjected to the “transition tax”!

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IRC Section 965 Transition Tax – Part 8

John-Richardson- Investigating the Transition Tax

This small business thought it was saving to invest in business expansion – Wrong, they were saving to be robbed by America!

This is the eighth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by taxpaying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen. Read more

IRC Section 965 Transition Tax – Part 6

John-Richardson- Investigating the Transition Tax

A Reprieve

This is the sixth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by tax paying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen. Read more

IRC Section 965 Transition Tax – Part 5

John-Richardson- Investigating the Transition Tax

Shades of ODVP

This is the fifth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by tax paying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen. Read more

What U.S. Expat Needs To Know About Foreign Earned Income Exclusion

Olivier-Wagner- What U.S. Expat needs to know about Foreign Earned Income Exclusion

While all Americans are taxed in their worldwide income regardless where they reside, they also have Foreign Earned Income Exclusion to reduce the tax burden. And this is what our today’s tax infographic is about. In 2018 you can eliminate up to $104,100 of foreign earned income on your U.S. expat tax return. Let’s look into details and what this exclusion is about. Read more

IRC Section 965 Transition Tax – Part 4

Canada, Transition Tax, John Richardson, non-US residents, tax laws

This is the fourth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by tax paying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen.

Last night I was discussing the “transition tax” with an “individual” who is impacted by the tax AND is a Homeland American. He is a “tax resident” of ONLY the United States. For Homeland Americans who are subject to ONLY the U.S. tax system the “transition tax” is NOT a bad thing. Read more

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