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Archive for Expatriate

5 Things To Know About IRAs For U.S. Expats

As an American living and working abroad you better be fully armed with a knowledge regarding IRA for US expats, its’ opportunities and tax savings you can achieve. For example, do you know that depending on your foreign income you may or may not contribute to your regular or Roth IRA as an American abroad?

A lot of US expats qualify for the Foreign Earned Income Exclusion and they choose it to exclude the first $102,100 (as of the 2017 tax year) of foreign wages or self-employed income from the US federal income taxes. But not so many people know that if you are using the Foreign Earned Income Exclusion, then you signed yourself to its restrictions on your contributions to an IRA. Read further to find out more about it.

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Expatriates Required To File U.S. Individual Tax Return – Automatic Filing Extension Until June 15, 2018

All Americans are required to file annually the U.S. Individual Tax Return, wherever in the world they live. Here’s what US expats need to know about filing US taxes from abroad.

Expats have an automatic filing extension until June 15th, with a further extension available until October 15th upon request.

All Americans who earn over $10,400 ($4,050 if married filing separately), or just $400 of self-employment income are required to file, regardless of where their income is earned, where in the world they live, whether the U.S. has a tax treaty with that country, or whether they also pay foreign taxes.

The good news is that there are some IRS exemptions just for expats that allow them to reduce or in most cases eliminate their U.S. tax liability completely, although they still must file a US return to claim these exemptions.

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Foreign Earned Income Exclusion For U.S. Expatriates

Olivier Wagner, Tax Traveler, Vancouver, Canada, Tax Blog, TaxConnections

Even if you have left the United States for a brighter future elsewhere, you  (something not as strong) take a moment and think about any obligations you have towards the IRS. The US retains its right to tax globally its citizens and resident aliens who are a citizen or national of a country with which the United States has an income tax treaty in effect. Only two countries have such a citizenship-based taxation system: the United States and Eritrea.

What Is A Foreign Earned Income Exclusion For U.S. Expats?

The Foreign Earned Income Exclusion (FEIE) is offered to US citizens and resident aliens that are living abroad on a consistent basis, have earned income in a foreign country and can prove that they have done so for the past tax year by satisfying either the Physical Presence Test or the Bona Fide Residence. Read more

What US Expats Who Receive Form W-9 from a Foreign Bank Should Do

Hugo Lesser, Tax Advisor

Over the last few years, millions of US expats have been asked by their foreign banks and investment firms to fill out IRS form W-9. Receiving form W-9 often causes surprise or alarm. While there’s no need to panic, there are a number of things that expats should know if they receive form W-9, to ensure that they don’t create any problems in the future. Read more

Filing IRS Back Taxes for US Expat Americans

Hugo Lesser, Tax Advisor
American expats are still required to file a US federal tax return to the IRS. As expats also have to comply with the tax rules in the country where they live, it’s counterintuitive but nonetheless important that they file US taxes too.
Taxing US citizens abroad, or Citizenship (rather than Residence) Based Taxation, dates back to the Civil War, but until recently the IRS was powerless to enforce expat taxes, so few expats filed.

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International Tax Reform & Can Wealthy Americans Move to Virgin Islands and Not Pay Federal Capital Gains Tax?

William Byrnes, Tax Advisor

The Senate Finance Committee Modified Mark has published the modification to source rules involving possessions; the following is a description and analysis of the proposal:

The proposal modifies the sourcing rule in section 937(b)(2) by modifying the U.S. income limitation to exclude only U.S. source (or effectively connected) income attributable to a U.S. office or fixed place of business. The proposal also modifies section 865(j)(3) by providing that capital gains income earned by a U.S. Virgin Islands resident shall be deemed to constitute U.S. Virgin Islands source income regardless of the tax rate imposed by the U.S. Virgin Islands government.

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Claiming the Foreign Earned Income Exclusion when Filing a Late Return – What US Expats Need to Know

Hugo Lesser, Tax Advisor

The Foreign Earned Income Exclusion lets US expats exclude the first around $100,000 (the exact figure rises a little each year) of their earned income from US taxes.

It’s a great choice for many expats who earn less than this threshold, and sometimes a good option for expats who earn above the threshold too.

To claim the Foreign Earned Income Exclusion, expats have to file form 2555 with their annual US tax return. Form 2555 requires expats to prove that they live abroad.

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Top Year-End Tax Planning Strategies for US Expats in 2017

Hugo Lesser, Tax Advisor

Year-end tax planning is slightly different this year due to the proposed changes to the tax system. Despite this uncertainty however, there is still plenty that expats can do before the holidays to make their lives easier in 2018. They can even save some money, too!

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Trump Tax Reform Bill Analysis – What Does It Mean For US Expats?

Hugo Lesser, Tax Advisor

On November 2nd, the House of Representatives unveiled the first draft of the Trump Tax Reform Bill. Here we look at how it will affect expats.

Citizen Based Taxation and FATCA 

There is no mention in the draft Tax Reform Bill of any change to citizen based taxation for individuals, or of repealing FATCA.

It is proposed that corporations are only taxed on their US profits (rather than globally), as taxing corporations globally has (conversely to expectations) reduced government revenue, as globally operating firms have simply relocated to other countries with more favorable tax regimes.

Despite ACA (American Citizens Abroad) lobbying to make a similar change away from global taxation for expat individuals, there is no mention of this in the draft bill. Read more

What US Expats Can Learn From the Paul Manafort Indictment

Hugo Lesser, Tax Advisor

President Trump’s former campaign manager Paul Manafort, along with his associate Richard Gates, were indicted last week, with a long list of criminal charges filed against them.

The charges include engaging in conspiracies against the United States and to launder money, making false statements, acting as an unregistered foreign agent, and failing to report foreign bank and financial accounts.

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What Can We Learn From Paul Manafort’s Tax Problems?

Clinton Donnelly, Tax Advisor

What will the IRS do with Paul Manafort if the special prosecutor’s allegations are true? On October 30, 2017, the special prosecutor released an indictment against Paul Manafort, former campaign manager for President Trump, related to his actions as an unregistered agent of the Ukraine government. The prosecutors allege that Manafort had opened 16 foreign companies and conspired to money launder over $18 million of payment through these companies.

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US Expats Renouncing American Citizenship – What You Need to Know

Hugo Lesser, Tax Advisor

Americans living abroad are still required to file a US tax return, reporting their worldwide income, as well as obey the tax rules in the country where they live.

Many US expat have settled abroad permanently though, and they justifiably wonder why they must continue filing a US tax return every year, even if they don’t pay any US taxes because they claim one or more of the exemptions available to expats, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, when they file.

As a result, many US expats consider renouncing their American citizenship.

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