2021 is ending and 2022 is coming. Post-holiday is tax filing season and Americans living abroad need to file their taxes. Just like Americans living in the United States, federal tax returns are filed every year. However, applying from abroad is more complicated. Below is new information about the taxes collected abroad for 2022 that Americans file with the United States.
Some things stay the same
First, it might be helpful to look back at what’s not new for Americans overseas in 2022.
Americans living abroad must submit US tax documents and report that foreign accounts, assets, and businesses remain unchanged. This year there was hope that President Biden’s tax reform might be accompanied by some kind of exemption for Americans living abroad, but that has not materialized.
For this blog post, we bring an interview with Keith Redmond, a Multi-Cultural Global Management Executive working with cross cultural issues for over 20 years, who is currently the International Senior Consultant at Leaders Across Borders.
Keith is an American overseas, based in France. He has strong views about the harm of FATCA unfairly punishing a large group of Americans who are living overseas. He is fighting for these views by testifying in Congress in January.
TaxConnections will post on Worldwide Tax Blogs all documents over a series of weeks leading up to the Internet Tax Summit.
On 14 July 2015 the FATCA Lawsuit in US Federal Court in Southern Ohio on behalf of 8.7 million Americans overseas as well as a large segment of the 12.6 million foreign passport-holding U.S. residents by Republicans Overseas Action, a 501(c)(4) organization which does not intervene in any political campaign by corporate policy. The lawsuit cites eight constitutional violations and requests a preliminary injunction that will protect Americans overseas from FATCA and FBAR until a trial can be held by the court.
Keith Redmond, an American living in Paris, France for the past 20 years, works globally Read More
The IRS has really streamlined the Streamline Procedures. IRS has just updated the Streamlined Procedure forms for both its “offshore” and “domestic” procedures. All is now in fillable format; even the statement of facts can be cut and pasted right onto the Form.
Certification for Persons OUTSIDE the US
Certification for Persons INSIDE the US
You can learn more about the new Streamlined Procedures at my blog post, here.
Original Post By: Virginia La Torre Jeker, J.D. Read More
A nonresident alien individual (NRA) is generally subject to US income tax on two types of income categories:
Income that is “effectively connected” with a trade or business in the United States (so-called “ECI”); Income from US sources that is “fixed, determinable, annual or periodical” (so-called “FDAP” income)
ECI versus FDAP
When income is “effectively connected” with a US trade or business, the income is taxed at graduated rates. These are the same rates that apply to US citizens and residents (the highest marginal rate is 39.6%). Such “effectively connected income” ECI, is to be Read More
It was recently reported in the press that the Social Security Administration was collecting old debts of many deceased persons by intercepting the tax refunds of their children. After much unwanted publicity, the Social Security Administration announced it would stop doing this with regard to debts that were over ten years old. What implications does this case raise for tax noncompliant expatriates?
The case of the Social Security Administration is quite alarming and raises serious concerns for persons with unpaid US tax liabilities. It is widely reported and recognized that there has been a vast increase in expatriations. I suspect that some expatriations will involve taxpayers who were not fully tax compliant and I foresee that this area is ripe for IRS audit and controversy. Read More
When purchasing a real property overseas, there are situations when it may prove advantageous or even necessary to do so through an offshore corporation, rather than owning the property individually. It is crucial to understand that this can also have significant US tax consequences for US persons. Fortunately, “checking the box” on Form 8832 provides a possible solution to this problem, taking advantage of the protections provided by the corporate entity while avoiding many of its tax repercussions.
Benefits of Corporate Ownership
Investment in real property through a vehicle offering limited liability, as opposed to direct ownership, offers numerous protections. Should any legal claims arise, such as in the case of tenant injury when renting out property owned through a corporation, the liability of Read More
If you are a US citizen or resident and you receive gifts or bequests (generally, an inheritance or gift of property by a Will) of money or other property from a foreign (non-US) person or entity, you may need to report these gifts on Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. Form 3520 is an information return, not a tax return. Many people receiving gifts or bequests get very confused. They mistakenly believe that they have to pay tax when they receive a gift or bequest. This is not the case – bona fide gifts or bequests are not subject to income tax in the hands of the recipient. This remains the case regardless of whether the person giving the gift is a US person or a foreign person. It remains the case regardless of the amount of the gift or bequest. Read More
Given all the press surrounding “Report of Foreign Bank and Financial Accounts” or so-called FBARs, by now we all know about what should be reported on an FBAR, right? Well, given the Internal Revenue Service’s latest assertion in United States, v. John C. Hom, maybe we had better start studying once again.
Online Gambling Accounts
In the Hom case, the taxpayer was an avid and professional internet gambler with online gambling accounts maintained with overseas entities: FirePay.com (based in London), PokerStars.com (based in Isle of Man), and Partypoker.com (based in Gibraltar). Overseas gambling accounts were necessary because of US laws that prohibit the interstate operation of betting businesses in the United States, making online gambling technically illegal. The Read More
In my tax practice in the Middle East, it is very common for family members to have legal title to assets they do not own. For example, it is common for a parent to have the eldest son hold legal title to property in which the child has no beneficial interest whatsoever; sometimes the nominee relationship is entered into in an attempt to circumvent forced inheritance shares of Sharia law, or to avoid probate.
What is a Nominee and How Does a Nominee Relationship work?
A nominee is a person or entity named by another party (called a “nominator”) to hold title to a certain property. The nominee is the registered owner of the property but he is not the beneficial owner. All rights and incidents of true ownership belong to the beneficial owner and essentially, the nominee stands in a position of trust to follow the orders of the Read More
The Report, OFFSHORE TAX EVASION: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts, by the Senate Permanent Subcommittee on Investigations was released at the end of last month. Senator Carl Levin chairs the Panel and the Report covers lots of ground.
Bashing the Swiss
Looking at the Swiss banking industry it lambasts the Swiss Government for obstructing United States efforts to identify US persons with undisclosed accounts. The Swiss authorities stand accused of lots of wrongdoing – among them: intervening with United States criminal investigations by restricting document production by Swiss banks; pressuring the US to design a non-prosecution program so hundreds of Swiss banks Read More
This is a two-part blog post with Part I available HERE.
Renouncing US Citizenship if the Individual is a Minor
“Jus soli” (the law of the soil) is a rule of common law followed by the United States, under which the place of a person’s birth determines his citizenship. In addition to common law, this principle is embodied in the 14th Amendment to the US Constitution which states, in part, that: “All persons born in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” Citizenship is also determined under various US citizenship and nationality statutes, such as the Immigration and Nationality Act (INA). Read More