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Tag Archive for FEIE

The Reality Of Owning A Controlled Foreign Corporation After Trump’s Tax Reform

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

Do you know that owning a Controlled Foreign Corporation got affected by New Tax Bill? In a nutshell, Trump’s tax reform now means that all income is Subpart F income. In addition, all currently untaxed retained earnings will be subject to a one-time tax. Read further if you want to find out what it means exactly and how U.S. expats with CFCs are affected.

Let’s take a quick look at a few changes that were introduced in recent tax legislation. Generally, Trump’s tax reform benefits individuals who are struggling with their finances by doubling standard deductions, i.e. from $6,000 to $12,000 for singles, and reducing the rates for five tax brackets of the existing seven. Read more

FBAR Penalties Rise Again Due To Inflation

Ephraim Moss, Tax Advisor, Tax Blog, New York, USA, TaxConnections

As with many numbers in the U.S. tax code (for example, the foreign earned income exclusion maximum amount), FBAR penalties increase periodically due to inflation.

Recently, the IRS announced that FBAR penalties for noncompliance would be increased for penalties assessed after January 15, 2017. A brief summary of the FBAR requirement and the new penalty amounts are the subjects of this blog.

The FBAR Requirement – A Quick Background Read more

FEIE For U.S. Expats With Student Loans

Moving abroad is the adventure of a lifetime, but if you have student loans it’s important to understand the consequences for expats.

For example, it’s a good idea to set up autopay (some loan servicers even offer a small discount for this) to ensure that you don’t miss any payments, and also to ensure that if your salary will be paid into a foreign bank once you move abroad you can easily transfer payments to your U.S. bank so that you don’t miss any payments. Read more

Reasons Not To Worry If You’re Behind With Your Expat Filing

There are lots of scare stories going around about the possible consequences for not filing U.S. taxes as an expat. You may have heard for example about U.S. passports being revoked, sizable FBAR penalties, and banks closing expats’ accounts because of FATCA. So if you’re an expat who’s behind with their U.S. tax filing, you may well be at least a little bit concerned. Read more

Exactly What Income Can U.S. Expats Exclude? FEIE

American expats are, unfortunately, still required to file U.S. taxes from abroad. Thankfully though, there are several exclusions that reduce or in most cases eliminate their U.S. tax liability. The foremost among these is the Foreign Earned Income Exclusion. Not owing U.S. taxes doesn’t exempt expats from having to file a U.S. tax return though, as the exclusions that reduce or eliminate U.S. tax liability for expats must be claimed each year when expats file their federal return. Read more

Digital Nomads Using The FEIE To Avoid Paying Income Tax

John Richardson, digital nomad, FEIE

Digital Nomads are entrepreneurs who run location independent business. Many digital nomads travel outside the United States with their laptops. Although they have a presence in other countries, they rarely stay long enough in any country to become tax residents of those other countries. They typically conduct their businesses through non-U.S. (foreign) corporations and draw a salary from those foreign corporations. By drawing a salary from those foreign corporations, they ensure that their income is foreign and they they avoid paying U.S. self-employment taxes.

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Tax Court Denies FEIE In Two Recent Cases

Ephraim Moss

Following the trend of the past several years, the Tax Court continues to review foreign earned income exclusion cases at a relatively high rate. In most of the recent cases, the Tax Court has denied the FEIE claims on a number of different grounds.

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Tax Changes Coming In 2017: What U.S. Expats Need To Know

Ephraim Moss

While the past year did not produce any monumental changes to U.S. tax law, there are a number of noteworthy changes that expats should keep in mind as we enter 2017. We also share a few highlights from President-elect Trump’s current tax plan.

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Late Filing The Foreign Earned Income Exclusion

Ephraim Moss

We’ve blogged a number of times in the past about the foreign earned income exclusion (“FEIE”), because it is one of the main tax relief measures available to expats filing U.S. tax returns. Expats qualifying for the FEIE may be able to exclude all or part of their foreign salary or wages from their income when filing their return – so its importance can’t be overstated.

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Foreign Earned Income For U.S. Overseas Taxpayers

John Dundon

The following was prepared by IRS Employees Bethany Barclay, Technical Specialist LB&I Division & Tracy McFee, CPA Technical Specialist LB&I Division regarding Foreign Earned Income Exclusion (FEIE).

Tracy and I met as guest panelists on the hit TV Show Tax Talk Today: Aliens, Immigration, and Taxes—Navigating the Shoals and I’ve grown to truly appreciate her knowledge base and skill set. She is a respectable public servant who I thank for allowing me to share her efforts in this venue.

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Foreign Earned Income Exclusion – Timing is Everything!

Not many U.S. expatriates realize that the foreign earned income exclusion is an election and is not automatic. In a recent tax court Nancy McDonald learnt this in a painful way when her exclusion was denied. Nancy McDonald V. Commissioner TC Memo 2015-169.

IRC Section 911(a) provides that a qualified individual may elect to exclude from gross income the foreign earned income of such individual. To qualify for the foreign earned income exclusion (FEIE), the taxpayer must satisfy a three-part test:

1. Taxpayer must be a U.S. citizen who is a bona fide resident of a foreign country for an entire taxable year or physically present in a foreign country during at least 330 days out of a 12-month period, sec. 911(d)(1); Read more

Foreign Earned Income Exclusion: What Is “Earned Income”?

Americans working abroad may be eligible to exclude certain foreign earned income (wages, compensation for services) from US taxable income under the rules governing the Foreign Earned Income Exclusion (FEIE). The FEIE amount is adjusted annually for inflation. This amount for 2014 is $99,200. If a couple is married, each spouse can claim the full FEIE amount (e.g., for 2014, each spouse can exclude up to $99,200 of his or her earned income). If one spouse does not earn enough salary to fully utilize the exemption amount and has “excess” FEIE, this excess cannot be used by the other spouse to exclude amounts beyond his or her own exemption.

The exclusion can apply regardless of whether any foreign tax is paid on the foreign earned income, provided certain tests are met. Generally, for an individual to qualify for the Read more

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