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Marriage to a Foreign Citizen

How Does My Marriage to a Foreign Citizen Affect My Taxes If We Don’t Live in the U.S.?

Question I’m an expatriate and live and work in Europe, visiting family in the United States a couple times a year. I didn’t think about my U.S. taxes until recently, when I sat down to work on them. How is my changed marital status going to affect my U.S. tax liability? Answer Congratulations on the …

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Contractor Versus Employee

Contractor Versus Employee Taxes for Americans Working Abroad

As an independent contractor or an employee, working abroad has both advantages and disadvantages. A US expat living overseas might have numerous financial and non-financial perks, especially when compared to their domestic counterparts. However, your taxes will vary greatly depending on whether you are an independent contractor or an employee. Read the following case studies …

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Foreign Retirement Plans

Reporting Requirements for Foreign Retirement Plans: Issues and Solutions

The IRS typically taxes contributions to foreign plans, the income that has been generated in those plans (growth) but has not yet been distributed, and payouts from such plans. The extensive list of information-reporting obligations and the severe penalties for infractions should draw your attention if the lack of tax deferral is insufficient to do …

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US Expat Taxpayers

Some US Tax Law Changes Impacting US Expat Taxpayers

The new changes to US federal tax laws impacts expats filing their 2021 tax returns in 2022.  The standard deduction for married couples filing jointly for tax year 2021 has been increased to $25,100.  For single taxpayers and married individuals filing separately, the standard deduction increased to $12,550 for 2021, and for heads of households, …

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foreign tax return

It is on my foreign tax return, so I can take this deduction

U.S. Expat Taxes are determined under U.S. tax rules, not those of a foreign country. The variations between what is deductible in one country versus another can sometimes result in significant differences between the foreign tax return amounts reported abroad and on the U.S. tax return. When the reported taxable income is exactly the same …

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foreign earned income exclusion and the foreign tax credit.

I have an option to choose between the foreign earned income exclusion and the foreign tax credit.

Americans overseas can reduce their US tax burden using the foreign earned income exclusion, the foreign tax credit or a combination of both. This year, for example, claiming foreign earned income exclusion allows higher-earning expats to qualify for coronavirus stimulus payments that they would not otherwise qualify for. Unfortunately, it is not permitted to switch …

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IRS Exchange Rates for Expats

What are the IRS exchange rates for Americans living abroad?

What are the IRS exchange rates for Americans living abroad? Filing your expat taxes generally means converting your foreign income into US dollars. To do that, you need to understand IRS currency exchange rates. This is what you need to know. Why are IRS exchange rates important for expat taxes? Every year, Americans living abroad …

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expat taxes

My passport or Green card has expired, so I do not have to file my expat taxes any more?

Filing a US tax return while living abroad can be stressful and expensive. When I first came across this idea, I found it surprising, but finally understood how frustrated American taxpayers with a second citizenship and no desire to return to the United States would choose to renounce their American status. However, throwing your passport …

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This is not like this! Legal foreign marriages are recognized by the US. A US citizen with a foreign spouse is therefore married for US tax purposes and is even allowed to file a joint tax return with the foreign spouse if you wish. By making this joint election, the foreign spouse enters the US tax system, which may not be a good idea if the foreign spouse has foreign income and assets. Filing a separate tax return may be a better option in that situation, but filing with "single" status is in no way a valid option. If you have eligible children dependents who have SSN or ITIN you can file as Head of Household. The IRS says "If you are a U.S. citizen married to a nonresident alien, you may qualify to use the head of household tax rates. You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien"

I got married abroad, So I am still single because my spouse is foreign?

This is not like this! Legal foreign marriages are recognized by the US. A US citizen with a foreign spouse is therefore married for US tax purposes and is even allowed to file a joint tax return with the foreign spouse if you wish. By making this joint election, the foreign spouse enters the US …

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GILTI Tax

Similar to a subpart F inclusion, “U.S. Shareholders” of CFCs include GILTI in income on an annual basis. U.S. corporations may be entitled under section 250 to a deduction of up to 50% of their GILTI inclusion and related section 78 gross-up. Unlike a subpart F inclusion, a U.S. Shareholder calculates a single GILTI inclusion, …

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Form 14654 and the Streamlined Offshore Program

There are two directions for the IRS streamlined program. These are the SFOP (Streamlined Foreign Offshore Program) and the SDOP (Streamlined Domestic Offshore Program). Both the SFOP and SDOP has the following benefits: amnesty from FBAR penalties, accuracy-related penalties, and failure to file penalties. Differences between the SFOP and SDOP The differences between the two …

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FATCA compliance and FBAR filing

FATCA was signed into law in 2010, with an aim to levy certain taxes on U.S. citizens and entities with substantial overseas holdings and the overseas institutions that enable some sorts of tax evasion. Requires foreign banks to report and pass due diligence of US persons bank accounts to accurately report to the US treasury …

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Form 8621 (PFIC)

Required when there is distribution of income from a passive foreign investment company (PFICs) in which a U.S. person is a shareholder or a disposition of the shares of a PFIC by gift, death and most types of otherwise tax free exchanges or redemptions. This form must be filed to compute the tax due on …

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Form 3520

Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts Usually amounts of $100,000 or more are required to be reported in a calendar year.

Form 5471 (CFCs)

U.S. citizens and U.S. residents who are officers, directors, or shareholders in certain foreign corporations are responsible for IRS Form 5471 filing. Under the TCJA, rules requiring the inclusion of GILTI for controlled foreign corporations (CFCs) were added. The new rules are in Section 951A and other sections of the Internal Revenue Code (IRC). The …

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Form 8938, statement of Specified Foreign Financial Assets

If you are required to file Form 8938, you must report your financial accounts maintained by a foreign financial institution. The following are considered reportable under the code: Financial accounts held at foreign banks and financial institutions Stocks, bonds, or other securities issued by a non-U.S. person and not held through an investment account Notes …

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Form 2555. Foreign Income Exclusion

Required to be prepared and filed if you qualify for either physical presence test or Bona fide residence, exclusion amounts changes every year. For example, it was $105,900 in 2019 and $107,600 for year 2020

U.S Taxes and Canadian Retirement plans

U.S Taxes and Canadian Retirement plans

Planning for retirement can be an extraordinarily complex process, particularly when there are cross-jurisdictional issues like the Canada-US Tax Treaty. As a non-resident or expat, you will need to understand how each country taxes withdrawals in registered investment plans, such as the RRSP, TFSA, and other certain pensions as explained in this article. Registered Retirement …

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foreign income tax

The country where I live does not tax it, So this is not an income? What about deductions?

The country where I live does not tax it, So this is not an income? The IRS does not care how your foreign country, where you reside and make money taxes income. If the income is not specifically excluded in the Internal Revenue Code, it is taxable. Section 61 leaves little doubt: unless otherwise provided …

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