Tax Tips

Tax saving incentives for Americans

Puerto Rico Act 60 – Tax saving incentives for Americans

Act 60, passed in 2019, offers significant tax incentives for individuals who establish residency in Puerto Rico. These incentives include a 4% flat individual income tax rate, a 100% tax exemption on dividends and capital gains for individuals and a 100% exemption on dividends and interest for corporations. Establishing Residency in Puerto Rico To take …

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US EXIT TAX

US EXIT TAX

The U.S. exit tax is the last thing you’ll pay if you give up citizenship. The U.S. exit tax is a tax on capital gains for American citizens who renounce their citizenship. It was implemented in 2008, as a response to the growing number of Americans renouncing their citizenship. The exit tax is a tax …

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Form 8621 for U.S Expatriates

Form 8621 for U.S Expatriates

Form 8621 for U.S Expatriates and Passive Foreign Investment Companies Tax forms for American expatriates living abroad, such as Form 2555 (Foreign Earned Income Exclusion) and Form 1116 (Foreign Tax Credit), can be relatively easy to understand. However, if you have shareholder investments, you may also be required to complete disclosure forms that must be …

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Form 8621 for American Expatriates and Passive Foreign Investment Companies

Form 8621 for American Expatriates and Passive Foreign Investment Companies

For American expatriates, it’s important to be familiar with the most common income tax forms. For example, Form 2555 (Foreign Earned Income Exclusion) and Form 1116 (Foreign Tax Credit) are both fairly easy to understand. But if you’re an expat with shareholder investments, you may also have to complete disclosure forms that must be filed …

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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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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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