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
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 …
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 …
Reporting requirements for your interests in foreign corporations
A US person may have international tax reporting obligations to the IRS if he owns more than 10% of the shares of a foreign corporation. US persons who may be subject to these special reporting rules include: 1) US citizens or residents serving as directors or officers of the foreign corporation. 2) US citizens or …
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I do not have to file a state tax return because I moved abroad.
American expats are happy to quickly end their tax ties to their former state of residence. Unfortunately, they are not always able to completely do so. This may result in them continuing to be considered tax residents for state tax purposes. Several states, such as New York, California, New Jersey, Pennsylvania and others, may continue …
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Are foreign investments treated like U.S. Investments?
This is another area of frustration. Foreign mutual funds, exchange-traded funds (ETFs), and other pooled investments are generally classified as Passive Foreign Investment Companies for US Tax purposes or PFIC. PFICs are punitively taxed and do not benefit from preferential tax rates like qualified dividends and long-term capital gains like US funds do. They are …
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The Company is on my spouse name, do I still have to report it in my expat taxes?
Expat Taxes: Due to the complexity of US tax rules, some of the tax reduction and simplification ideas that are shared online among non-experts can turn out to be ingenious in the middle. The idea of putting the business of a US citizen in the name of the foreign spouse is one of them. There …
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Stimulus Checks for US Citizens Living Abroad
During the COVID-19 pandemic, the US government passed three major laws that included stimulus payments for Americans living in the US and abroad. Reviewing these details will help U.S. expats determine if you are eligible for the third stimulus check and if you can claim a recovery relief refund on your 2020 tax return. Do …
Social Security Payments for Americans Working Abroad (Expats)
Social Security for Expats Americans working abroad by foreign business normally participate in the social security system of their foreign employer. Self-employed Americans abroad, though, might likewise be needed to pay into the U.S. social security system unless they are eligible for a Certificate of Insurance coverage from the international nation. These certifications are offered …
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Child Tax Credit 2021
The Child Tax Credit 2021 is a refundable federal tax credit for parents who claim their children as dependents. It was intended to make receiving an education more affordable and to help those with higher incomes pay their share for taxes. In order to qualify, a child must be resident in the United States at …
News: IRS Tax Fourth Stimulus Checks
All you need to know!! Many lawmakers are pushing for a fourth round of Stimulus Checks, but President Joe Biden has not yet shown any support for it. Approximately 24+ Senate Democrats sent a letter to President Joe Biden on March 31 2021 urging him to implement recurring payments and automatic unemployment insurance tied to …
I don’t need to worry about penalties for late filing because I never owe any U.S. tax.
Typically, penalties are calculated based on tax owed, international information returns, such as from 8938 can cost a taxpayer, if filed late, large penalties even of no tax is due. Some related penalties can reach up to $10,000 per form per month. Filing Form FinCEN 114 late or incorrectly can also result in hefty penalties. …
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Foreign Dividends
Your foreign dividends may be eligible to be taxed at a special lowered tax rate. Here’s how you can find out, if they are: When you receive dividends from a US corporation, your Form 1099 will identify whether they are eligible dividends or not. Qualified dividends are entitled for a much lower tax rate that …
Demystifying IRC section 965 Math
For foreign earnings, an overview of the taxation. With the bit of time of professionals or taxpayers to prepare for them, the tax code’s tax jobs and cuts introduced many changes. The revision of internal revenue code section 965, one of the most complex changes involved in it, maintains the United States taxes earnings from …
U.S. Expat Taxes – Tax Relief for U.S. Citizens Renouncing Citizenship
U.S Expat Tax Report: A new amnesty program for certain U.S. citizens who have renounced, or intend to renounce, their U.S. citizenship. Among other requirements, you must have renounced U.S. citizenship after March 18, 2010, and have never filed a U.S. Form 1040 income tax return. The relief is also good news for certain individuals …
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Stimulus Payments, Paycheck Protection Program, Expense Deductibility Headline, Tax Changes In Latest Covid Relief Package
Covid Relief Package When Congress initially responded to the Covid-19 pandemic by passing the CARES Act on March 27th, 2020 — handing down individual stimulus payments, Paycheck Protection Program loans, supplemental unemployment benefits and a bevy of additional tax breaks to struggling businesses — many anticipated that if the virus continued to spread unabated, additional …
Another Stimulus Bill is Coming
In recent months and as a result of long negotiations between Congress’s Democrats, Republicans, and the White House on another round of stimulus legislation, the possibility of a deal is becoming real. In May, the Democrats in the House released COVID-19 Phase 4 legislation, the Health and Economic Recovery Omnibus Emergency Solution Act (HEROES Act). In July, …
FBAR and Its Maximum Account Balance
FBAR or FinCEN Form 114 requires a declaration of all non-US financial accounts, including the highest balance for each account in a year. Also, the due dates for this form are moved from June 30 to April 15. If there are transfers of accounts during the year, this process can be a complicated process. There …
What You Need to Know About Taxes Related to Passive Foreign Investment Companies
As a U.S. citizen, no matter what country you live, you have tax duties. IRS requires all U.S. citizens, including expats, to submit standard income taxes. Expats must also file an informational return on their assets for their foreign bank accounts through FinCEN Form 114 or the FBAR (Foreign Bank Account Report). Wages and self-employment …
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The Bona Fide Residence Test and the Common Errors Expats Make
Many expats can use the FEIE or the Foreign Earned Income Exclusion as one of the tax money-saving devices. If you want to take advantage of the FEIE, you have to use either the physical presence test or the bona fide residence test. Although many expats consider the bona fide residence test as a natural …
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