Read More in the article from JD Supra
We are attorney/CPAs experts on US International Taxation. Visit our website at www.taxmeless.com or email ustax@hotmail.com. Our whatsapp us number is 818-519-9219. Kauffman Nelson LLP.
US IRS rules, regulations and laws, for US Citizens, Americans, green card holders, and nonresidents living abroad or moving to the US or out of the US.... valuable information on IRS rules concerning U.S. expatriates and their tax returns, and tax planning.... by an experienced International Tax Attorney
Read More in the article from JD Supra
We are attorney/CPAs experts on US International Taxation. Visit our website at www.taxmeless.com or email ustax@hotmail.com. Our whatsapp us number is 818-519-9219. Kauffman Nelson LLP.
Tax rules for US expatriates living abroad can be complex and depend on various factors such as income sources, residency status, and specific tax treaties between the US and the country of residence. Here's an
1. Foreign Earned Income Exclusion (FEIE)**: One of the primary benefits for US expatriates is the FEIE, which allows qualifying individuals to exclude a certain amount of their foreign earned income from US taxation. For tax year 2023, the maximum exclusion amount is $112,000 per qualifying individual.
2. Foreign Tax Credit (FTC)**: If you pay foreign taxes on income that is also subject to US taxation, you may be eligible for a foreign tax credit. This credit can reduce your US tax liability on that income.
3. Foreign Housing Exclusion or Deduction**: Expatriates may also qualify for a housing exclusion or deduction to help offset the cost of housing abroad. This can be claimed in addition to the FEIE.
4. Tax Treaties**: The US has tax treaties with many countries to avoid double taxation and provide certain exemptions. These treaties can affect how income is taxed and which country has the primary right to tax specific types of income.
5. Filing Requirements**: US citizens and green card holders living abroad are generally required to file US tax returns if their income exceeds certain thresholds, regardless of where the income was earned. There are specific forms, such as the Form 1040 and Form 2555 (for the FEIE), that may need to be filed.
6. Reporting Foreign Accounts**: US expatriates are required to report their foreign bank accounts and other financial assets if they exceed certain thresholds. This is done through the Foreign Bank Account Report (FBAR) and Form 8938.
7. Social Security and Medicare Taxes**: US citizens working abroad may still be subject to Social Security and Medicare taxes, depending on their employment situation and the country they're residing in.
8. State Taxes**: While living abroad, US expatriates may still be liable for state taxes, depending on the state's rules regarding residency and taxation.
It's essential for US expatriates to understand their tax obligations and take advantage of available benefits to minimize their tax liability while remaining compliant with US tax laws. Consulting with a tax professional who specializes in expatriate taxation is highly recommended to ensure compliance and maximize tax benefits. Contact Kauffman Nelson CPAs and Attorney if you need assistance. Email: ddnelson@gmail.com . We have been doing expatriate and international taxes for over 30 years for over 800 clients located abroad. US Phone 949-480-1235. Whatsapp 818-519-9219.
Not filing your tax return or paying your taxes on time or at all can lead to serious consequences, including:
The good news is that the IRS actually does try to help those who come forward on their own and, in many cases, is willing to work something out. We are US CPAs and Attorney. Email us at ddnelson@gmail.com or whatsapp at 1818-519-9219.
From entrepreneur Magazine:
https://www.entrepreneur.com/business-news/these-are-the-cheapest-countries-to-buy-a-citizenship/454254?utm_campaign=Daily%20Newsletter&utm_medium=email&_hsenc=p2ANqtz-_w_pC99dlBIpi2WjvS_v5wrkudeySUSDAly1Ny9VBw_-7WhW5hF-hQmFb66R7quEi3kSzLz7UBVCBHBC4DCDCm57aztw&_hsmi=291018315&utm_content=291018315&utm_source=hs_automation (copy an paste this link into your web browser)
Find the country you can live in and save taxes. We can help you save on your US taxes if you live abroad either as retired person or business. Email us at ddnelson@gmail.com for more. We have been assisting expats with their US taxes and moving abroad for over 30 years. Kauffman Nelson LLP, CPAs and Attorney at Law. Whatsapp 1818 519 9219.
The Internal Revenue Service reminds taxpayers living and working outside the U.S. to file their 2023 federal income tax return by Monday, June 17, 2024. This deadline applies to both U.S. citizens and resident aliens abroad, including those with dual citizenship.
This deadline does not apply to taxpayers who live or have a business in Israel, Gaza or the West Bank, and certain other taxpayers affected by the terrorist attacks in the State of Israel. They are granted relief until Oct. 7, 2024, to both file and pay most taxes due. For more information, check out Notice 2023-71PDF.
Taxpayers unable to file their tax returns by the June deadline can request a further extension to file, but not pay, until Oct. 15.
If a taxpayer is a U.S. citizen or resident alien residing overseas or is in the military on duty outside the U.S., on the regular due date of their return, they are allowed an automatic 2-month extension to file their return without requesting an extension. If they use a calendar year, the regular due date of their return is April 15, and the automatic extended due date would be June 15. Because June 15 falls on a Saturday this year, the due date is delayed until the next business day, June 17.
A taxpayer qualifies for the June 17 extension to file and pay if they are a U.S. citizen or resident alien, and on the regular due date of their return:
Qualifying taxpayers should attach a statement to the return indicating which of these two situations applies.
Many taxpayers living outside the U.S. qualify for tax benefits, such as the foreign earned income exclusion and the Foreign Tax Credit, but they are available only if a U.S. return is filed.
In addition, the IRS encourages families to check out expanded tax benefits, such as the Child Tax Credit, Credit for Other Dependents and Credit for Child and Dependent Care Expenses and claim them if they qualify. Though taxpayers abroad often qualify, the calculation of these credits differs depending upon whether they lived in the U.S. for more than half of 2023. For more information, see the instructions to Schedule 8812, Credits for Qualifying Children and Other Dependents, and the instructions to Form 2441, Child and Dependent Care Expenses.
Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B, Interest and Ordinary Dividends, to their Form 1040 series tax return. Part III of Schedule B asks about the existence of foreign accounts such as bank and securities accounts and usually requires U.S. citizens to report the country in which each account is located.
In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Specified Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. For details, see the instructions for this form.
Certain foreign financial accounts, such as bank accounts or brokerage accounts, must be reported by electronically filing Form 114, Report of Foreign Bank and Financial Accounts (FBAR), with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The FBAR requirement applies to anyone with an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2023.
The IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is available only through the Bank Secrecy Act E-Filing System. The deadline for filing the annual FBAR is April 15, 2024. However, FinCEN grants those who missed the April deadline an automatic extension until Oct. 15, 2024. There’s no need to request this extension. See FinCEN’s websitePDF for further information.
Any income received or deductible expenses paid in foreign currency must be reported on a U.S. tax return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.
Both FINCEN Form 114 and IRS Form 8938 require the use of a Dec. 31 exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction. Generally, the IRS accepts any posted exchange rate that is used consistently. For more information on exchange rates, see Foreign currency and currency exchange rates.
To ensure tax payments are credited promptly, the IRS urges taxpayers to consider the speed and convenience of paying their U.S. tax obligation electronically. The fastest and easiest way to do that is via their IRS Online Account, IRS Direct Pay and the Electronic Federal Tax Payment System (EFTPS). These and other electronic payment options are available at IRS.gov/payments.
Taxpayers who relinquished their U.S. citizenship or ceased to be lawful permanent residents of the U.S. during 2023 must file a dual-status alien tax return and attach Form 8854, Initial and Annual Expatriation Statement. A copy of Form 8854 must also be filed with the IRS by the due date of the tax return (including extensions). See the instructions for this formPDF and Notice 2009-85, Guidance for Expatriates Under Section 877A, for further details.
Taxpayers who can’t meet the June 17 due date can request an automatic extension to Oct. 15 by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. The IRS encourages anyone needing the additional time to make their request electronically. Several electronic options are available at IRS.gov/extensions.
Businesses that need more time must file Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns.
If you owe the IRS money (and are very late in paying) can legally request the US State Department not renew it or suspend your US passport. They also have in the past requested US Customs and Border agents to take your passport away from you when taxes are due and not paid. They will let you into the country but you cannot leave until you clear up your debt to the IRS. The rules are set forth HERE.
If you owe past taxes or tax returns we can help you avoid problems that may arise when you return to
Our firm of attorney and CPAs have over 30 years experience in US expatriate, International and Nonresident taxation.
You may owe the IRS and not even know it! It is your legal obligation to keep them informed of any moves or new addresses. They are not responsible for keeping track of you or for poor mailing service.
Email us for help: ddnelson@gmail.com Visit our website at www.taxmeless.com Our US phone number is 949-480-1235
A new law that's taking effect next year is going to require millions of small businesses to begin filing disclosures about their true ownership with the Treasury Department or face stiff penalties, and most are unaware of it.
As a result of the Corporate Transparency Act of 2021, corporations, LLCs and other entities formed under state law (domestic reporting companies) or similar entities formed under foreign law and registered to do business in the U.S. (foreign reporting companies) must report their beneficial ownership to FinCEN — the Treasury Department's Financial Crimes Enforcement Network.
The reason is that kleptocrats, human rights abusers and other corrupt actors have used complex and opaque corporate structures, including shell companies, to hide and launder the proceeds of their corrupt activities.
Need help with your LLC and Corporate filings or tax planning for the future. Email us to set up a consultation EMAIL FOR TAX HELP
As a result of the Corporate Transparency Act of 2021, corporations, LLCs and other entities formed under state law (domestic reporting companies) or similar entities formed under foreign law and registered to do business in the U.S. (foreign reporting companies) must report their beneficial ownership to FinCEN — the Treasury Department's Financial Crimes Enforcement Network.
The reason is that kleptocrats, human rights abusers and other corrupt actors have used complex and opaque corporate structures, including shell companies, to hide and launder the proceeds of their corrupt activities.
Learn all of the rules and regulations at our website www.taxmeless.com At our website you can download a 2022 tax questionnaire which you can use for the current year and any past unfiled returns. Contact us with your questions and inquiries by email HERE. Our whatsapp number in the US is 818-519-9219.
One more thing, if you owe the IRS more than $50,000 they can seize your US passport when you enter back into the US. We can help you resolve this problem before it happens.
DOWNLOAD YOUR 2022 EXPAT TAX QUESTIONNAIRE
DOWNLOAD YOUR 2022 EXPAT FAST TAX FACT SHEET
Ready to file or confused about expat tax forms? Get started with Kauffman Nelson LLP CPAs. We have been doing taxes for US expats and nonresidents for over 30 years. Email us at taxmeless@gmail.com or call 949-480-1235 (this is a US number. We offer phone consultations to answer you questions and solve your problems.
Most of the common errors taxpayers make on their tax returns are easily avoidable. By carefully reviewing their return, taxpayers can save time and effort by not having to correct it later. Filing electronically also helps prevent mistakes. Tax software does the math, flags common errors and prompts taxpayers for missing information. It can also help taxpayers claim valuable credits and deductions. Taxpayers who qualify may use IRS Free File to file their return electronically for free.
Here are some of the mistakes to avoid:
If you are a US expatriate living abroad, you are still subject to US estate tax on your assets no matter where they are located in the world. Also, even if you are below the estate tax threshold, your US assets will be subject to probate unless proper planning is instituted. Your US assets may be bank accounts, real estate, stock accounts, etc. which are located somewhere in the USA.
For assets located outside the USA, it is best you do a will (or whatever procedure or document is appropriate) for those assets legal under the country of the assets location to make certain those assets will go to your designated heirs. There are treaties with some countries that provide for honoring foreign wills, but still there are often problems and best to do a local will in the country where you live and where the assets are located.
If you are a nonresident but have assets located in the USA, you can also avoid expensive probate and possible estate taxes by planning in advance and make certain your property goes to the heirs you wish to receive them.
To avoid expensive and time consuming probate and possibly reduce US estate taxes you need to create US Wills, living trusts and other estate planning documents. Our firm has assisted hundreds of expatriates and clients with their estate planning and are ready to help you. Email us at taxmeless.com or contacts us on whatsapp at 818-519-9219 (a us cel phone number). We can then set up a personal consultation to help you plan for the disposition of your US assets.
2022 Fast Tax Facts for US Expatriates and Green Card Holders
Living and Working Abroad
Kauffman Nelson LLP CPAS - Don D. Nelson , Attorney, Charles Kauffman CPA
If you are a US Citizen or green card holder you must file a US tax return every year unless
your taxable income is below a certain threshold. Even if your income is below that threshold,
you may still be required to file certain forms to report foreign assets, etc. Failure to file these
forms can result in severe IRS penalties If you do not itemize your health, tax, interest, charitable
and miscellaneous deductions you get a standard deduction of $12,950 if single or filing as
married filing separately or $25,900 if you file jointlywith your spouse.
As a US expatriate living and working abroad 4/18/2023 your 2022 tax return is automatically
extended until 6/15/23 but any taxes due must be paid by 4/18/23 to avoid penalties and interest.
The return can be further extended until 10/15/2023 if the proper extension form is filed. An even
further extension until December may be available if the proper letter is sent to the IRS.
For 2022 if you are a qualified expatriate you get a foreign earned income exclusion (earnings from
wages or self employment) of $112,000 but this exclusion is only available if you file a tax return.
You must qualify under one of two tests to take this exclusion: (1) bona fide resident test or
(2) physical presence test. You can read more about how to qualify in IRS Publication 54. This
exclusion only applies to income taxes and does not apply to US self- employment tax
(social security plus medicare). Your spouse who lives works abroad with you will also be
able to use this exclusion against any earned income they have abroad.
You can lose this exclusion if you file your return more than 18 months late.
The exclusion can only be claimed on filed tax return and does not apply if you fail to
file a tax return.
If you receive a gift or inheritance of $100,000 or more during 2022 from a nonresident
individual or nonresident corporation you must file form 3520 to report that gift. If you fail
to file that form you will incur substantial penalties and taxes. .
If your foreign earnings from wages or self -employment exceed the foreign earned income
exclusion you can claim a housing expense for the rent, utilities and maintenance you pay if
those amounts that exceed a minimum non-deductible amount. There is a limit to the housing
amount and in certain “high-cost” locations there is a higher amount of housing expense which
can be considered. (For “high-cost” country limitations see Form 2555 instructions).
You get credits against your US income tax obligation for foreign income taxes paid to a
foreign country but you must file a US tax return to claim these credits. This avoids double
taxation of the same income. Value added taxes paid to foreign countries are not eligible
for this credit.
If you own 10% or more of a Foreign corporation or Foreign partnership (LLC) you must
file special IRS form 5471 or 8865, or incur substantial penalties which can be greater
including criminal prosecution if the IRS discovers you have failed to file these forms.
If you create a foreign trust or are a beneficiary of a foreign trust you may be obligated
to file forms 3520 and /or 3520A each year to report those activities or be subject to
severe penalties of $10,000 US or more Foreign foundations and nonprofits which indirectly
benefit you may be foreign trusts in the eyes of the IRS.
Your net self-employment income in a foreign country (earned as an independent
contractor or in your own sole proprietorship) is subject to US self-employment tax
(medicare and social security) of 15.3% which cannot be reduced or eliminated by the
foreign earned income exclusion or foreign tax credits. The one exception is if you live
in one of the very few countries that have a social security agreements with the US and
you pay the equivalent of social security in that country.
Forming the correct type of foreign corporation and making the proper US tax election
(to cause the income and foreign taxes the foreign corporation pays to flow through to your
personal US tax return) with the IRS for that corporation may save you significant income taxes
and avoid later adverse tax consequences. You need to investigate this procedure before you
actually form that foreign because it can be difficult to make that election later and only certain
types of foreign business entities are eligible to make this election.
If at any time during the tax year your combined highest balances in your foreign bank and
financial accounts (when added together) ever equal or exceed $10,000US you must file
a FBAR form 114 with the IRS by October 15, 2023 for the 2022 calendar year or incur a
penalty of $10,000 US or more including criminal prosecution. Foreign financial accounts
often include accounts when you sign on for a foreign corporation, foreign partnerships
foreign pension plans, stock brokerage accounts, and cash surrender value of foreign life
insurance. This form does not go in with your personal income tax return and can only be
filed separately on the web at:
http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html
The IRS gets lists of Americans applying or renewing for US passports or entering the country.
They will compare these lists with those who are filing US income tax returns and take action
against those who do not file US returns but are US residents or citizens.
Often due to foreign tax credits and the foreign earned income tax expats living abroad
who file all past year unfiled tax returns end up owing no or very little US taxes.
The IRS has a special program which will help you catch up if you are in arrears which will
reduce or possibly eliminateall potential penalties for failing to file the required foreign
asset reporting forms. We can direct you to the best program for your situation, prepare
the returns and forms and represent you before the IRS.
Beginning in 2011 a new law went into effect which requires all US Citizens report
all of their worldwide financial assets with their personal tax return if in total the value
of those assets exceed certain minimum amounts starting at $50,000. Failure to file that
form 8938 on time can result in a penalty of $10,000. The form is complex and has
different rules that apply to you if you live abroad or live in the US. This form is
required in addition to the FBAR form 114.
Certain types of income of foreign corporations are immediately taxable on the
US shareholder's personal income tax return. This is called Subpart F income. The rules are
complex and if you own a foreign corporation you need to determine if these rules apply to
you when you file the required form 5471 for that corporation. For 2018 a new tax was
enacted with the acronym of GILTI tax. This may or may not cause an owner of
a Controlled Foreign Corporation (CFC) to owe taxes on the income it
does not distribute to its owners. This GILTI tax applies to 10% or more
owners of CFCs.
If you own investments in a foreign corporation or own foreign mutual fund shares you
may be required to file the IRS form 8621 for owning part of a Passive Foreign Investment
Company (PFIC) or incur additional, taxes and penalties for your failure to do so. A PFIC
is any foreign corporation that has more than 75% of its gross income from passive income
or 50 percent or more of its assets produce or will produce passive income.
There are many more special tax laws too numerous to mention here that apply to expatriates,green card holders. nonresidents and US taxpayers with foreign assets, businesses, etc.
Please consult with Kauffman Nelson LLP if you have other offshore tax planning or return
filing questions.
Download your 2022 Expatriate Tax Questionnaire at www.taxmeless.com.
Send us your completed questionnaire and we will immediately provide you with a flat fee
quote for preparing your return(s).
Don D. Nelson, US Tax Attorney, Charles Kauffman CPA,
Kauffman Nelson, LLP, CPAs
Huntington Beach, California USA
US Phone: (949) 480-1235, US Fax: (949) 606-9627
Email:ddnelson@gmail.com or ustax@hotmail.com
Skype address: dondnelson whatsapp: 818-519-9219 (US)
Website: www.taxmeless.com
Visit our International Tax Blog for the Latest Expat and International Tax
Developments atwww.usexpatriate.blogspot.com / http://us-mexicantax.blogspot.com
We have been preparing tax returns and assisting US clients located in over 123
countries around the world for over 30 years. We also assist US Nonresidents
meet their US tax obligations and return filing requirements. Email, skype or phone
us for immediate assistance.
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For additional useful information and tax assistance go to our website at.
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