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January 14, 2019

2018 Tax Return Preparation For US Expatriates, US Nonresidents and Others Doing Business in USA

Attached is  our 2018 basic expat tax questionnaire form for your use in sending us the necessary information for this  year's tax return preparation.  We will send you back a fee estimate once we receive and review the questionnaire.

If you are subject to the foreign bank account filing requirement, the form is due to be received by the US Treasury Department by April 15, but there is an automatic extension to October 15.  This form is separate from the tax return itself.  We can prepare this form for you OR you can prepare and submit via this on-line yourself at the BSA website (more information can be found in the questionnaire).   

If you need additional questionnaires for self-employment, rental properties, a foreign corporation, or multiple foreign bank accounts please let us know and we would be happy to send over.  Also if you were living in the US for all of 2018, we can send you a different questionnaire (this questionnaire is set up for those living abroad at least part of 2018).  Some of the other questionnaires are available on the resources tab at MORE TAX FORMS

If you need 
your tax return completed (or an estimate of tax due) by April 15, we would need your complete tax data no later than March 15, 2019.  If you will be living outside the U.S. on April 15, 2019, you receive an automatic extension for tax return filing until June 17, 2019 (therefore if you want to file on-time for June 17 please send in early May).  We can also file for an additional extension to October if desired or needed.  At peak periods our turnaround time can range to 35-40 days from the date complete information is received.

NOTE:  The tax act passed in December 2017 changed but did not simplify the way the federal government will tax most individuals and businesses.  In particular, the changes to self-employed individuals and those who own non-US businesses are substantial (and hopefully favorable in many cases from a tax point of view).  Given the significance of these changes it is fair to say that fees will increase on the clients affected by the more complex changes.  Those with very straight-forward fact patterns may not be affected significantly.  The training and software cost increases for CPA’s across the board due to these changes has been the biggest our industry has seen in decades.  We would like to thank you in advance for your patience this year and we have taken steps to ensure the change to the new tax law goes as smoothly as possible.

2018 Expatriate Tax Return Questionnaire (Download)


Email us with questions or for additional help; ddnelson@gmail.com.  Visit our website at www.taxmeless.com 

We offer mini tax consultations on your questions concerning US expatriate, nonresident and  international tax questions. To learn more or request one write us at taxmeless@gmail.com 

January 11, 2019

CHANGES IN TAX LAW THAT MIGHT AFFECT YOUR TAX RETURN FOR 2018 FOR EXPATS AND NONRESIDENTS

The following is a summary of important tax developments that occurred in October, November, and December of 2018 that may affect you. 
Business meals. One of the provisions of the Tax Cuts and Jobs Act (TCJA) disallows a deduction for any item with respect to an activity that is of a type generally considered to constitute entertainment, amusement, or recreation. However, the TCJA did not address the circumstances in which the provision of food and beverages might constitute entertainment. The new guidance clarifies that, as in the past, taxpayers generally may continue to deduct 50% of otherwise allowable business meal expenses if: (a) the expense is an ordinary and necessary expense paid or incurred during the tax year in carrying on any trade or business; (b) the expense is not lavish or extravagant under the circumstances; (c) the taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages; (d) the food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and (e) in the case of food and beverages provided during or at an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts.

Depreciation and expensing. IRS provided guidance on deducting expenses under Code Sec. 179(a) and depreciation under the alternate depreciation system (ADS) of Code Sec. 168(g), as amended by the TCJA. The guidance explains how taxpayers can elect to treat qualified real property, as defined under the TCJA, as property eligible for the expense election. The TCJA amended the definition of qualified real property to mean qualified improvement property and some improvements to nonresidential real property, such as: roofs; heating, ventilation and air-conditioning property; fire protection and alarm systems; and security systems. The guidance also explains how real property trades or businesses or farming businesses, electing out of the TCJA interest deduction limitations, can change to the ADS for property placed in service before 2018, and provides that such is not a change in accounting method. In addition, the guidance provides an optional depreciation table for residential rental property depreciated under the ADS with a 30-year recovery period.

State & local taxes. IRS has provided safe harbors allowing a deduction for certain payments made by a C corporation or a "specified pass-through entity" to or for the use of a charitable organization if, in return for such payment, they receive or expect to receive a state or local tax credit that reduces a state or local tax imposed on the entity. Such payment is treated as meeting the requirements of an ordinary and necessary business expense. For tax years beginning after Dec. 31, 2017, the TCJA limits an individual's deduction to $10,000 ($5,000 in the case of a married individual filing a separate return) for the aggregate amount of the following state and local taxes paid during the calendar year: (1) real property taxes; (2) personal property taxes; (3) income, war profits, and excess profits taxes, and (4) general sales taxes. This limitation does not apply to certain taxes that are paid and incurred in carrying on a trade or business or a for-profit activity. An entity will be considered a specified pass-through entity only if: (1) the entity is a business entity other than a C corporation that is regarded for all federal income tax purposes as separate from its owners; (2) the entity operates a trade or business; (3) the entity is subject to a state or local tax incurred in carrying on its trade or business that is imposed directly on the entity; and (4) in return for a payment to a charitable organization, the entity receives or expects to receive a state or local tax credit that the entity applies or expects to apply to offset a state or local tax described in (3), above, other than a state or local income tax.
Personal exemption suspension. IRS provided guidance clarifying how the suspension of the personal exemption deduction from 2018 through 2025 under the TCJA applies to certain rules that referenced that provision and were not also suspended. These include rules dealing with the premium tax credit and, for 2018, the individual shared responsibility provision (also known as the individual mandate). Under the TCJA, for purposes of any other provision, the suspension of the personal exemption (by reducing the exemption amount to zero) is not be taken into account in determining whether a deduction is allowed or allowable, or whether a taxpayer is entitled to a deduction.

Limitation on deducting business interest expense. IRS has provided a safe harbor that allows taxpayers to treat certain infrastructure trades or businesses (such as airports, ports, mass commuting facilities, and sewage and waste disposal facilities) as real property trades or businesses solely for purposes of qualifying as an electing real property trade or business. For tax years beginning after Dec. 31, 2017, the TCJA provides that a deduction allowed for business interest for any tax year can't exceed the sum of: (1) the taxpayer's business interest income for the tax year; (2) 30% of the taxpayer's adjusted taxable income for the tax year; plus (3) the taxpayer's floor plan financing interest (certain interest paid by vehicle dealers) for the tax year. The term "business interest" generally means any interest properly allocable to a trade or business, but for purposes of the limitation on the deduction for business interest, it doesn't include interest properly allocable to an "electing real property trade or business." Thus, interest expense that is properly allocable to an electing real property trade or business is not properly allocable to a trade or business, and is not business interest expense that is subject to the interest limitation.