Reducing or Eliminating 951a GILTI Tax on Conrolled Foreign Corporations

Many clients want to reduce or eliminate the new tax for 2018 and beyond on the undistributed earnings of their controlled foreign corporations (over 50% ownership in the hands of US taxpayers). This replaces the old regime where profits left in foreign corporations (except in certain specific types of situations) are not taxed until distributed as dividends or wages.

The new  IRS Section 951a is complex and often hits  US owners of small foreign corporations. The tax on the earnings which are deemed distributed actually is assessed on the 1040 (or other US tax form) of the owner of the corporation though a deemed distribution (Subpart F) which is included with the shareholders other income.  READ MORE ABOUT HOW TO AVOID  OR REDUCE THE GILTI 951A TAX HERE

If you own a controlled  foreign corporation we can provide you with guidance and help you eliminate or reduce this new tax on deemed distributions of its profits.  Email us at taxmeless@gmail.com with your questions or for help.   Don Nelson, Tax Attorney

EXPATRIATE AND NONRESIDENT BUSINESS EXPENSES WHEN SELF EMPLOYED ABROAD

When you are self employed and have your own business abroad most of the same rules apply that apply when  in the USA.  Many overlook deductions and expenses which may reduce your taxable income and social security payments to US (if required).  Some of the expense rules applicable to your US income tax return may be different than those in the country in which you operate your business.   See below for guidance.

Business expenses. Business expenses are usually deductible if the business operates to make a profit. To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that’s common and accepted in the trade or business. A necessary expense is one that’s helpful and appropriate for the trade or business. An expense doesn’t have to be indispensable to be considered necessary. Business expenses include:

• Business use of a home – If a taxpayer uses part of their home for business, part of their home expenses may be deductible. These expenses may include mortgage interest, insurance, utilities, repairs and depreciation. Alternatively, a simplified method is available for figuring this deduction. Special rules and limits apply. See Publication 587 for details. 
• Business use of a car – If a taxpayer uses their car in their business, they can deduct car expenses. If they use it for both business and personal purposes, they must divide expenses based on actual mileage. For details, including special recordkeeping rules, see Publication 463.
• Meals and entertainment – In general, taxpayers can deduct 50 percent of the cost of business meals if the taxpayer -- or an employee of the taxpayer --is present and the food or beverages aren’t lavish or extravagant.
• Rent expense – In general, a taxpayer can deduct rent as an expense only if the rent is for property used in their trade or business. If they have or will receive equity in or title to the property, the rent is not deductible.
• Interest – Business interest expense is an amount charged for the use of money a taxpayer borrowed for business activities. Limits and special rules may apply. See basic questions and answers about the limitation on the deduction for business interest expense for more information.
• Taxes – A taxpayer can deduct various federal, state, local, and foreign taxes directly attributable to their trade or business as business expenses.

Publication 535, Business Expenses, has more information about these and other deductible business expenses, including employee related expenses such as employees’ pay, retirement plans and insurance.

You may owe US self employment tax (medicare and social security) on your net business income if the US does not have a social security agreement with the country you live in or if you are not paying into that countries social security system. Many countries do not have such agreements with the US.

We can help with your nonresident, international and expatriate tax planning, tax returns and IRS issues, audits, payment plans and citizenship surrender. Email us at Expatriate Tax Help Now.   US Tel. 949-480-1235

PAY YOUR ITS INCOME TAXES ON LINE DIRECTLY FROM YOUR BANK ACCOUNT WHEN YOU ARE AN EXPAT LIVING ABROAD

If you owe taxes as an expat mailing a check to the IRS often is not the answer. The following video from the IRS shows how to pay the IRS by direct deposit, credit card or debit card.  Listen to the IRS video explaining payment methods here:  https://youtu.be/drh1UUCMMLk

Another method which can be used to pay from foreign bank accounts is the IRS wire transfer. Read more about this method and how to do it HERE.

Many states including California have on line portals to allow payments without sending checks directly from your bank account.

Of course the CPAs and Attorneys at TaxMeLess are always there to help you with your expatriate, nonresident and international tax return forms, payments plans and citizenship surrender (stop paying US taxes forever).  You can email us by clicking HERE

Big Winners Under New Tax Laws are Millionaire CEOs and Ultra Rich

Forbes Magazine Points Out the the big winners under the tax law are the Millionaire CEOs and Ultra Rich

Reporting Foreign Bank and Financial Accounts, Foreign Assets on your 2018 Tax Return

You may be obligated to report your foreign financial accounts on line using form 114. Failure to do so may cause the IRS to assess penalties of $10,000 or more .... and there are also criminal penalties. Learn more in the Forbes article HERE

Also if you have other types of foreign assets such as foreign corporations, foreign partnerships, foreign LLCS, foreign bonds, stocks, etc. you may be required to file form 8938 with your tax return or incur the same type of penalties.  READ MORE HERE

These rules are complex and compliance with the law is important. We are here to help you with these forms or your entire US resident, US expatriate or US nonresident tax return. Email us at ddnelson@gmail.com . We are US CPAS and Attorneys that deal exclusively with International Tax Issues and Returns.

US Expats Moving Expenses Can No Longer Be Deducted and If Paid for by Employer it is Taxable Income to Recipient

For businesses that have employees, there are changes to fringe benefits that can affect a business’s bottom line and their employee’s tax liabilities. One of these changes is to qualified moving expenses.

Under previous law, payment or reimbursement of an employee’s qualified moving expenses were not subject to income or employment taxes.

Under last year’s tax reform legislation, employers must include all moving expenses, in employees’ wages, subject to income and employment taxes.

Exception

Generally, members of the U.S. Armed Forces can still exclude qualified moving expense reimbursements from their income if:

• They are on active duty
  
• They move pursuant to a military order and incident to a permanent change of station
• The moving expenses would qualify as a deduction if the employee didn’t get a reimbursement

Transition rule

There is a transition rule under the new law. Under this rule, certain payments or reimbursements aren’t subject to federal income or employment taxes. This includes amounts that:

• An employer pays a third party in 2018 for qualified moving services provided to an employee prior to 2018.  
• An employer reimburses an employee in 2018 for qualified moving expenses incurred prior to 2018. 

To qualify for the transition rule, the payments or reimbursements must be for qualified expenses which would have been deductible by the employee if the employee had directly paid them before Jan. 1, 2018. The employee must not have deducted them in 2017.

We can help you with your US Federal and State Tax Returns. We know all of the special rules for US expatriates and the changes made by the recent tax  law.  Email us at taxmeless@gmail.com for assistance and your tax return preparation. We have specialized in expatriates for over 20 years. Download our 2018 tax return questionnaire for expatriates. Send it to us afrter filled out and we will provide you with a fixed fee quote.

REPORTING CASH PAYMENTS OF OVER $10,000 US - Form 8300

Has your business ever received a large cash payment, and you were not quite sure what Report of Cash Payments Over $10,000 Received in a Trade or Business, if your business receives more than $10,000 in cash from one buyer as a result of a single transaction or two or more related transactions.

your reporting obligations were regarding that large payment? The general rule is that you must file Form 8300,

The Form 8300 provides valuable information to the Internal Revenue Service and the Financial Crimes Enforcement Network (FinCEN) in their efforts to combat money laundering. This is an important effort, since money laundering is a tool used to facilitate various criminal activities, ranging from tax evasion to terrorist financing to drug dealing, to hide the proceeds from their illegal activities.  READ MORE HERE

Need more information on this form, tax law and how it applies to nonresidents, expatriates and those residing in the USA?  Email us at www.taxmeless@gmail.com. Our firm includes CPAs and an Tax Attorney. When required we can provide you with attorney-client privilege.

Tax Reform Basics for Individual Taxpayer - some apply to US Expatriates

Click here to view IRS video on individual tax reform   Need help with your tax return or tax planning or review of your personally prepared return?  Email us at taxmeless@gmail.com  Tax attorney and CPAs ready to assist.

US Expatriates & Nonresidents With US assets -Why you Need a US Living Trust

If you have assets located in the US and want to avoid time consuming and expensive court probates

you need a living trust with respect to your US assets. Such a trust also assures you that your US assets upon your demise will go directly to the individuals you name as beneficiaries.  Read more in the Forbes articles the 10 reasons you need a a living Trust (over which you have total authority while you are alive) below.

Forbes: 10 Reasons Why You Need A Trust.

US citizens currently can bequeath over 11 million dollars in assets without incurring any estate tax. However US nonresidents with US assets will incur an estate tax on assets that exceed $60,000 in value.  There are techniques to avoid the US estate tax on nonresidents which can be used if title to your US assets are held in the proper manner. Let us know if we can help with your estate planning. Email us at ddnelson@gmail.com. We are US attorneys and CPAs. specializing in expatriates, nonresidents and international tax matters.  Visit our website at www.taxmeless.com

Best Place for US Taxpayer Abroad to Form Your Foreign Corporaton?

U.S. corporations reported more foreign income in Bermuda than in any other sovereign nation in the Americas in 2016, despite having only 384 total employees located there, according to data recently released by IRS.

This may be one good indicator  if you are a US entrepreneur located  abroad where to locate your foreign corporation for best foreign tax breaks, etc.  Check Bermuda taxes out here.

Have questions on your US taxes, forms or planning for a foreign corporation you own, email us at taxmeless@gmail.con

US Expatriate, Nonresident or International Tax Consultations With An Attorney

A "MINI TAX CONSULTATION" IS NOW AVAILABLE with a US Attorney by Phone or Skype: If you have specific tax questions on your personal situation and need to discuss it with an US expatriate international tax expert, with the protection of  Attorney-Client privilege, you can request a "Mini Consultation."   "Mini Consultation" costs a minimum of $300 US for up to 30 minutes of Mr. Nelson's professional legal tax advice over the phone, skype or by  email from any where in the world.         

  No need to visit his office.  If  you send us an outline of your situation, facts and questions in advance, we prepare in advance and this time is extremely productive and usually resolves all of your questions  within the time allowed. Over 900 U.S. expat taxpayers located everywhere in the world  have used "Mini Consultations" to resolve their tax problems and issues.  US Phone (949) 480-1235. US Fax (949) 606-9627 or we can talk on my skype address dondnelson. Email:ddnelson@gmail.com   Payment can easily be made by credit card, or  paypal, or direct  bank transfer. If your questions or problems are URGENT let us know and we can often schedule it on the same day. Learn More About  How your Mini Consultation Works

Don Nelson, Attorney at Law has ever 30 years experience with US expatriate, international and nonresident taxation and representing taxpayers before the IRS.  He is also a partner in Kauffman Nelson LLP Certified Public Accountants.  Read more about his background and experience.

www.TaxMeLess.com

WARNING -CHECKING NO BOX ON SCHEDULE B CONCERNING OWNERSHIP OF FOREIGN BANK ACCOUNTS, WHEN YOU HAVE THEM SHOWS INTENT TO VIOLATE THE LAW

If you check "No" on schedule B that you do not have a foreign bank account and check "No" that the combined balances of all of your  foreign bank and financial accounts ever exceeded $10,000US has been held by the Courts to show your personal intent to violate the law.  If you have foreign bank or financial accounts (including foreign stock brokerage accounts) you may need to amend your returns and file form 114 for those past years to avoid possible criminal and civil penalties from the IRS.

Form 114 where you report this foreign accounts is simple. You simple show your highest balance for the calendar year, name, address and account number of the bank.  You also need to indicate information on other individuals who also sign on the accounts.  The statute of limitations for failure to file form 114 is 6 years.

If you have not reported your foreign accounts properly, we recommend you correct this problem before the IRS contacts you. The IRS is  receiving reports from most of the banks in the world on US taxpayers holding these foreign accounts. If you come forward before the IRS catches you in almost all situations the penalties may be waived.

We can help you catch up. We offer our clients attorney-client privilege which protects you statements to us from discovery by the IRS or FBI.  Email us at  taxmeless@gmail.com for further assistance and to set up a consultation to chart the best course of action for you.

2018 Fast Tax Facts for US Expatriates and Green Card Holders Living and Working Abroad

by Kauffman Nelson LLP CPAS and 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 $12,000 if single or filing as married filing separately or $24,000 if you file jointly with your spouse.

As a US expatriate living and working abroad 4/15/19, your 2018 tax return is automatically extended until 6/17/19  but any taxes due must be paid by 4/15/19 to avoid penalties and interest. The return can be further extended until 10/15/19 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 2018 if you are a qualified expatriate you get a foreign earned income exclusion (earnings from wages or self employment) of $104,100, 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) bonafide 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).  You spouse who lives and 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.

✦  For 2018 if you qualify for the entire year  for the foreign earned income exclusion  (form 2555) you will be excluded from having to comply with the health insurance rules  (or possible penalties) of Obamacare (ACA). These rules are complex and should be reviewed if you do not qualify for the expat exclusion for the entire year of 2017 because you may have an obligation to purchase health insurance or be penalized.

✦  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 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.

✦   If you own 10% or more of a Foreign corporation or Foreign partnership (LLC) you must file special IRS forms,  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. Foreign foundations and non-profits 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. The one exception is if you live in one of the very few countries that have a social security agreement 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 take 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, 2019 for the 2018 calendar year or incur a penalty of $10,000 or more including criminal prosecution. Foreign financial accounts often include accounts in 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.

✦   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 several special programs which will help you catch up if you are in arrears which will reduce or possibly eliminate all 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 every Controlled Foreign Corporation to owe taxes on the income it does not distribute to its owners. LEARN MORE HERE

✦   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 and US  taxpayers with foreign assets, businesses, etc. Please consult a tax expert if you have other offshore matters to be certain what is required to be filed.

Download your   2018 US tax return questionnaire prepared expressly for Expatriates HERE. 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

Visit our International Tax Blog for the Latest Expat and International Tax Developments at www.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 the world for over 35 years. We also assist US Nonresidents meet their US tax obligations and return filing requirements. Email, skype or phone us for immediate assistance.

MINI TAX CONSULTATIONS BY PHONE, SKYPE OR EMAIL: We offer mini consultations (with attorney client privilege) to answer your tax questions and resolve your tax issues.  Email: taxmeless@gmail.com to learn more or request a consultation

For additional useful information and tax assistance go to our website at. www.TaxMeLess.com

Disclaimer and Conditions: The information contained herein is general in nature and is not to be construed or relied on   as tax or legal advice with respect to you individual tax situation or questions. Your use of this material does not create any attorney/CPA relationship between you and this firm or any other obligation. You are advised to retain competent tax professionals help with your individual tax matters and for appropriate answers your specific tax questions.

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 

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.

For more information, see IRS guidance on the deductibility of meals purchased in an entertainment context.

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.

For more information, see Guidance issued on expense election and alternate depreciation changes under TCJA.

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.

For more information, see  IRS: Sec. 162 deduction available for payment by businesses to reduce certain state taxes.

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.

For more information, see IRS clarifies effect of suspending personal exemption deductions on certain healthcare provisions.

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.

For more information, see Safe harbor treats certain infrastructure trades or businesses as real property trades or businesses.

Need more assistance, email taxmeless@gmail.com or visit our website at www.taxmeless.com

US Expatriate and Nonresident Estate Planning

If you are a expatriate and have assets in the USA or are a US nonresident with assets in the USA it can save you substantial legal expenses, time and taxes to do the proper estate planning.  If you have assets abroad outside of the USA it also is wise to plan for the disposition of those assets under the laws of the country where they are located.  Though some countries may recognize the US estate planning documents and techniques, many do not and best to plan for your foreign assets disposition upon your demise under the local law and using documents recognized under that foreign law,

What are the steps Involved in US estate planning?Identify your goals for creating an estate plan: Do you want to provide for your family, protect assets, prepare for incapacity, take control of your legacy, or do all of the above?

1. List the asset you want to include in your plan: When making a plan, you need to consider all of the money and property you own either independently or jointly.
2. Identify the risks to your assets and make plans to protect them: If you lose your wealth because of high nursing-home costs, because of creditor claims, or because you don't make a business succession plan, then you'll undermine your efforts to leave a legacy. You need to know what risks you face and mitigate them.
3. Identify the loved ones you want to provide for and protect: There may be many people in your life whom you need to consider in your plan, including not a spouse, children, friends, and even pets. And your loved ones may all have different needs. For example, your minor children will need a guardian if you can't raise them to adulthood.
4. Decide whether you want to make charitable contributions: You may want to make bequests in your will to a charity, or take other steps to give such as creating a foundation or a charitable remainder trust.
5. Determine whether your potential heirs or beneficiaries have any special needs: In some cases, you'll need to take extra steps to ensure that an inheritance is transferred appropriately and used wisely.
6. Determine whether you'll owe estate tax: The federal government and some states charge taxes on larger estates.
7. Decide whether avoiding probate is one of your goals: In most cases, assets transfer through the probate process, which can be complicated and expensive. You may want to avoid this, and that will require different estate planning techniques.
8. Think about what will happen if you become incapacitated: If an illness or injury leaves you temporarily or permanently incapacitated, you'll need to consider questions such as who will make decisions for you and what kinds of care you'll receive or reject. You'll also need to think about who will provide you with care and how you'll pay for it.
9. Make sure you have the right insurance policies: If you don't have enough money to provide for dependent loved ones, you may need to obtain additional coverage, such as life insurance. 
10. Determine what legal tools you'll need to use: You may need to use tools such as trusts, a power of attorney, advance directives, and a last will and testament to accomplish your goals, provide for loved ones, and prepare for incapacity. 
11. Implement your plan: This could involve taking steps such as changing how property is owned, creating legal documents, or transferring assets into a trust. You should likely have a lawyer help with this step.

We can help. US estate taxes hit nonresidents  when their US assets exceed $60,000 whereas US estate taxes do not apply to US residents until their worldwide assets exceed $11,400,000 US.  Expensive and time consuming probate for assets located in most US states can happen when the assets are only worth approx $10,000 or more (this figure varies depending on the state where the asset is located). Contact us on skype at dondnelson or by email at ddnelson@gmail.com, As attorneys and CPAs we are uniquely qualified to cover all bases.