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.