Wall Street Journal's excellent article on potential problems with IRA s for expatriates.
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
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August 27, 2016
August 10, 2016
Estate and Gift Tax Planning for US Nonresidents with US Real Estate and Other US assets
The table below shows when the IRS considers US property owned by nonresidents to be subject to estate taxes (paid upon death of the nonresident) and gift taxes (when US property and assets are transferred without consideration) during the nonresidents life.
ESTATE TAX GIFT TAX
Estate Tax | Gift Tax | |||||
Property Type | Yes | No | Yes | No | ||
Tangible Personal Property in U.S. (e.g., artwork, jewelry) | X | X | ||||
Currency in U.S. Safe Deposit Box | X | X | ||||
Cash Deposits in a U.S. Bank | X | X | ||||
U.S. Real Estate | X | X | ||||
Non-U.S. Real Estate | X | X | ||||
U.S. Stocks | X | X | ||||
Non-U.S. Stocks | X | X | ||||
U.S. Government and Corporate Bonds | X | X | ||||
U.S. States/Muni Bonds | X | X | ||||
U.S. Partnership/LLC Interest | Depends (a) | X | ||||
Retirement Plans | X | N/A | ||||
Life Insurance Cash Value | X | X | ||||
Life Insurance Death Benefits | X | X |
(a) The law is not clear and interpretations go both ways with respect to US situs of assets and situs of acutal partnership or LLC interest.
The table below shows the differences between estate and gift taxes paid by a citizen or permanent resident from that which is paid by a nonresident (NRA) including tbe differences in exemptions, and other rules.
U.S. Person | NRA | ||||||
Estate Tax Exemption Amount | $5,430,000 per person | $60,000 per person | |||||
Top Estate and Gift Tax Rate | 40% | 40% | |||||
Lifetime Gift Tax Exemption Amount | $5,430,000 per person | $0 | |||||
Annual Gift Tax Exclusion Amount | $14,000 per donee | $14,000 per donee | |||||
Gift Splitting Between Spouses | Yes, if both spouses are U.S. people | No | |||||
Marital Deduction for Lifetime Gifts | Unlimited if recipient spouse is a U.S. citizen | $147,000 per year if recipient spouse is a non-U.S. citizen4 | |||||
Marital Deduction for Testamentary Bequests | Unlimited if recipient spouse is a U.S. citizen | $0, if recipient spouse is a non-U.S. citizen, unless assets are held in a Qualified Domestic Trust | |||||
Gift Tax Exclusion for Direct Payment of Medical and Education Expenses | Yes | Yes | |||||
Portability of Decedents Exemption | Yes | No |
If you are a nonresident and need estate tax or gift tax planning for your US assets contact us at ddnelson@gmail.com.
Most Popular Cities and Jobs for Expats Working Abroad
https://blog.linkedin.com/2016/07/28/Most-Popular-Cities-and-Jobs-for-Americans-Working-Abroad
July 30, 2016
What facts do I need to include in completing the narrative statement of facts portion of the Form 14653?
Provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Include the whole story including favorable and unfavorable facts.
Specific reasons, whether favorable or unfavorable to you, should include your personal background, financial background, and anything else you believe is relevant to your failure to report all income, pay all tax, and submit all required information returns, including FBARs.
Additionally, explain the source of funds in all of your foreign financial accounts/assets. For example, explain whether you inherited the account/asset, whether you opened it while residing in a foreign country, or whether you had a business reason to open or use it. And explain your contacts with the account/asset including withdrawals, deposits, and investment/management decisions. Provide a complete story about your foreign financial account/asset.
The following points address common situations that may apply to you
We realize that many taxpayers failed to acknowledge their financial interest in or signature authority over foreign financial accounts on Form 1040, Schedule B. If you (or your return preparer) inadvertently checked “no” on Schedule B, line 7a, simply provide your explanation.
We realize that some taxpayers that owned or controlled a foreign entity (e.g., corporation, trust, partnership, IBC, etc.) failed to properly report ownership of the entity or transactions with the foreign entity. If you (or your return preparer) inadvertently failed to report ownership or control of the foreign entity or transactions with the foreign entity, explain why and include your understanding of your reporting obligations to the IRS and to foreign jurisdictions.
If you relied on a professional advisor, provide the name, address, and telephone number of the advisor and a summary of the advice. Also provide background such as how you came into contact with the advisor and frequency of communication with the advisor.
If married taxpayers submitting a joint certification have different reasons, provide the individual reasons for each spouse separately in the statement of facts.
July 8, 2016
July 6, 2016
Better Pay Your Mexican Taxes on your Mexican Rental Income
Under Mexican law, all income generated from properties located within Mexican territory is subject to taxation, even if the owners are foreigners and even if all funds are collected in accounts located outside Mexico. For many years it has been a major issue for both Mexican tax authorities and individuals attempting to comply. For years a Federal Taxpayer ID was required to file and pay the tax. In order to obtain this tax ID one needed to be a resident of Mexico. This was lose-lose for both the authorities and the foreigners who were willing to pay but baffled by the issues involved to “get legitimate”.
After more than five years of Settlement Company® dialogue with Mexican tax officials, a resolution was made in which the foreign property owner could appoint a Mexican company to pay his or her taxes and dispense with all other formalities. This has become reality! Mexican authorities are now looking seriously to collect this long-neglected source of tax revenue and foreigners not only are lining up to pay but also to receive the receipts for payment of the taxes which can then be credited against taxes paid in their native country under the terms of the NAFTA treaty. Remember! no double taxation is permitted under the terms of the treaty!
If you have a rental property in Mexico contact us for details. ddnelson@gmail.com
June 15, 2016
Expats should include their pets in estate plan
A majority of American households today make pets a part of the family. More and more, people want to see pets provided for even after the passing of the human members of the family. In the past,
June 5, 2016
FBAR FORM 114 DEADLINE FOR FILING IS JUNE 30TH
May 30, 2016
US Expatriate Tax Return Due Date Deadlines
- June 15, 2016: US Expat Tax Tax Return Deadline (without applying for an extension)
- June 30, 2016: Foreign Bank Account Report (FBAR) Filing Deadline
- October 17, 2016: Final US Expat Tax Deadline
May 17, 2016
WHEN THE IRS CALLS, DON'T BE FOOLED... IT MOST LIKELY IS SOMEONE ELSE
The Internal Revenue Service has some advice for taxpayers this April Fool’s Day that may prevent them from being the victim of a tax scam: Don’t be fooled by scammers. Stay safe and be informed. Here are some of the most recent IRS-related scams to be on the lookout for:
- Call to demand immediate payment over the phone or call about taxes owed without first having mailed you a bill.
- Threaten to immediately bring in local police or other law enforcement groups to have you arrested for not paying.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- Require you to use a specific payment method for your taxes, such as a prepaid debit card.
- Ask for credit or debit card numbers over the phone or threaten to bring in local police or other law enforcement groups to have you arrested for not paying.
- Don’t reply to the message.
- Don’t give out your personal or financial information.
- Forward the email to phishing@irs.gov. Then delete it.
- Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.
Additional IRS Resources: