Category Archives: Uncategorized

The battle over U.S. corporate tax inversion – listen to @SenCarlLevin

The battle over U.S. corporatate tax inversion – listen to @SenCarlLevin http://t.co/PcdGIGsWB1

— US Taxation Abroad (@TaxationAbroad) August 1, 2014

Senator Carl Levin attempts to defend the right of the U.S. to tax profits earned outside the United States. The Senator doesn’t even once point out that:

1. Inversions do NOT affect the amount of tax paid on U.S. profits; and

2. Does NOT acknowledge that all inversions do is exempt U.S. companies from tax on foreign profits where they already pay tax to those countries.

Levin believes that tax reform is not likely.

The basics of #Americansabroad and inheritances – with a touch of expatriation

Anything to do with U.S. tax is of course complicated. That said here are some basic principles.

The basic principle – you can inherit free of U.S. tax

Tax implications of an American citizen receiving a bequest from abroad http://t.co/tNfRrUmQZr – I'ts the forms, not the tax

— US Taxation Abroad (@TaxationAbroad) July 23, 2014

Whether a U.S. person is living inside or outside the United States:

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The special rules of U.S. Taxation and the non-U.S. spouse

@USCitizenAbroad Oh a wonderful engagement gift! "You need to be sure to obtain a Individual Taxpayer Identification number for your spouse"

— Amanda (王曼卿) (@east_west_notes) July 24, 2014

The above tweet references a post from Jane Bruno about the U.S. tax implications of the “non-American spouse” which includes in part:

If you are married to a non-American and you both live overseas, you may have wondered how this impacts on your U.S. tax filing situation, if at all. As with most concerns involving taxes, the more complicated they can make it, the better Congress likes it! This article will try to present your various tax obligations (and options) with regard to a non-American spouse as simply and precisely as possible.

Read on! To be forewarned is to be forearmed!

Snowbirds beware! You can be a tax resident of both Canada and the U.S.

The topic of the day:

@VLJeker Forms, forms and forms: Form 8840: The possible cure to having "Overstayed Your Welcome". http://t.co/OV1juCsjTL it's a good form.

— US Taxation Abroad (@TaxationAbroad) July 22, 2014

The problem revealed:

One CAN owe U.S. tax if one has NO U.S. income and is NEITHER a citizen NOR Green Card Holder http://t.co/Pq5WgxUs8K Here's how.

— US Taxation Abroad (@TaxationAbroad) July 22, 2014

The reason as described by Ms. Jeker in the post:

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Recipients of gifts from covered expatriates must pay tax on gifts

How to Treat Gifts and Bequests from Foreign (Non-US) Persons | Let's Talk About: US Tax http://t.co/p9C50RkyAK

— V. La Torre Jeker JD (@VLJeker) June 16, 2014

Another great article from Virginia La Torre Jeker describes the reason for the taxation of gifts to U.S. citizens from “covered expatriates” as:

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@VLJeker Trilogy: Foreign Corporations – Dividends, qualified dividends and subpart F

Prologue:

Controlled Foreign Corporations and Subpart F income were introduced here. Tax professionals about written about the dangers of Americans abroad carrying on business through a corporation. In addition to the tax problems (dividends, Subpart F, etc). there are also extremely invasive, expensive and penalty laden reporting requirements. In fact, Form 5471 is arguably America’s most deadly and dangerous form.

For those who want to understand this difficult topic better …

@VLJeker This is great stuff. What about a series on Form 5471?

— US Taxation Abroad (@TaxationAbroad) January 25, 2014

@VLJeker Since its hard to fit in your schedule, perhaps you can write posts focusing on a 5471 "schedule" at a time …

— US Taxation Abroad (@TaxationAbroad) January 25, 2014

Well, she has followed through. Form 5471 is the form required for “Foreign Corporations”. She has written this wonderful trilogy of posts on “Foreign Corporations”. Thank you Virginia La Torre Jeker for the following:

“What you need to know about foreign corporations, but couldn’t even imagine to ask “Triology”.

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The horrors of retirement planning for #Americansabroad – #PFIC edition

The horrors of retirement planning for #Americansabroad – #PFIC edition http://t.co/W3D9n1SC8i

— US Taxation Abroad (@TaxationAbroad) April 16, 2014

General discussion of how the PFIC rules work in theory:

#PFIC taxation and #Americansabroad http://t.co/LMn996W4ZN – Submission to the Senate Finace Committee

— US Taxation Abroad (@TaxationAbroad) April 16, 2014

Discussion of the incredible unfairness and stupidity of the PFIC rules in practice (don’t enter OVDP):

Painful discussion of what happens to #Americansabroad who invest for retirement – Must avoid #PFIC http://t.co/bvZIxZ9cf9

— US Taxation Abroad (@TaxationAbroad) April 16, 2014

And a comment that says it all:

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Should it be reported on your #FBAR? Not even your accountant knows for sure

Should it be reported on your #FBAR? Not even your accountant knows for sure http://t.co/QBqxXKqSH5

— US Taxation Abroad (@TaxationAbroad) April 15, 2014

The deadline is fast approaching. Mr. FBAR has been updated and modernized.

He has a new name (Form 114).

He has a new look.

He must now be filed online.

He is still one of the U.S.A.’s deadliest forms.

But, the question still remains:

What exactly is required to be reported on your FBAR?

Taxpayers “navel gaze” in fear!

How much of your life is reportable on #FBAR? Nobody knows for sure. Interesting comments at @IsaacBrockSoc blog http://t.co/pGx5H31kOs

— US Taxation Abroad (@TaxationAbroad) April 15, 2014

Tax professionals continue to educate!

“Foreign” Online Gambling Accounts – IRS Says FBAR Filing is Required | Let's Talk About: US Tax http://t.co/xCythtr6Lt

— V. La Torre Jeker JD (@VLJeker) April 14, 2014

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U.S. Gift tax rules and returns – What #Americansabroad need to know about marriage to a non-citizen

Good summary: Gift Tax Returns: What You Need To Know http://t.co/AbxvMTploH via @forbes #usexpat

— Tanager Wealth (@TanagerWealth) April 14, 2014

This is a nicely done article by Deborah Jacobs of Forbes.

As you know, a U.S. citizen who is is married to a non-U.S. citizen does not have the benefit of the unlimited marital deduction. Although I recommend the complete article, the following is of particular note:

Are there special rules for married couples?

Yes. The most important one is that the usual limits on lifetime gifts don’t apply. If your spouse is a U.S. citizen, there’s an unlimited marital deduction for most gifts, even if they exceed the annual exclusion amount and you generally are not required to file a return.

A different rubric applies if your spouse is not a U.S. citizen. In that case you must file a gift-tax return if your gifts to him or her total more than $145,000 per year. Additional gifts to a non-citizen spouse count against your $5.34 million basic exclusion and must be reported on the gift-tax return.

#Americansabroad: How long can the #IRS audit you?

As you U.S. tax compliance for “U.S. persons” living outside the United States is very difficult. The reason is that most (if not all of your activities) are considered to be either “foreign” and/or “offshore”. San Francisco tax lawyer Robert Wood recently write a couple of posts that illustrate how the fact of living outside the United States can actually extend the number statures of limitations for an audit. I draw your attention to:

Problem 4 #Americansabroad who fail to declare $5000 of foreign income is that the IRS has 6 years (not 3) to audit http://t.co/JUsFkCzjoK

— US Taxation Abroad (@TaxationAbroad) April 7, 2014

and

Problem 4 #Americansabroad who carry on business through a corp and don't file Form 5471 is IRS can audit forever http://t.co/6gLLf2nld5

— US Taxation Abroad (@TaxationAbroad) April 7, 2014

The gist of the posts is explained in the tweets. That said, I recommend reading both of Mr. Wood’s posts/articles. Although they are not written specifically for Americans abroad, they do illustrate how punitive the U.S. Internal Revenue Code is when applied to Americans abroad.

Why so punitive?

The answer is that U.S. tax law is punishes things that “foreign”.

The problem?

For Americans abroad their lives are foreign.

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