We can help you cleanly exit from the US system -- we know the tax rules and have been through the process many times.Learn More
Buying the property correctly is the secret to tax success. We know how to set things up correctly from the start.Learn More
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Here is one question that we saw rather often:
I am a US citizen reporting on a calendar year. I have a fiscal year corporation. When am I subject to the repatriation tax? What is the rate of tax?
This post explains why you might not have a fiscal year corporation under tax law, why a US shareholder of a fiscal year corporation (assuming it is one) takes into account income in 2018, and how the participation exemption works for shareholders of fiscal year corporations.
A quick introduction to section 965: In December of 2017, Congress passed laws that changed the US taxation of foreign income significantly.... continue reading
Sometimes you need to confirm situation normal. This is one of those times. Thanks to correspondent BZ for triggering the discussion of this topic.
Here is the conclusion up front, in case you want to go outside and have fun:
Americans abroad with tax caused by Section 965 (you know who you are) can pay that tax over eight years. The first installment is due June 15 — the regular tax payment due date.
That seems unremarkable.
Americans abroad have a June 15 filing deadline for their income tax returns, and can pay their tax due by that date without incurring late payment penalties.... continue reading
One of the much-touted aspects of the new tax laws that came into effect at the start of 2018 is the abolishment of the personal exemption and the increase of the standard deduction.
These changes are part of the “tax reform” bill passed in late 2017 whereby ordinary individual taxpayers are supposed to benefit from a simpler system and a lower overall tax bill. I put the words “tax reform” in quotes because, well, I have opinions.
In today’s discussion, I will examine how these changes will impact people who expatriate in 2018 and later years, and specifically, expatriates with low income.... continue reading
One question we get a lot is this:
My client is a US citizen who has to recognize deferred income from foreign corporations under the new deemed repatriation law. What is the effective tax rate?
The effective tax rate is going to depend on this client’s income and what else he has going on, so it is not particularly effective to tell you the tax rate. Instead, this post tells you how to calculate the participation exemption that applies to the deemed repatriation, so you can plug in some numbers and get the effective tax rate for each client.
A quick introduction to section 965: In December of 2017, Congress passed a law that changes the US taxation of foreign income fairly significantly.... continue reading
We received a question from our March 23, 2018 workshop discussion about Section 965 about the interplay between the new transition tax rules (IRC §965) and the Net Investment Income Tax (IRC §1411).The Answer
There is no free lunch. The taxpayer will pay income tax AND Net Investment Income Tax on the income recognized because of new Section 965.
Income tax is paid all at once, or over eight years, as the taxpayer chooses.
The taxpayer will not escape the Net Investment Tax.... continue reading