The Tax Cuts and Jobs Act completely rewrote Section 965 to force a one-time repatriation of deferred earnings and profits in foreign corporations. It forces income recognition in the 2017 tax year, so there is not a lot of time to figure this one out!
I call this a workshop because the intention is for Rufus to talk a bit about the new law, then we will open it up for questions and input. Some of you out there are smart about Section 965, so please share with us.... continue reading
Does a treaty election to be taxed as a nonresident of the United States trigger a Form 5472 filing requirement? The Schrödinger’s cat meme gives us the answer. Yes and no.The Setup
Imagine a green card holder living outside the United States. She is the sole shareholder of a domestic corporation.
For various good and valid reasons, our green card holder decides to make an election under the applicable income tax treaty’s tiebreaker rules to be treated as a resident of the foreign country where she lives, and thereby be treated as a nonresident of the United States for income tax purposes.... continue reading
Our trusted servants in Washington DC blessed us with a new tax law, effective December 22, 2017. The new law–the Tax Cuts and Jobs Act of 20171 –did not change the expatriation tax rules, but it did make expatriation more attractive to a certain group of Americans abroad.Tax Cuts and Jobs Act of 2017
But Congress did not touch Sections 877A or 2801 of the Internal Revenue Code. Those are the two special-purpose statutes that impose tax on people who renounce US citizenship or abandon their green cards.... continue reading
If you were paying attention to the tax law rewrite last year, you may have heard the term “global intangible low-taxed income” (GILTI). It is supposed to establish a minimum tax on foreign source income for multinational corporations. It also affects US citizens and residents.
Two posts ago, we covered what happens under the default GILTI rules if a US citizen owns a software company abroad. In summary:
A taxpayer who wishes to invoke an income tax treaty to claim nonresident alien status for U.S. income tax purposes–must Form 8833 be filed to claim this status?
The answer is no. A taxpayer may claim nonresident alien status for U.S. income tax purposes without filing Form 8833 to tell the IRS about this tax reporting position.
The follow-up question is also interesting:
What’s the worst that can happen if the IRS audits an income tax return and claims that Form 8833 is missing?
The worst that can happen is that the IRS can impose a $1,000 penalty. But the IRS cannot disallow the treaty claim to nonresident status.... continue reading