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February 1, 2019 - Phil Hodgen

Minimultinationals Chapter 01: Overview of the Series

American minimultinationals are small (for various definitions of “small”) business enterprises subjected to the U.S. tax system.

There are many ways that a minimultinational becomes exposed to the U.S. tax system. Doing business in the United States is an obvious way. If you have an office or employees in the United States, some portion of your business profits will be taxed.

I focus here on businesses that operate mostly or entirely outside the United States but are owned by U.S. citizens or residents. This factor alone–ownership by a U.S. person–means that the business profits will be exposed to U.S. income tax, even if the business never operates in the United States.... continue reading

January 18, 2019 - Phil Hodgen

American Minimultinationals: An Introduction

What’s an American Minimultinational?

What do I mean by American minimultinational?

Multinational

A multinational business operates in multiple countries, exposed to multiple tax-hungry governments. Apple. General Motors. Exxon.

A minimultinational is a multinational business, but smaller.

• Do you have 100 people in a cubicle farm working on your international tax stuff? You’re a multinational.
• Is that thought ludicrous bordering on insane? You’re a minimultinational.

American

An American minimultinational is one that is owned by a U.S. citizen or resident.

Merely by having a U.S. citizen or green card holder as an owner, a business that operates 100% outside the United States is a multinational business.... continue reading

January 8, 2019 - Debra Rudd

Exit Tax Book Chapter 1: A Quick Overview of the Exit Tax

Today’s topic: A quick overview of the exit tax

The term “exit tax” is not used or defined in the Code or regulations anywhere. It is a shorthand to describe the federal law that requires some citizens and green card holders who are leaving the US tax system to pay US tax, one last time, on their worldwide assets.

The defining feature of the exit tax is that all assets are treated as if they are sold on the day before citizenship or resident status is terminated. If there are any profits from the pretend sale, you pay tax on those profits.... continue reading

August 24, 2018 - William Shiraga

File an Income Tax Return Extension to December 15, 2018

If you are an American living abroad and sweating the October 15, 2018 tax filing deadline for your 2017 income tax returns, there is a possible piece of relief. You may be able to qualify for a further extension of time for filing your tax return — to December 15, 2018.

Summary

For American taxpayers living abroad, if you want to get a filing deadline of December 15, 2018 for your 2017 Form 1040, do this:

• On or before June 15, 2018, file Form 4868.
• On or before June 15, 2018, pay whatever tax you have to pay for 2017, along with that Form 4868 you are filing.

... continue reading

August 14, 2018 - Debra Rudd

Dual-Status: Expatriation Year Tax Returns when US Income is Zero

This week we are talking about dual-status returns. An email reader sent us this question, asking what his income tax return should look like in the year of expatriation:

I file 1040 covering income up to the date of renunciation. Do I have to file 1040NR from the date of renunciation to the end of the year if I don’t have any US source income at all for either before or after renouncing?

The expatriation year income tax return is a little more complicated than that. It is slightly difficult to figure out whether you need to file Form 1040NR or Form 1040 as your tax return.... continue reading