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February 6, 2017 - Phil Hodgen

Filing Deadlines for FBARs and Income Tax Returns

We finally have sane filing deadlines for income tax returns and FBARs (FinCen Form 114). But there is still a trap for the unwary.

Income Tax Return Deadline for Tax Returns: April 15

Humans file income tax returns by April 15 .1

Income Tax Return Extended Filing Deadlines

Humans can get extensions of time to file their income tax returns:

  • June 15. This is an automatic extension, no paperwork required. It is available for American citizens or green card holders whose tax homes are outside the United States.2
  • October 15. This deadline is yours if you ask for it.
... continue reading
Americans Living Abroad Random
January 6, 2017 - Phil Hodgen

Digital Nomads and Eliminating Social Security Tax

American Digital Nomads With U.S. Corporations

This article is for entrepreneurs who, for valid reasons, need to have a U.S. corporation to operate their businesses. Maybe the customers are in the United States. Maybe there is an office full of employees in the United States. Maybe banking and financial transactions are simpler when there is a U.S. corporation.1

The entrepreneur, however, decides to live abroad. Let’s use the phrase “digital nomad” (the current favorite appellation). This person is going to travel from place to place, working for the U.S. business, but staying below the radar in the various foreign countries.... continue reading

Americans Living Abroad Friday Edition
December 23, 2016 - Phil Hodgen

The Green Card Holder’s Gift Tax Loophole

Green card holders living abroad can have a weird hybrid (tax) life. They are U.S. residents for income tax, but can be U.S. nonresidents for gift tax purposes.1

This is a useful tax planning tool. We use it for people who wish to abandon green card status because they no longer wish to live in the United States. By making large gifts, they can avoid covered expatriate status for purpose of the exit tax. But any green card holder who is permanently settled abroad can use this to solve cross-border tax problems.

Definitely a U.S. Resident for Income Tax

A person holding a permanent resident visa (aka the green card) is a “resident alien” for income tax purposes.... continue reading

Americans Living Abroad Friday Edition
November 28, 2016 - Phil Hodgen

Claiming the Foreign Earned Income Exclusion for Nonfilers

This discussion is for Americans working abroad who want to claim the foreign earned income exclusion, but they are late in filing the tax return to do so.

The Foreign Earned Income Exclusion

Americans living and working abroad can make up to $101,3001 of earned income tax-free. Earned income is what you get paid for working — wages or self-employment income.

This is the foreign earned income exclusion.2 It is great.

  • Your salary = $100,000.
  • Your tax = $0.

What’s not to like?

You get this tax benefit by attaching Form 2555 to your income tax return.3

Misunderstanding

People (not you!) have been known to misunderstand the foreign earned income exclusion.... continue reading

Americans Living Abroad Friday Edition
November 14, 2016 - Phil Hodgen

ACA Solves Banking Problems for Americans Abroad

Americans living abroad have a hard time keeping U.S. bank accounts open.  As soon as the bank (or investment firm *cough* Merrill Lynch *cough*) finds out you are living abroad, you are apt to get your account closed.  

Subterfuge is a common solution.  (Subterfuge is an $11 word that means “tell the bank a lie”.)  You simply report that you have a home address in the United States.  That address happens to be the home of a friendly friend, parent, or sibling.

Now you can do it correctly, courtesy of American Citizens Abroad.

For Americans living abroad, opening and maintaining a US bank account has been a BIG problem.

... continue reading
Americans Living Abroad