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Redfield v. Commissioner (U.S. Tax Court Memorandum Opinion, 26 April 2017)

This Tax Court Memorandum opinion is currently only available on (extremely overpriced and God-awful UI) Lexis via Tax Notes Today. (How do you take something terrible and make it worse? Lexis Advance is your answer).

I do not see the opinion anywhere on the Tax Court’s website. In order to make it available to everyone, I am posting it here.

The opinion demonstrates the procedural aspects for filing a late Form 2555.

DAMON AARON REDFIELD,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
RespondentUNITED STATES TAX COURTFiled April 26, 2017

Damon Aaron Redfield, pro se.

Jeffrey E. Gold and Stephen C.... continue reading

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.

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

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

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!)... continue reading