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June 23, 2017 - Phil Hodgen

How to Not Pay U.S. Social Security Tax While Working Abroad

Americans who move abroad to work face a particularly difficult job in preparing tax returns. Let’s cheerfully ignore income tax problems today, and instead look at Social Security taxes.

Technically, I am talking about FICA1 taxes: the taxes you pay to fund your old-age pension, survivor’s pension, disability insurance, and Medicare benefits. But for simplicity’s sake–and to match the way normal people talk about these taxes–I will refer to these taxes as “Social Security” taxes.

Let’s look at the semi-established digital nomad. You are a U.S. citizen who owns an operating U.S. business, formed as a corporation. You plan to move abroad and travel for a few years.... continue reading

Friday Edition
June 9, 2017 - Phil Hodgen

Income Tax Return Filing Deadlines for Americans Abroad

Answers In a Hurry

Here are the answers in a hurry:

When You Must File Your Income Tax Return

  • April 15. If your “tax home” or “abode” is in the United States, your filing deadline is April 15. This is the default rule.​
  • June 15. If your “tax home” or “abode” is outside the United States, your deadline for filing your income tax return is June 15. This is automatic and you do not need to do anything to get it.
  • October 15. Anyone can file Form 4868 to make extend the filing deadline to October 15. File before April 15 or June 15 (whichever applies to you).
... continue reading
Friday Edition
May 26, 2017 - Phil Hodgen

Nonresident Real Estate Investors, Rental Income, and No Tax Returns Filed

What happens to a nonresident who owns U.S. real estate and — gasp — does not report the rental income on a U.S. tax return? What is the tax risk to that nonresident investor? And how can that investor fix the problem?

In this article I will discuss the following topics:

  • How does the United States tax rental income received by a nonresident owner of U.S. real estate?
  • What are the tax return requirements for that nonresident investor in U.S. real estate?
  • What can a nonresident do if he has not filed U.S. tax returns and reported (and paid tax on) the rental income collected?
... continue reading
Friday Edition
May 12, 2017 - Phil Hodgen

Independent Contractors Who Become U.S. Residents

Inspiration: Swizec

This newsletter is inspired by a geek with a hat. Swizec is someone whose blog I follow from afar. I also watch for him on Hacker News, where he pops up from time to time. Interesting guy, does interesting things.

So when he wrote a blog post about his international tax catastrophe, I read it with interest.

In brief, Swizec came to California from Slovenia, spent too much time here, and became a resident for tax purposes for multiple years. He ended up with a massive tax bill for Federal and State income tax.

As a bonus multiplier, he ended up owing tax in Slovenia, too.... continue reading

Friday Edition
April 28, 2017 - Phil Hodgen

Snatch Form 2555 Victory from the Jaws of Procrastination Defeat?

Snatching Victory from the Jaws of Defeat

You messed up, and time has gone by. You wanted to claim the foreign earned income exclusion on a tax return, but the filing deadline for that tax return was more than a year ago.

You are very late. Maybe you filed a tax return and missed making the claim for the foreign earned income exclusion. Maybe you did not even file a tax return at all.

Let’s talk about how you can claim the foreign earned income exclusion. To do this we will talk about the rules, and a recent Tax Court case that demonstrates the rules in action.... continue reading

Friday Edition