Let’s look at the taxation of income earned by spouses living in community property jurisdictions. When a U.S. person is married to a nonresident alien, the tax rules are different.The normal rules: two U.S. taxpayers
The normal rules are described in IRS Publication 555.1 Where spouses are subject to community property rules and they file separately, community income is split equally between the two spouses. The community property jurisdiction might be California. Or it might be any one of a number of countries outside the United States.Different rules for a nonresident alien spouse
When one of the spouses is a nonresident alien, the rules are different.... continue reading
Hello from Singapore by way of Jakarta, and welcome to the Friday Edition. It’s all alt-country1 and international tax here, folks.
For our literary purposes, you are a nonresident and noncitizen of the United States. You sign a contract to buy U.S. real estate, then think of tax planning and come to see me.
You decide on some kind of holding structure to own the real estate.... continue reading
In a quick email exchange I had with Susan Brown Otto (hi Susan) we touched on a topic that deserves attention. The topic is not terribly difficult, but its existence points to a meta problem.
Susan’s question/comment was about the non-requirement of withholding that is required when nonresidents own U.S. rental real estate . . . sometimes. It’s counterintuitive, because the IRS loves withholding.
So often in tax law there is an answer that you know, intuitively, but you can’t put your finger on exactly why the answer is true. This is dangerous territory for tax advisors. I have done this: blurt out an answer only to find out my memory was faulty.... continue reading
And the preparation for next Friday’s Section 962 workshop dragged my attention across a sleepy backwater of the Internal Code: Section 951A(f)(1)(A).
There we find a newly-minted (circa December, 2017) instance of “as if”, this time disguised by using the magic words “in the same manner”.
Everything works out in the end. We can figure out what the law is (more or less). Still, I wish the writers (let’s be fair to writers, like Sparky Anderson)2 had not introduced yet another fiction into the Code.... continue reading
Sometimes you need to confirm situation normal. This is one of those times. Thanks to correspondent BZ for triggering the discussion of this topic.
Here is the conclusion up front, in case you want to go outside and have fun:
Americans abroad with tax caused by Section 965 (you know who you are) can pay that tax over eight years. The first installment is due June 15 — the regular tax payment due date.
That seems unremarkable.
Americans abroad have a June 15 filing deadline for their income tax returns, and can pay their tax due by that date without incurring late payment penalties.... continue reading