U.S. tax returns for Americans living abroad are not simple. While these articles cannot be used in place of proper tax advice, they may help you understand a bit more about your filing requirements before you speak to a professional. If you are need a professional, contact us to find out how we can help.
This topic is from real life and will help you this tax season when confronted with a holding structure that looks like the one discussed here. When exactly do you file Form 5472 for a disregarded entity? The subtle treachery of the Internal Revenue Code Form 5472 is sometimes required for foreign-owned domestic disregarded entities….
You’re right, but why are you right? A lot of the things you just “know” are right. But you don’t know why you’re right. This little blog post tells you why a U.S. citizen living abroad can be a trustee of a domestic trust and the trust will still be classified as a domestic trust….
This blog post describes a situation when there is an exception in the attribution rules so that one spouse is not considered the owner of the other spouse’s stock in a foreign corporation. There are, of course, exceptions when someone is a nonresident alien spouse. This can have real-world impact: what you assume is a…
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…
The Tax Cuts and Jobs Act completely rewrote Section 965 to force a one-time repatriation of deferred earnings and profits in foreign corporations. It forces income recognition in the 2017 tax year, so there is not a lot of time to figure this one out! Rufus Rhoades will give a one-hour free workshop on March…
Congress Hates Foreign Trusts Congress hates foreign trusts.1 We know this because: I like to convert foreign trusts to domestic trusts in order to eliminate these problems. Whenever there are foreign trust distributions, there is paperwork. Beneficiaries of domestic trusts do not have to file the offending forms (eliminating the penalty risk), and do not…
The Problem This week, I want to highlight a risk: when an unanticipated FinCEN Form 114 filing requirement might apply to a trust. There is a weird situation where a foreign trust (as defined for income tax purposes) may be required to file FinCEN Form 114. (FinCEN Form 114 is how you tell the U.S….
Summary “Head of Household” filing status is desirable–it can save you some tax. Proving you qualify for head of household status is not easy. Among other things, head of household filing status is generally for unmarried taxpayers only. But it is possible for U.S. citizens (or resident aliens) who are married to nonresident aliens to…
This discussion is inspired by an email I received from A.A., a CPA living and working outside the United States.1 Nonresident Real Estate Investors, Zero Income, and U.S. Tax Return Filing Requirements When are nonresidents required to file U.S. income tax returns? Let’s ignore the obvious situation–when they earn income in the United States. Let’s…
How to Become a U.S. Resident Taxpayer People who are not citizens of the United States and are not residents of the United States are called “nonresident aliens”. The U.S. will impose income tax on them only if they earn income from U.S. sources. Noncitizens of the United States who are residents of the United…
U.S. Citizen Wants to File a Joint Tax Return U.S. citizens living abroad will often (gasp) marry someone who is not a citizen of the United States. The married couple lives happily outside the United States, so the noncitizen spouse is not a resident of the United States in the eyes of the IRS. Everything…
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…
New This Year: Form 5472 for U.S. LLCs Nonresidents (human and otherwise) who own assets in the United States may face a new paperwork requirement, starting this year. Nonresidents who own 100% of U.S. limited liability companies are now required to file Form 5472. Form 5472 tells the U.S. government the name of the ultimate…
Americans living abroad will frequently do a sensible thing, and invest in foreign mutual funds. That’s a good investment strategy. But when that American is a kid? Foreign mutual funds make trouble. They may require the child to file a U.S. tax return, even if the child has trivial amounts of income: Usually, a minor…
This is for the self-employed Americans living abroad who want to enjoy some of that tax-free goodness that comes from the foreign earned income exclusion. Perhaps you are a digital nomad — an American abroad earning a living online by building websites. You have not organized your business as a corporation. You are a sole…