An interesting case was recently decided. I blog about it today to warn those who marry or divorce in a foreign country about the US tax complications that can arise. It’s an area fraught with pitfalls and can impact the couple in many ways, including of course, their US tax planning. Let’s have a brief … Continue reading IRS Tells You if You are Married and to Who! Yes, IRS has Rules For That!
Under current law, limited partners who materially participate in a partnership's business are not subject to self-employment tax. Members of an S corporation who materially participate in the S corporation's business are subject to self-employment tax only on "reasonable compensation" received in their capacity as an “employee”. These individuals are also exempt from the 3.8% … Continue reading All You Need to Know about the 3.8% Medicare / Net Investment Income Tax & how Pres. Biden Will Expand Who Pays It
Today’s post involving the case of Jonathan Zuhovitzky presents some important takeaways: The IRS can get very aggressive when it comes to assessing “willful” FBAR penalties. We see this trend is on the rise. A diligent representative, however, can get the IRS to settle an FBAR matter that is favorable to the taxpayer. It takes … Continue reading Taxpayer’s FBAR WIN: “Willful” Penalty over $9.8 Million for Mere Signature Authority — Removed Entirely
The ‘‘Ultra-Millionaire Tax Act of 2021’’ (the “Act”) was proposed by Democratic Senators Elizabeth Warren and Bernie Sanders on March 1, 2021. Like all other tax proposals I have seen in my over 35+ years of tax practice, once the bee is in the bonnet, legislation will inevitably, inexorably, eventually blossom and flourish. The Act … Continue reading What does Senator Warren’s Proposed Wealth Tax Mean for You?
Foreign investment in the US real property market is big business. US property sales to foreign buyers in 2019 totaled US$78 billion. A look at statistics from more recent years shows that the largest share of foreign residential investors are from China and Canada, followed by Mexico. The US tax laws apply to foreigners owning … Continue reading IRS Needs Money: NRA’s Owning US Real Estate Will Help the Agency Get it Via Taxes and Penalties
Most tax practitioners and wealth planning professionals have heard of the “foreign grantor trust” (FGT) but many are unsure of what it is, how it works, or what it can accomplish in US tax planning. My post today provides an overview. The use of a so-called “foreign grantor trust” is a traditional planning technique that … Continue reading Using a “Foreign Grantor Trust” – I Heard of it, but Hmmmm … I Want to Know More
I have been keeping readers up to date with the current controversy surrounding imposition of an FBAR penalty for “willful” violations – is it limited to a $100,000 cap or can the penalty, if greater, be assessed at 50% of the value of the unreported account? More detailed background on this issue is available at my … Continue reading Seriously? IRS Assesses US$5.1 Million FBAR Penalty for “Signature Authority”
Recently, I am seeing more and more married couples of dual nationality (with one US individual partner) struggling with the US tax issues wrought by such a "mixed marriage". Some are same sex couples married under the laws of a foreign (non-US) jurisdiction. Believe it or not, marriages taking place in a foreign country (whether … Continue reading Warning: Marriage to a ‘Foreigner’ May Be Hazardous to Your Tax Health
A very important building block when establishing a business is selecting the best type of entity from both a legal and tax perspective. This “choice of entity classification” can make a huge difference in liability protection and tax outcome. When an international business is involved, it should come as no surprise that the complexities only … Continue reading Check-the-Box Election: Is it Really that Simple?
In Rev. Proc. 2020-20, the Internal Revenue Service (IRS) provided relief to foreign citizens who were caught out by travel disruptions occasioned by the corona virus, and as a result, remained in the United States for too many days thereby causing them to be subject to US income tax. Under the Revenue Procedure, the IRS will … Continue reading COVID-19 Relief: IRS Helps Foreigners Having Prolonged Presence in the US