Many US persons living abroad have foreign life, sickness or accident insurance or a foreign annuity. Yet, only a handful have any knowledge of the US Foreign Insurance Excise Tax provisions affecting these policies. Foreign asset information reporting may also apply. Here's what you need to know! Foreign Life Insurance Generally, an excise tax of … Continue reading Do You Have Foreign Life, Sickness, or Casualty Insurance? A Foreign Annuity Contract? Excise Tax / FBAR / Form 8938….
I have been keeping readers up to date with the current controversy surrounding imposition of an FBAR penalty for “willful” violations. Here’s an overview of where we are to date. “Willful” Penalty Ceiling: The Cases So Far Last year, two district courts had limited the FBAR “willfulness” penalty to $100,000 because the Department of Treasury did … Continue reading IRS Hits the Jackpot: Another District Court Rejects $100,000 Cap on FBAR Penalty
Section 199A of the Internal Revenue Code was created by the Tax Cuts and Jobs Act (TCJA). If a taxpayer can utilize the new law, the taxpayer can save a bundle in taxes since the provision provides a 20% deduction for so-called “qualified business income” ("QBI”). The American abroad will not be so lucky since … Continue reading QBI Deduction? Not for the American Abroad! AND Next Year, IRS Will Be Checking Your Numbers!
President Trump’s tax reform (commonly referred to as the "Tax Cuts and Jobs Act", and also known as "TCJA" was signed into law on December 22, 2017. My recent blog post detailed how TCJA revised the “kiddie tax” rules and how the new rules will take a big bite out of a young person’s investment income, … Continue reading Americans Abroad – How to Cope With Tax Reform & Save for Education
Tax simplification was an enunciated goal of the Tax Cuts and Jobs Act (TCJA) enacted in December 2017... but it was certainly a goal that remains unmet. The Internal Revenue Service (IRS) itself has estimated that due to TCJA it needs to create or revise more than 400 taxpayer forms, instructions and publications for the … Continue reading Hot off the Press: IRS User-Friendly Guides Explain TCJA Basics
Giving a significant amount of investment assets to one’s children used to be a popular tax strategy, since it permitted the income earned on the investment to be taxed at the child’s presumably lower tax rate. Congress, in its kind-hearted way enacted the so-called “kiddie tax” in 1986 to prevent parents from abusing this strategy. … Continue reading Your Children, Kiddie Tax and US Tax Reform – Tax, Tax, Tax the Kiddies!
Once a non-US individual is classified for income tax purposes as a “resident” he is subject to income tax in the same manner as a US citizen: i.e., taxed on his worldwide income (meaning income from all sources whether from within or outside the US) at a maximum rate of 37 percent (this top rate … Continue reading Mechanics of the Substantial Presence Test and Exemptions: Foreign Teacher, Student, Trainee, Government Employee in the US
Former US citizens or long term permanent residents who are giving up (or previously gave up) their US status, have far more than just the "Exit Tax" to worry about. They must also consider the impact the expatriation will have on their US family members and other intended US beneficiaries. I'm still waiting for more … Continue reading Gifts & Bequests from Former Americans – Beware that Trojan Horse
My earlier blog post gave a head’s up to married couples about jointly owned assets when one spouse is a non-US citizen. Virtually every aspect of the US tax rules are impacted by such joint ownership - income tax, gift tax, estate tax, tax information reporting and FBAR reporting under the Bank Secrecy Act. Today's post provides … Continue reading LOVE SCHMUV! Just K.I.S.S. (Keep It Separate Sweetheart) – US Tax Perils of Joint Ownership
For those of you who have been sleeping too much the past few days, let’s wake up and learn a bit about the face-off in Washington DC over the border security wall. Right now, there’s no federal budget in place and funding for many government agencies has disappeared, resulting in partial shutdowns for some, including … Continue reading SHUTDOWN… Last IRS Agent to Leave, Please Turn off the Lights