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U.S. Expat Taxes – Tax Relief for U.S. Citizens Renouncing Citizenship

U.S Expat Tax Report: A new amnesty program for certain U.S. citizens who have renounced, or intend to renounce, their U.S. citizenship. Among other requirements, you must have renounced U.S. citizenship after March 18, 2010, and have never filed a U.S. Form 1040 income tax return. The relief is also good news for certain individuals …

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Stimulus Payments, Paycheck Protection Program, Expense Deductibility Headline, Tax Changes In Latest Covid Relief Package

Covid Relief Package When Congress initially responded to the Covid-19 pandemic by passing the CARES Act on March 27th, 2020 — handing down individual stimulus payments, Paycheck Protection Program loans, supplemental unemployment benefits and a bevy of additional tax breaks to struggling businesses — many anticipated that if the virus continued to spread unabated, additional …

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Another Stimulus Bill is Coming

In recent months and as a result of long negotiations between Congress’s Democrats, Republicans, and the White House on another round of stimulus legislation, the possibility of a deal is becoming real. In May, the Democrats in the House released COVID-19 Phase 4 legislation, the Health and Economic Recovery Omnibus Emergency Solution Act (HEROES Act). In July, …

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What You Need to Know About Taxes Related to Passive Foreign Investment Companies

As a U.S. citizen, no matter what country you live, you have tax duties. IRS requires all U.S. citizens, including expats, to submit standard income taxes. Expats must also file an informational return on their assets for their foreign bank accounts through FinCEN Form 114 or the FBAR (Foreign Bank Account Report). Wages and self-employment …

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The Bona Fide Residence Test and the Common Errors Expats Make

Many expats can use the FEIE or the Foreign Earned Income Exclusion as one of the tax money-saving devices. If you want to take advantage of the FEIE, you have to use either the physical presence test or the bona fide residence test. Although many expats consider the bona fide residence test as a natural …

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Year End Tax Planning

As year-end approaching, we are offering our clients some important tax highlights and updates that we believe are important to shed light on. Its possible that that Congress could enact additional COVID-19-related tax legislation before the end of this year but as of now we are not going to speculate and offer planning around it. …

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Section 1291 Taxation

All PFICs that do not presently have Mark to Market or Qualifying Electing Fund elections are taxed under § 1291 of the Internal Revenue Code. § 1291 taxation is very complex but the basic idea is that the taxpayer will be treated as if any gain in the investment were received equally over the period …

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Latest Regulations for controlled foreign corporations (CFCs)

The IRS on Monday gave proprietorship attribution rules for deciding the status of companies as controlled foreign partnerships (CFCs) and whether their shareholders are U.S. shareholders (T.D. 9908). The guidelines concluded the proposed rules (REG-104223-18) with two or three changes in light of in any event one remark. Before its annulment by the law alluded …

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Tools to help non-filers receive economic impact payments

The IRS provided tools for tax practitioners who can utilize them to connect and contact to taxpayers who don’t ordinarily document their tax returns and are able to get economic effect installments because of current COVID-19 emergencies. The IRS reported that such people will before long get economic effect installments whose installments were redirected to …

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GILTI rules address income subject to high foreign tax rate

To cater the provision of global intangible low-taxed income (GILTI), IRS issued an additional package Sec. 951A, which was added by the law known as the Tax Cuts and Jobs Act, P.L. 115-97. It requires 10% US shareholders of controlled foreign corporations (CFC) to include in their gross income as their share of the CFC’s GILTI …

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U.S Tax Impact from portability between non-US retirement plans

Transfer of funds from one pension plan to another may be treated a taxable event in the US (there is no official document to confirm the tax exemption). Introduction Numerous Americans are working abroad. A significant number of them will be involved in the retirement plan in a foreign work workplace which they believe is …

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Federal Stimulus FAQ

Update: The IRS has reversed their stance and senior citizens, Social Security recipients, and railroad retirees who are not otherwise required to file a return will not have to.  Update 2: IRS Reverses stance, introduces tool for non-filers (those who are below minimum filing requirements) to provide information where to send stimulus payments. Important – if you have …

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IRS adds waiver for 2020 Foreign Earned Income Exclusion (FEIE)

COVID-19 impacted the whole world badly in general and USA in particular. Due to this unprecedented situation where normal travelling and flight operations has been suspended across the globe, many countries taking special measures for immediate return of their citizens to their homeland. This situation forces the US citizens to return USA who otherwise expected …

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Tactics for Stretching Retirement Assets under the SECURE Act

As part of funding legislation for the federal government, President Trump signed a law of Setting Every Community Up for Retirement Enhancement (SECURE) Act on December 20, 2019. The law has many provisions relating to financial planning, especially retirement planning with IRAs and employer-sponsored plans. Among the provisions the most attracting is the curtailing of …

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COVID-19 pandemic prompts many tax changes

IRS introduced many relief measures for taxpayers to help them through the economic disruption caused by COVID-19. These measures includes legislative and administrative changes to provide many short term and few long term tax breaks to America’s taxpayers, e.g. tax credits and filing postponements. Below is details of changes helping individuals and businesses: FILING AND PAYMENT …

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IRS offers to settle microcaptive insurance cases

In September, the IRS announced that they would mail time-limited settlement offers to certain taxpayers under audit who had participated in abusive micro captive insurance transactions (IRS News Release IR-2019-157). Only Eligible taxpayers are notified through mail. Captive insurance management is one in which an insurance company insuring only the risk of its related companies. …

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Tax Reform for US Expats

The look and feel of iconic tax return form, the Form 1040 has been virtually recognized by everyone for many years. Although the form is complex yet consistent. With the passage of time it changed through Jobs act and tax cuts which recognize as the most significant tax reforms over a period of 30 years. …

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Requirement to File Informational Return Form 8621 Even If Below Filing Thresholds

While submitting the shareholder’s tax return (or, if applicable, partnership or exempt organization return), fill the Form 8621 as per instructions mentioned in it, attach it with return and file both by the due date, including extensions, of the return at the Internal Revenue Service Center where the tax return is required to be filed. …

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