U.S. Tax Services For Expats

  If you’ve ever done business in the United States from abroad or received dividends from U.S. securities, you’ve likely been asked to complete a Form W-8 or W-9. These forms, created by the IRS, are intended to identify the individual or entity receiving income from US sources. It’s important to note that foreign, non-U.S. based individuals or entities complete a W-8, while U.S. based persons or entities complete a W-9. These forms help identify the type of entity, the taxable status of an entity, and how much U.S. tax is due to be withheld from the gross amount paid. Without a properly prepared W-8, the person or entity making a payment to you would need to withhold taxes at the maximum rate, currently 30%. Meaning, if you didn’t submit a complete and accurate form, the IRS will end up with more of your money than they should! This often leads to non-US persons needing to file a US income tax return to reclaim tax that was over-withheld, a costly and time-consuming process. At U...

  Life insurance, mutual funds and ETFs are popular investments for US persons living abroad. However, if not properly executed they can fall under the rules of a “Passive Foreign Investment Company”, aka THE PFIC. If this happens, expenses can rise dramatically, and the investment can become more costly than beneficial. Understanding PFIC’s requires hours of study and calculations to determine if one is subject to PFIC treatment. However, we will leave the links below for those who, like us, are fascinated by esoteric tax rules. One example of PFIC’s that we see often in our practice is foreign life insurance. As the US tries to discourage Americans from making foreign investments, it issues complex rules with punitive consequences on these investments. Income from these investments can be subject to the highest US marginal income tax rate as well as interest that accrues from the first day of ownership. When adding all this together, easily 50% of the gains from foreign investmen...

  As part of the recently-passed massive  Coronavirus Aid, Relief, and Economic Security (CARES) Act , taxpayers will receive a direct stimulus payment within the coming weeks. This one-time remittance is based on an individual’s 2019 adjusted gross income (line 8b of your 2019 Form 1040) and is considered an advance payment of a refundable credit. If the taxpayer has not yet filed their 2019 tax return, the IRS will use their 2018 adjusted gross income (line 7 of your 2018 Form 1040) to calculate their allowable credit. We’re answering some of the most common questions about the recovery rebate below, including who’s eligible, amounts and questions about dependents. Rebate amounts and qualifications Every United States resident or citizen who filed a tax return in 2018 or 2019 may be eligible to receive a recovery rebate under the CARES Act. Filers are eligible for a $1,200 rebate ($2,400 for married filing jointly) according to the following gross adjusted income parameters:...

  As an American expat, you may have heard about US tax compliance laws like FATCA but you may not know what impact these tax laws have on you as an American abroad and what compliance with them is required. The FATCA legislation has forced foreign financial institutions to report assets held by Americans directly to the IRS. Tax compliance reporting requirements have always been important but FATCA has serious consequences that make compliance with tax laws more important now than ever. What is FATCA? FATCA stands for Foreign Account Tax Compliance Act and this legislation was passed in 2010. FATCA is a broad yet complex set of rules designed to increase tax compliance by Americans that have financial assets held outside the United States. This is largely a response to recent off-shore banking scandals that revealed that many Americans were keeping large financial holdings in Swiss bank accounts without reporting or paying the US tax due on those assets. FATCA created some new sel...