In ABCast Episode 25 – US Expatriate Tax Planning – Part 2, we pick up the conversation regarding tax and legal issue U.S. expatriates might face and how Allen Barron can help. The discussion turns to real estate matters, and the issue of moving money from the United States to a Foreign Financial Institution (FFI) for the purposes of buying a home. Many U.S. expats do not realize this is a triggering event for FBAR filing requirements. If an individual account or the aggregated total of all your offshore financial accounts exceeds $10,000 at any point in the tax year, even if for an hour or a day, it triggers the requirement to file associated FBARs. A lot of the deductions we are able to take here in the U.S., such as depreciation and amortization, are not available in foreign tax returns. How should a U.S. expat manage real estate transactions.
ABCast Episode 25 – US Expatriate Tax Planning- Part 2 continues the conversation, turning to international tax treaties and how these treaties and associated tax credits balance out. Janathan Allen shares the heirarchy of tax treaties, bilateral tax treaties, and many of the rules that regulate reportable income. Tax credit computation may seem to be a dollar-for-dollar transaction, but Janathan shares the misleading nature of this assumption and the impact of timing issues and paying one tax entity in order to seek a deduction from another. Jan discusses Form 5471, regarding foreign corporations and Form 8621 regarding Passive Foreign Income Corporations (PFICs). Many U.S. expats fail to understand the tax impact of PFIC investments – which can be as high as 55%.
ABCast Episode 25 – US Expatriate Tax Planning – Part 2 concludes with a discussion about marriage for U.S. expatriates. What issues does a U.S. expat face if they decide to get married overseas, and how can this impact taxes here in the United States. Many expats fail to consider the impact of a foreign marriage and/or divorce, and that either or both may not be recognized here in the U.S. Should you get married / divorced here in the U.S. as well? Jan shares a real life example of a client who faced incredible tax and monetary challenges simply because of an offshore divorce. California also taxes it’s citizens based upon worldwide income. Many U.S. expats fail to understand the reach of California and the taxes our state may impose upon those who earned their retirement funds while working and living in California.
Listen to ABCast Episode 25 – US Expatriate Tax Planning – Part 2 and we hope you enjoy learning more about the important issues associated with the tax issues and challenges facing US expats. We invite you to meet with Janathan Allen and the experienced team at Allen Barron by contacting Allen Barron, or call 866-631-3470 to schedule a free consultation.
Read a Transcript of Episode 25 – US Expatriate Tax Planning – Part 2