EXTENSIONS TO GAIN DAYS, by Jean Mammen, EA

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The three, maybe four, ways to request an extension of the due date for filing a tax return may be used by filers who need more time to meet the number of days required to use Form 2555, or to claim the first-year choice to file as a tax resident by substantial presence in the US for part of the first year in the U.S.

Of course, payment of any expected balance due must be made by April 15, or late payment interest and penalties will begin to accrue.

Do you need more days to reach the qualification level for the foreign earned income exclusion (Form 2555) – 330 full days in a foreign country out of 365 consecutive days? Or to meet the bona fide residence test?

Do you need more days so that you file your first-year-in-the -U.S.  tax return AFTER meeting the substantial presence test in your … Continue reading →

AWAY-FROM-HOME BUSINESS EXPENSES C A R E F U L !!!

 
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Most people who come to the US on a work visa (example H, L), or on a student or exchange visitor visa (ex. F, J) expect to stay longer than one year. They changed their tax home when they entered the US and do not qualify to take away-from-home business expenses.

Home for the purpose of claiming a tax deduction means your Tax Home – the area where you normally work and earn the money which will be taxed on your income tax return.

When you are temporarily away from your normal work location, you may claim some ‘ordinary and necessary’ business expenses if your employer does not reimburse you for them.

If your employer does not have an accountable plan, or if it does not include common business expenses, urge your employer to set  up or expand an accountable plan.

These deductions can be taken against wage income only … Continue reading →

Expatriation – client handout, courtesy of Ragini Subramanian, EA and Tax Attorney

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About IRC Sections 877 and 877A

Further to our telephone conversation today, below is a brief review of expatriation tax provisions we discussed.  The discussion below scratches only the surface of the myriad requirements of legislation, case studies, revenue rulings and recent financial disclosure requirements.  Please also note this memo is not intended to be legal and/or tax advice of any nature or form whatsoever.  A further evaluation of state and local laws in the country of expatriation will be necessary as you begin to finalize your expatriation strategy.

When expatriation occurs (that is a US citizen renounces citizenship or a US permanent resident renounces his/her residency) a special tax regime popularly called “expatriation tax” kicks in. The expatriation tax provisions apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their residency. The rules that apply are based on the dates … Continue reading →

Which Form 1040NR income tax filers may claim a spouse or dependent? by Jean Mammen, EA

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A look at form 1040NR shows that it must be possible for some nonresident taxpayers to claim a spouse or dependents. The section labelled Exemptions has boxes to check and lines to complete for  7b Spouse, and 7c Dependents, as well as 7a, Yourself.

If you have heard that non-residents must file alone, whether as single or ‘other married’ (treated as married filing separately), these lines are puzzling. And perhaps tax software seems not to let you place a spouse or child on the completed 1040NR return.

The answer lies partly in the U.S. tax code, and partly in bilateral tax treaties.

Look above Exemptions at the Filing Status section of 1040NR. Three choices list ‘resident’ of a specific country, or a personal status (QW- qualifying widow/er). The countries are Canada, Mexico, or U.S. national, and South Korea.  Residents of those countries may be able to claim a spouse or … Continue reading →

Gifts Coming in to U.S. – Client Handout courtesy of Ragini Subramanian, EA and Tax Attorney

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  • IRC Code Sections 6039F and 2801

    • As we discussed,  below is brief information on the reporting and special tax payment requirements of a foreign gift from a relative or a friend overseas.  The discussion below is of a general nature only and has not been adapted to your specific situation.  This information is not intended to be tax or legal advice in any nature and form.  A further evaluation of your specific situation including the $ value of the gift, or the vehicle used to make the gift, may make additional tax code provisions apply.   These additional provisions, plus the ones discussed below, include laws in the U.S. state where the gift is received, as well as foreign country tax and other legal requirements that will also need to be evaluated. Feel free to call should you have any other questions as you learn  more about the gift that you … Continue reading →

    The NEW way to file an ‘FBAR’, or, FinCEN 114 Courtesy of David Treitel david.treitel@americantaxreturns.co.uk.

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     Please add comments to this blog post if you learn of workarounds, solutions, or  changes that resolve any issues you may find in working with this recently-launched program.

    FBARs are separate to and in addition to United States income tax returns, Beginning with the 2016 forms, due in 2017, the filing date is the same as for a Form 1040 tax return, that is, mid-April. There is an automatic filing date extension to the Form 1040 extension date, mid-October. No action by the taxpayer is needed to request an extension. The date change came from the PATH Act. The decision not to require a formal extension request was announced in a December 16, 2016, press release.

    FBAR’s are required when a taxpayer has foreign bank accounts that total more than $10,000 at any point during the calendar year.

    History: The US Department of Treasury announced that … Continue reading →

    Which visa holders should put in new withholding forms now?

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    Visa holders may need to submit new withholding forms to adjust for treaty income exclusions or changes in tax status. Tax residency will affect how payors should withhold for income tax and FICA taxes (social security and Medicare). A visa holder should alert payors to these situations.

    International students and exchange visitors (F, J, M, Q visa holders) may need to submit updated withholding documents for 2014 to their sponsors or employers. The payor needs a signed withholding form from the payee to start or change special withholding even if it is aware of every change in the situations of all its payees,

    Treaty Exclusions: People who claim bilateral income tax treaty exclusions submit Form 8233 to the payor. They should submit new forms each year they claim the exclusion. If the treaty-based income exclusion will end this year, before the income does, the payor may … Continue reading →

    Hello book lovers!

     
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    This blog aims to work with and for readers of 1040NR? or 1040?: U.S. Income Tax Returns for Visa Holders + International Organization and Foreign Embassy Employees, by Jean Mammen, EA

    Blog posts will cover new and timely topics related to the interests of readers of this book. Expect new posts when there is breaking news. And when I have new insights to share with you.

    I hope you will write contributions or comment on areas where you have special experience and knowledge.

    Perhaps you work often with a bilateral tax treaty, or are familiar with how pensions and retirement plans in other countries are treated by the U.S. tax code. Maybe you have written client handouts that you would share.

    We would love to share in your hard-won insights!

    Let me know,

    Jean Mammen, EA

    jean@1040nror1040.com

    Click here to go to book website