Showing posts from June, 2017

Bureau of Economic Analysis

Two years ago, we wrote about BEA reports due by US individuals and entities investing abroad -

It should be acknowledged that not just US outbound investment but also US inbound investment may be similarly required to report.  Do note that this is beyond the scope of tax reporting so you may wish to consult an attorney to seek clarification.

US Investment Alternatives for the Foreign Investor


Residence for Estate and Gift Tax Purposes


Expanding the Exceptions to the US Income Tax Resident Alien Definition


Trinidad & Tobago left as the last blacklisted tax haven

The last tax havens to resist the global crackdown on evasion have bowed to intensifying political pressure over the leaked Panama Papers, experts said on Wednesday. The Paris-based Organisation for Economic Co-operation and Development said "massive progress" had been made over the past year as it revealed there would be no significant offshore centres on the blacklist of "unco-operative tax havens" it had prepared for the G20 group of leading countries. It reported that only one country — Trinidad & Tobago — had failed to comply with international transparency standards. The OECD said it did not have a big financial sector and was not deemed to be a significant risk. It also said that tax amnesties over the past eight years had raked in close to €85bn of extra tax, as more than 500,000 taxpayers had disclosed offshore assets. In Indonesia, for example, $336bn in hidden assets have been declared. The move towards greater transparency is a result of the intens…

Do I have to annually report PFICs held in a UK pension scheme?

...I assume that the employee is a US citizen who works in the UK, who is a resident of the UK under the US-UK income tax treaty, and who has an approved pension scheme under UK law that his employer funded for work he performed in the UK.

The PFIC annual reporting requirements

In general, if a US person owns a PFIC, he has annual reporting requirements even if he has no income from the PFIC. IRC §1298(f). The IRS has authority to adopt waivers of the reporting requirement. More details on the requirements and the waivers are found in Reg. §1.1298-1T.

Background on pensions: They are also trusts

When looking for rules that apply to pensions, it is also useful to look for rules related to trusts. This is because the US generally considers pensions to be trusts: A settlor (the employer) transfers property to a trustee (the pension manager) for the purpose of protecting it (for retirement) for a beneficiary (the employee) under rules similar to those imposed on trustees. Reg. §301.7701-…

Being Punished by the IRS for Marrying a Foreigner

One frequent complaint from expat American citizens and Green Card holders arises when they marry a non American (known as a a Non Resident Alien or NRA).  For many newlyweds, Married Filing Separately is the default option.  Unfortunately, compared to other filing status,  this could definitely be less tax efficient.

Have a look here for 2016 rates -

One alternative is to consider filing jointly or head of household.  Jointly isn't always an attractive option as most NRAs do not like being exposed to the US tax net.  Head of Household is often more attractive.

How do you qualify for Head of Household even if you're married?

If a taxpayer's spouse was a nonresident alien at any time during the tax year, and the taxpayer did not choose to treat the nonresident alien spouse as a resident alien, the taxpayer was unmarried for head of household purposes. (IRC § 2(b)(2)(C).)

Only the following relatives can qualify an unmarried taxpayer for head of household filing status.


Supreme Court Decision Means Thousands Automatically Get U.S. Citizenship

The Supreme Court on Monday struck down a federal law that treats children born overseas to unmarried parents differently for purposes of citizenship depending upon whether the biological father or mother is a US citizen.
Under the law, US citizen fathers have to spend at least five years in the states before the child could become a citizen, while the mother only had to spend one year.
The plaintiff in the case, Luis Ramon Morales-Santana, was born in 1962 in the Dominican Republic to unmarried parents. His mother was a citizen of the Dominican Republic and his father was a US citizen who had not spent more than five years in the United States after his 14th birthday.
Morales-Santana was admitted to the US as a lawful permanent resident in 1975. After years of living in the US he was put in removal proceedings after convictions for various felonies. He claimed he was a US citizen because of his father's citizenship. But the Board of Immigration Appeals denied the claim because t…

Which Filing Status Should Unmarried Same Sex Couples Use?

The following questions and answers provide information to individuals of the same sex and opposite sex who are in registered domestic partnerships, civil unions or other similar formal relationships that are not marriages under state law. These individuals are not considered as married or spouses for federal tax purposes. For convenience, these individuals are referred to as “registered domestic partners” in these questions and answers. Questions and answers 9 through 27 concern registered domestic partners who reside in community property states and who are subject to their state’s community property laws. These questions and answers have been updated since the Supreme Court issued its decision in United States v. Windsor. As a result of the Court’s decision, the Service has ruled that same-sex couples who are married under state law are married for federal tax purposes. See Revenue Ruling 2013-17 in 2013‑38 IRB 201.

Q1. Can registered domestic partners file federal tax returns using…

What Filing Status Should a Married Same Sex Couple Use?

The following questions and answers provide information to individuals of the same sex who are lawfully married (same-sex spouses). These questions and answers reflect the holdings in Revenue Ruling 2013-17in 2013-38 IRB 201.

Q1. When are individuals of the same sex lawfully married for federal tax purposes? A1. For federal tax purposes, the IRS looks to state or foreign law to determine whether individuals are married. The IRS has a general rule recognizing a marriage of same-sex spouses that was validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage of two individuals of the same sex even if the married couple resides in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages.
Q2. Can same-sex spouses file federal tax returns using a married filing jointly or married filing separately status? A2. Yes. For tax year 2013 and going forward, same-sex spouses generally must file using a married filing separately or j…