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Showing posts from March, 2018

4 Speaking Engagements - April 2018

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Our Regional Brochure

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Non US Digital Nomads Working for American Companies

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Twice in the past 24 hours, clients have asked this question so I thought others would benefit from the answer.  The question is how should a domestic U.S. business treat payments to a foreign independent contractor for services performed outside the U.S.? 

Is a Form 1099 required?  Is withholding required?
Does the foreign based, independent, non US contractor need to file a US tax return?
The answer is this - as long as the foreign contractor is not a U.S. person and the services are wholly performed outside the U.S., then no Form 1099 is required and no withholding is required.  Sometimes US taxpayers get concerned about how to substantiate the deduction if no Form 1099 needs to be issued to the foreign contractor.

The simple answer is that you substantiate the deduction the same way you substantiate all other deductions --- by maintaining books and records evidencing how much was paid, why it was paid, and to whom it was paid. Filing a Form 1099 is not required to substantiate a…

Dealing with the Transition Tax

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The Tax Cut and Job Act hit many of my clients.  It's best that you first read this - http://www.derrenjoseph.com/2018/02/us-exposed-owner-of-international.html

I spent time in my previous note talking about GILTI, now it's time to talk about the Transition Tax.  Very topical now as we work with clients in the mad rush to get the calculations right.  In short, the Transition Tax requires certain CFCs to repatriate foreign retained earnings from prior years and pay US tax at 15.5% on those profits. This tax can be spread over 8 years.

The IRS has kindly provided Questions and Answers about Reporting Related to Section 965 on 2017 Tax Returns.

The new provision enacted by section 14103 of the Act, set forth at section 965 of the Internal Revenue Code (the “Code”), applies with respect to the last taxable year of certain specified foreign corporations (as defined under section 965(e) of the Code) beginning before January 1, 2018, and the amount included in income under section 9…

UK Tax - Arising vs Remittance Basis

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For foreigners moving to the UK, the UK tax system is relatively straightforward if you only have income and gains from UK sources for the duration of your stay here. However, things can get complicated if you are resident in the UK and have foreign income and gains. Here we explain how foreign income and gains are taxed in the UK.




It may be helpful to read this first -
http://www.mooresrowland.tax/2017/11/does-uk-tax-resident-need-to-pay-tax-on.html
http://www.mooresrowland.tax/2016/12/potential-uk-non-dom-changes.html


What are foreign income and gains? If you come to the UK, become tax resident and have foreign income or gains (that is income and gains from outside the UK) during your stay in the UK, you have to consider more complex tax rules. This is because the UK tax system tries to tax anyone who is resident in the UK on their worldwide income and gains.
Examples of foreign income and foreign gains include:
Earnings from working in another country;Profits from running a business i…

The Need for Caution around EB 5

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The image above is from  https://cis.org/North/New-EB5-Fraud-Cases-Involves-Phony-Investment-Law-Firm
Just key "EB5 fraud" or "EB5 scam" into the search window. Scary stuff pops up.  In 2013, the U.S. Securities and Exchange Commission’s Office of Investor Education and Advocacy and U.S. Citizenship and Immigration Services jointly issued this Investor Alert to warn individual investors about fraudulent investment scams that exploit the Immigrant Investor Program, also known as “EB-5."

Here we go - The U.S. Securities and Exchange Commission’s (“SEC”) Office of Investor Education and Advocacy and U.S. Citizenship and Immigration Services (“USCIS”) are aware of investment scams targeting foreign nationals who seek to become permanent lawful U.S. residents through the Immigrant Investor Program (“EB-5”).  In close coordination with USCIS, which administers the EB-5 program, the SEC has taken emergency enforcement action to stop allegedly fraudulent securities offer…

The Offshore Voluntary Disclosure Program (OVDP) is closing!

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On October 27th 2017, we warned you that changes to the IRS amnesty program were forthcoming.
http://www.derrenjoseph.com/2017/10/bye-bye-johnbut-what-about-amnesty.html



For our clients that responded quickly?  Good.  For those that dragged their feet? The window is now closing.

On March 13th, the IRS announced the following -

The Offshore Voluntary Disclosure Program (OVDP) is a voluntary disclosure program specifically designed for taxpayers with exposure to potential criminal liability and/or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets. OVDP is designed to provide to taxpayers with such exposure (1) protection from criminal liability and (2) terms for resolving their civil tax and penalty obligations.

Everything is available here - https://www.irs.gov/individuals/international-taxpayers/offshore-voluntary-disclosure-program
https://www.irs.gov/individuals/international-taxpayers/closing-the-2…

Tax Reform in the Philippines

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The Philippines is an amazing country.  This week, the Philippines was deemed the "best country to invest in," based on rankings released by US News and World Report.  The study gauged the countries based on 65 attributes and included 21,000 respondents worldwide. US News and World Report said it used criteria developed by The Wharton School of the University of Pennsylvania and Y&R's BAV Group.
Despite this, The Philippines has a mere four percent share in the FDI figures as against topnotcher Singapore’s 52 percent and second placer Indonesia’s 13 percent.  The Philippines has also been ranked sixth in terms of “tax regimes and overall competitiveness,” the statistics also said.
It’s amazing how much there are parallels between tax reform in the Philippines and in the USA.  Both countries have populist leaders who advocate economic nationalism.   Driven by the Executive, in December 2017, both nations somewhat hastily and controversially passed legislation that pr…

Surrendering a US Passport

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Despite the hope that President Trump’s Tax Reform would make it easier for American citizens abroad, over the past 2 months, I have had the task of breaking the bad news.  Things have actually got worse.  This was my honest message to an audience last Saturday evening at the exclusive City Club at Alphaland - a Private Members Club in the Makati area of Manila.  http://www.cityclub.com.ph/




How so?
For many overseas employees, who depended on certain itemized deductions like tax preparation fees, unreimbursed business expenses and moving expenses...these are no longer available.More importantly, those hoping for a shift to territorial tax were terribly disappointed. See more here – http://www.mooresrowland.tax/2018/01/an-act-to-provide-for-reconciliation.html
For employers or business owners, the ability to defer taxes has been completely removed and business owners are faced with a huge bill for retained earnings.See more here – http://www.mooresrowland.tax/2018/02/us-exposed-owner-…