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Showing posts from 2020

FOREIGN Investors in US Real Property: FIRPTA WITHHOLDING CERTIFICATE

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We have previously wrote on FIRPTA here -  http://www.mooresrowland.tax/2015/12/firpta-update.html
If the amount of the FIRPTA withholding tax (generally 15% of the selling price) will exceed your  “maximum US tax liability”, we can apply to the IRS for a withholding certificate to reduce, or waive, the withholding, down to the maximum US tax liability.

If the application is filed by the day of closing, the closing agent will retain the FIRPTA withholding tax in escrow until the IRS response (the withholding certificate) is received. When the certificate is received, the tax withheld is refunded by the closing agent, in accordance with the instructions in the certificate - i.e most, or all, of the FIRPTA withholding tax is refunded. This process can be completed in about 3 months. Otherwise, under normal procedures, and current IRS restrictions, you could wait a year, or longer, to receive the refund.


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Withholding Certificates

The amount that must be withheld from the …

Let's Talk About Tax Treaties

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In addition to the U.S. and foreign statutory rules for the taxation of foreign income of U.S. persons and U.S. income of foreign persons, bilateral income tax treaties limit the amount of income tax that may be imposed by one treaty partner on residents of the other treaty partner. Treaties also contain provisions governing the creditability of taxes imposed by the treaty country in which income was earned in computing the amount of tax owed to the other country by its residents with respect to such income. Treaties further provide procedures under which inconsistent positions taken by the treaty countries with respect to a single item of income or deduction may be mutually resolved by the two countries.

The preferred tax treaty policies of the United States have been expressed from time to time in model treaties and agreements. The Organization for Economic Cooperation and Development (the “OECD”) also has published model tax treaties. In addition, the United Nations has published a …

Moving from Singapore....to the UK?

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The exodus from Singapore continues. I'm told that expats trying to ship household goods are facing delays.  It's August and no containers are available until February next year?

The destinations of choice have to be Europe and New Zealand.  Even Americans seem to prefer Europe to going back to the States.

I was in the UK for a month myself and only just left yesterday.  For those moving to the UK in September or October this year, there are of course questions around the tax implications of the move.

As always, the answer is that...it depends

1. You may be able to choose whether you are to be taxed either on the remittance basis or on the arising basis -
Read more here - http://www.mooresrowland.tax/2018/03/uk-tax-arising-vs-remittance-basis.html

2. You should also need to determine whether you meet the statutory residence test or not.  There's a detailed discussion below but here's a tool from the HMRC website -
https://www.gov.uk/government/uploads/system/uploads/at…

Talk with a Legal Futurist

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Today we share a 30 minute conversation we had with Margaret Rose-Goddard we did last month.  Margaret is a UK based Lawyer specializing in public procurement law.  She is currently doing doctoral research at the University of Bath exploring complexity theory, public health procurement, and public policy implementation.  Margaret also calls herself a "Legal Futurist"
https://youtu.be/0Uykh4QPkRM
My thoughts -
1. Global supply chains around goods, face continued disruption.  Conversely, trade in services presents business opportunities   
2. To deal with the present crisis, Governments have shut down economic activity and negatively impacted millions of businesses.  It is likely that this would not be the last time.  How would this impact #entreprenuers #businessowners?  Would it discourage future effort? 
3. Data security and personal privacy will continue to be a pressing issue. 
I once had the privilege of attending a presentation by the late Hans Rosling in 2009.  He wrote -  &…

Get Comfortable being Uncomfortable

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Yesterday we featured an interview with someone who relocated from a big U.S. city to the countryside in Indonesia.  Today we feature a 40 min interview we did last month with Robert.  He is a New York attorney who works remotely and so is outside of the big city as well.
https://youtu.be/wR4wb0O6ceM
My thoughts -
1. Yesterday we mentioned the exodus of the wealthy from #NYC.  Same is happening in major cities across the US (and around the world) including  #California.  Nearly half of the US homeless population is there plus there is a looming #WealthTax.  According to online real estate company Zillow, #SanFrancisco home prices have fallen 4.9% year-over-year, while inventory has jumped 96% during the same period.
2. As Bloomberg reported on Monday, virus mutations suggest that there is no #NewNormal but we live in a post normal world.  We need to be comfortable being uncomfortable.  
3. Simply put: there are many less jobs. And a LOT more people competing for them now.  This imbalance w…

Largest Wealth Transfer in History

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1. #BabyBoomers are retiring and are passing trilions to their children in the biggest generational wealth transfer...ever.

2. The present pandemic has meant -
a. severe travel disruptions
b. expected tax increases
c. concerns over our own health and mortality
..Now the business case for setting up #familyoffices is even more compelling

3. Jurisdictions like #Singapore and #London will continue to benefit


Podcasts: http://www.mooresrowland.tax/2020/06/htj-podcasts.html

Economic Contraction in Singapore

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We share a 20-minute interview we did last month with Sébastien GRAVIERE. Originally from #France, he is a Partner in a #Singapore based Trust company -

https://lnkd.in/gbeMvZR

This 20-minute conversation with Sébastien shows he’s optimistic. But here are my thoughts:


1. Singapore expects to lost 200,000 jobs. 60% of these are expats. Assuming there are 4 in a family that would be nearly half a million expats leaving. Singapore will become an Asian #financialcenter and less of a #Global financial center.

2. Singapore's second-quarter GDP fell by 42.9% larger than the previously-estimated 41.2%. It marks the city-state's worst ever quarterly economic performance on record, as manufacturing, construction, and services sectors took a big hit during the "circuit breaker" period.

3. The government now predicts full-year GDP to shrink between 5% to 7%, canceling out the growth generated in the last two to three years.

4. Several big companies like Resorts World Sentosa and Pratt…

New Normal is a Dangerous Myth

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Today we share a 20-minute interview we did with Andrea in June. Originally from #Italy and now based in #Romania, Andrea is the CFO of a company manufacturing telecoms equipment

https://lnkd.in/grqZ9UV


Our thoughts -

1. Everyone talks about the "New Normal," as if there's a guarantee that life will return to normal. For many geographies and industries? #NewNormal doesn't matter: normal is dead.


2. Most casual observers were blissfully unaware of the pre-existing issues which the #pandemic has exacerbated. #ProfessionalSports#DiningOut, #airtravel, #cruiselines#movietheatres#healthcare, #highereducation#MusicIndustry#malls are among those that are fundamentally impacted. Business models with high fixed costs are in trouble. How long can restaurants operate at 50% capacity?


3. As Charles Hugh Smith wrote - there was no New Normal for the dinosaurs. A few winged species survived and evolved into the birds of today. For all the other dinosaur species? #Denormalization meant …

Urban Flight?

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Here's a 20-min interview we did with Patrick. After spending nearly 30 years in the #USA, he moved to #Indonesia to run a farm.


https://lnkd.in/gburRSG


Our thoughts -


1. Our thesis is that the pandemic has not created anything new but accelerated pre-existing trends.


2. For those with the means, leaving densely populated urban areas will be an attractive option. Space. Safety. Access to fresh food. Exercise. Natural surroundings. According to the New York Times, there was a mass exodus of 420,000 #NewYorkers between March 1st and May 1st. Roughly 5% of residents — or about 420,000 people — left the city between March 1st and May 1st. In the city’s very wealthiest blocks, in neighborhoods like the Upper East Side, the West Village, SoHo, and Brooklyn Heights, the residential population decreased by 40% +.
Can you imagine 40 percent of your neighborhood leaving in just two months?


3. In H1 2020, US gun sales increased 95%, (ten million guns), ammunition sales were up by 139%. Most signif…

Click to download my new book: "Essential Estate Planning for American Expats"

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US Tax Treatment of Singapore's Central Provident Fund

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Unfortunately there is content on the internet that may be misleading.  So much so that it is hard for US exposed taxpayers to know what to trust.  As one of the few tax firms with "boots on the ground" in Singapore, we feel confident in our ability to deal with those exposed to the tax rules of both Singapore and the US.
Our position is that Singapore's CPF is taxable by the US for US exposed persons.  Please see the screen shots below in support of our position. 

We start with a 1989 memo and continue with a 1997 memo.  Be careful when dealing with unqualified professionals with no experience in or with Singapore...













Rental Activity Loss Rules for Real Estate

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Link to IRS website - https://www.irs.gov/publications/p925#en_US_2019_publink1000104581 Tax Adviser -https://www.thetaxadviser.com/issues/2017/mar/navigating-real-estate-professional-rules.html







Summary
Passive Activity Losses are not allowed - default since the 1980sActive Participation - $25,000 rental loss deduction. As long as a taxpayer has more than a 10% ownership interest in the property and participates in management decisions in a bona fide sense, she is considered to actively participate in the real estate rental activity. Material Participation - may deduct the full amount of loss.  Safe harbor requires 500 hours in the rental activity.  7 factor test.Real Estate professional - may deduct losses against active or non passive income.  High standards for qualifying including at least 750 hours.
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Passive Activity Loss

Generally, the passive activity loss for the tax year isn’t allowed. However, there is a special allowance under which some or al…

Foreign Pensions of US Expats and Inbound Foreign Nationals: IRS Simplifies Reporting Rules For Certain Foreign Trusts

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U.S. citizens and residents are generally required to file IRS Form 3520 to report their ownership of, or transactions with, foreign trusts. The potential penalty for noncompliance is the greater of US $10,000, 35% of the amount contributed to, or distributed from, the trust, or 5% of the gross value of the portion of the trust’s assets treated as owned by the U.S. citizen or resident. A separate Form 3520-A is required from the trustee, or, in its absence, a separate similar filing by the owner of the trust. The potential noncompliance penalty for Form 3520-A is similar to Form 3520.

This triggers troublesome reporting with respect to certain foreign pension plans, and certain foreign savings plans such as Canadian Registered Education Savings Plans (RESPs) and Registered Disability Savings Plans (RDSPs). A separate rule previously eliminated any required filing of Forms 3520 and 3520-A for certain Canadian retirement plans. The new rules issued in IRS Revenue Procedure 2020-17 now …

HTJ Podcasts

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Our Podcasts are available on the platforms below.  Please click on the logo to connect with your preferred option.











































Requirements for Safe Management Measures at the workplace

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We are NOT doing any in person appointments at our Singapore office.  For those unfamiliar with the new guidelines, here are the guidelines from the Ministry of Manpower - https://www.mom.gov.sg/covid-19/requirements-for-safe-management-measures


Here are the takeaways -

Working from home must be the default mode of working ...Employees who have been working from home so far must continue to do so, and go to the office only where there is no alternative.
Companies should continue to conduct virtual meetings as much as possible. Physical meetings between employees and with suppliers / contractors must be minimised, e.g. by using tele-conferencing facilities.
Employers must cancel or defer all events or activities that involve close and prolonged contact amongst participants, e.g. conferences, seminars and exhibitions.
Please join us in respecting the laws of the Republic of Singapore.
Thank you

BE-10 Benchmark Survey: U.S. Direct Investment Abroad

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Every five years, the Bureau of Economic Analysis (BEA) conducts the Benchmark Survey of U.S. Direct Investment Abroad (Form BE-10) to secure current economic data on the operations of U.S. parent companies and their foreign affiliates. 2020 is a benchmark survey year, and the survey will cover fiscal years ending in 2019 in place of the annual survey (Form BE-11). The BE-11 annual survey is conducted during the four years between benchmark surveys. Smaller businesses that are not required to file annual surveys are required to participate in benchmark surveys, for which there are no size exemption thresholds. Larger businesses that file the BE-11 survey annually will instead fill out Form BE-10 in a benchmark year. The BEA filing is required under the U.S. Department of Commerce rules and is not a tax return filing required by the IRS.
Here's the website - https://www.bea.gov/be-10-benchmark-survey-us-direct-investment-abroad

All U.S. “persons,” including individuals, estates, tru…

If you cannot print and sign a pdf form, you can sign electronically. Follow these steps.

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ITIN Training from the IRS Website

ITIN Training - This is the process which Certified Acceptance Agents like our team, must follow.

Sales and Use Tax - VDA?

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I previously wrote about registering for Sales and Use Tax in new states here -  http://www.mooresrowland.tax/2020/03/register-for-sales-and-use-taxes-in-new.html
As a foreign company doing business in the US here's a great intro -  http://www.mooresrowland.tax/2019/11/are-you-foreign-company-or-non-us.html

VDA TAX INFO: WHAT IS A VOLUNTARY DISCLOSURE AGREEMENT?

Any sales tax consultant will tell you that a Voluntary Disclosure Agreement, also known as a VDA, is the best way to bring a company in to compliance with its previously unmet sales tax responsibilities. With the recent changes, many companies have found that they now have sales tax liabilities in states or other local jurisdictions where sales taxes were not previously collected. In other cases, a taxpayer may have collected the appropriate sales tax, but not yet be registered with the state to remit the sales taxes collected. Regardless of the reason for the outstanding tax liabilities, Voluntary Disclosure Agreements or …