Expatriate Tax Services
US citizens and resident aliens (e.g. green card holders) are subject to US tax on worldwide income. Since each jurisdiction has its own tax laws and fiscal periods may straddle over two calendar years, expatriates are not always able to rely on tax statements issued overseas to determine the amounts reportable on their US tax returns. Although expatriates meeting certain conditions while living abroad may be eligible for foreign earned income and housing exclusions, it should be noted that these exclusions must be elected in accordance with the prescribed regulations and do not preclude the obligation to file an income tax return even where the compensation could be fully excluded. Double taxation is a possibility but domestic tax law and bilateral income tax treaties provide various means for alleviation. Financial transactions carried out overseas and participation in benefit plans of foreign employers could, on the other hand, give rise to unexpected US tax consequences and/or disclosure requirements. Our services help expatriates mitigate their overall tax liabilities and manage their disclosure as well as compliance requirements at two different levels: (1) Plan their federal and state tax positions in advance to avoid major pitfalls and (2) Prepare expatriate US tax return by taking advantage of various domestic tax and treaty provisions.
Foreign nationals may be subject to US tax as a resident, nonresident, or dual-status alien. While worldwide income (including income earned overseas prior to but received during US residency) of resident aliens will be subject to US tax, nonresident aliens are only taxable on US-source income. Tax residency as defined by domestic tax law, is not determined solely by one’s immigration status (such as US green card and citizenship) but also one’s days of presence in the US and may be overridden by bilateral income tax treaties. Those who intend to acquire a US green card should carefully consider the tax implications in the even they renounce their green cards in the future. Our services help foreign nationals mitigate their overall tax liabilities and manage their disclosure as well as compliance requirements at two different levels: (1) Plan their residency and transactions in advance and (2) Prepare foreign national US tax returns by taking advantage of various elections and treaty provisions.
Foreign nationals who enter the US as students, teachers, or trainees on “F”, “J”, “M”, or “Q” visas are not automatically treated as nonresidents for US tax purposes. In fact, they may be considered tax residents of the US and subject to tax on worldwide income if they have been present in the US for enough calendar days to meet the substantial presence test (SPT). These foreign nationals may, however, qualify as exempt individuals and exclude their days of presence in the US for the purposes of SPT, for a limited number of years, provided certain conditions can be met and an exempt individuals US return is filed for each of those years. Our services help foreign nationals mitigate unexpected US tax exposures and fulfill the relevant filing requirements.
FBAR and FATCA reporting are separate requirements that make it tougher for taxpayers to hide assets and income offshore. US persons with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during the year generally must file FBAR (Report of Foreign Bank and Financial Accounts), FinCEN Form 114, with FinCEN separately from the federal return. US persons, including nonresident aliens with joint return elections, with an interest in specified foreign financial assets and the aggregate value of which exceeds certain thresholds, depending on marital status and presence abroad, are also required to complete and attach to their return, Form 8938 (Statement of Special Foreign Financial Assets), which does not replace or otherwise affect a taxpayer’s obligation to file an FBAR. Certain foreign pension and retirement plans covered by Intergovernmental Agreements (IGAs) may be exempted. Substantial penalties for non-compliance apply.
US persons who make certain gifts (including bargain sale at less than fair market value) to any one donee in excess of the annual exclusion will be required to file a US gift tax return, whether or not any tax is due after any applicable marital deduction and lifetime exemption. Scope of taxation and availability of annual exclusion, marital deduction, and lifetime exemption differ between US domiciliaries (e.g. US citizens and green card holders) and non-domiciliaries. Gift and/or estate tax treaties may also be invoked to resolve domicile issues and/or alleviate double taxation. Our services help expatriates and foreign nationals comply with the relevant reporting requirements.
US persons (and executors of estates of US decedents) who have ownership of foreign trusts, have certain transactions with foreign trusts, or are in receipt of certain large gifts or bequests from certain foreign persons may be liable for filing US returns of foreign trusts and gifts. Non-compliance could result in substantial penalties. Our services help expatriates and foreign nationals comply with the relevant disclosure and filing requirements.
US persons who are officers, directors, or have direct or indirect shareholdings of a certain level in certain foreign entities (including corporation, partnerships, and Passive Foreign Investment Company (PFIC)) may be required to file foreign entity US returns. Certain transfers of property to foreign entities may also be reportable on a separate return. Non-compliance could result in substantial penalties. Our services help expatriates and foreign nationals comply with the relevant disclosure, computation of Subpart F income, and filing requirements.
Expatriates and foreign nationals who need to establish, adjust, or exempt US tax withholdings on their employment and other personal income may engage us to prepare their US withholding certificates (e.g. Forms W-4, 673, 8233, W-8BEN, and W-9).
Expatriates and foreign nationals anticipating life events or other financial changes could better manage their taxes and avoid last minute surprises by utilizing our estimated tax projection services to project their tax liabilities, identify mitigation opportunities, and update their quarterly estimated tax payments.
Expatriates and foreign nationals who self-prepare their federal, state, and/or local returns may utilize our professional US tax return review services to help identify errors and mitigation opportunities such as potential credits, deductions, and alternative tax treatments, of which they may not otherwise be aware.