Tax traps for U.S. citizens living and working in Canada

In order to combat tax evasion, the United States has put in place many rules directed at US citizens investing outside the United States. While they might make sense to those who still live in the U.S., these are traps for many US citizens living in Canada, simply doing the sort of things that many ...

Taxation of interests in foreign trusts for US expats

The U.S. income taxation of a foreign trust depends on whether the trust is a grantor or nongrantor trust: In the case of a foreign grantor trust, income is generally taxed to the trust’s grantor, rather than to the trust itself or to the trust’s beneficiaries. In contrast, income from a foreign nongrantor trust is ...

How to qualify for the Physical Presence Test to use Foreign Earned Income Exclusion

How to qualify for the Physical Presence Test to use Foreign Earned Income Exclusion
U.S. expats can claim the Foreign Earned Income Exclusion to reduce taxable income. There are few requirements such as you should have foreign earned income, your tax home must be in a foreign country, and one must qualify for one of the two tests, either Bona Fide Residence or the Physical Presence Test. Last week we ...

What is a Bona fide residence test for U.S. expats? 1

What is a Bona fide residence test for U.S. expats?
As a U.S. expat, you probably heard about Foreign Earned Income Exclusion, which allows you to exclude up to $101,300 for 2016 tax year from your taxable income. But in order to qualify for such exclusion, you need to meet requirements for either Bona Fide or Physical Presence Test. We gathered few facts about Bona ...

What Do US Digital Nomads Need To Know About Their Taxes? 5

What Do US Digital Nomads Need To Know About Their Taxes?
All U.S. persons (and green card holders) are subject to U.S. tax on their worldwide income regardless where they reside. This means, whether you reside in the U.S. or outside the U.S., have a dual citizenship, or are an Accidental American that has never set foot in the U.S., your tax obligations remain the same ...

Passport revocation by the IRS: what you need to know 2

Passport revocation by the IRS: what you need to know
More than a year ago, Congress passed law HR 22, which resulted in IRC section 7345 “Revocation or denial of passport in case of certain tax delinquencies” This is a far-reaching law which covers all taxpayers owing more than $50,000 in back taxes. The intent of the taxpayer to leave the country is not a ...

Foreign Earned Income Exclusion vs. Foreign Tax Credit: which one is better? 2

Foreign Earned Income Exclusion vs. Foreign Tax Credit: which one is better?
We are often asked if it’s better to use Foreign Earned Income Exclusion or Foreign Tax Credit when it comes to US expat taxes. Yet you always need to remember that each case is different and while you personally may benefit from using FEIE, then your fellow expat may have better outcome utilizing FTC. Today ...

Sorting out PFIC problem 1

Sorting out PFIC problem
We are excited to share another success story of our client, who was facing a problem with PFIC. Check out Robin’s story and learn what applies to your case. Robin, a dual-citizen between the US and Canada was contemplating selling some Canadian mutual funds. Robin had been advised that mutual funds are PFIC as well ...

Taking advantage of the Foreign Earned Income Exclusion

Taking advantage of the Foreign Earned Income Exclusion
Today we want to tell you another success story and share how 1040 Abroad solved the tax problems, which our clients were facing. In today’s edition, we present you Mark’s story. Mark, a U.S. citizen, recently moved to Ecuador and got a professional 9-V visa/immigration status there. He was still going occasionally making trips to the United States, ...

Tax table for 2017 Federal Income

Tax table for 2017 Federal Income
One of the biggest myths about the Foreign Earned Income Exclusion is that income taxed above and beyond the FEIE is taxed at tax rates starting at 10%. Well, it’s not correct. For instance, did you know that the United States has a progressive federal tax system, which means that depending on your tax owed, you ...