Accountancy Saint-Paul | US Tax & FATCA Compliance

I want to move abroad. What do I need to know?

Sun, 07 Jul 2024 09:59:25 -0700

Tax residency, not the payer's location, is the key determinant of where income is taxed. While Americans are always subject to US tax regulations on their worldwide income, their country of residence also has the right to tax that same income, including US-sourced pensions.

However, for those residing in high-tax European Union jurisdictions, US tax liabilities are often effectively eliminated through foreign tax credits and exemptions. As a result, these individuals should prioritize managing their tax obligations in their country of residence before focusing in turn on their US liability.

A key principle for Americans moving abroad is that to avoid potential US tax liabilities at year-end, the tax paid in their country of residence must exceed the equivalent US federal tax on the same income. While the Foreign Earned Income Exclusion can offer some relief to Americans working abroad, those with substantial passive income or with salary income exceeding this threshold ($126k in 2024) will not benefit from relocating to a low-tax jurisdiction, due to the principles of citizenship-based taxation.

How much longer will streamlined foreign offshore procedures be available?

Mon, 14 Oct 2024 06:22:21 -0700

The Streamlined Foreign Offshore Procedure offers an opportunity, for as long as the IRS keeps it open, to resolve past non-compliance for US taxpayers living abroad. By filing three years of tax returns and six years of FBARs, qualified individuals can avoid substantial failure-to-file penalties, which can easily reach five figures or more.

This program won't be available forever. We strongly urge expats who qualify to take advantage of this opportunity as soon as possible to gain peace of mind and avoid future financial penalties.

What if I receive form W-9?

Fri, 13 Sep 2024 06:41:00 -0700

W-9 is the form financial institutions use to collect US citizen clients' social security numbers in order to satisfy their FATCA reporting requirement.

If you are current on your US tax and FATCA obligations and want to keep your account open, there is no reason not to return the completed W-9.

If you are not current on your US tax and FATCA obligations and want to keep your account open, consider regularizing your US fiscal situation so that you can return the completed w-9 with your US tax affairs in good order.

American Citizens or Permanent Residents who declare earned income and have American Citizen children under 17, with social security numbers, are eligible to receive child tax credits with a maximum value of $2,200 per qualifying child in 2026. The refundable part of the credit, ACTC, is worth up to $1,700 for each qualifying child.

Will I be taxed on the values reported on the FBAR?

Wed, 24 May 2017 08:53:07 -0700

The account values reported on the FBAR are not taxable income. The United States does not have a wealth tax. Only the passive income from foreign accounts is taxable, and even then this generally escapes US tax by the application of a credit for foreign tax paid on the same income.

What if I have a foreign spouse?

Wed, 24 May 2017 08:51:46 -0700

It many cases it can actually be helpful to have a so-called "Non-Resident Alien" Spouse. The primary advantage is that the spouse's income is neither reported nor taxable in the United States.