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Expat Tax Blog

Oct 17

Gifts to Charity: Six Facts About Written Acknowledgements

by julie

During the whole year many taxpayers contribute money or gifts to qualified organizations which are eligible to receive tax-deductible charitable contributions. Those taxpayers who are going to claim a charitable deduction on their tax return must do two things:

  • Have a bank record or written communication from a charity for any monetary contributions.
  • Get a written acknowledgment from the charity for any single donation of $250 or more.

Taxpayers should also remember six things about these donations and written acknowledgements:

  • Taxpayers who make single donations of $250 or more to a charity must have one of the following:
    • A separate acknowledgment from the organization for each donation of $250 or more.
    • One acknowledgment from the organization listing the amount and date of each contribution of $250 or more.

Original Story at IRS website.

Oct 11

Self Employment Tax Considerations For Clergy

by julie

If you are a missionary or clergy working in another country (receiving form 1099 from a church), you may be liable for self-employment tax if your place of employment is in a country without a totalization agreement,

The income should be reported on Schedule C, Form 1040.  If the minister has incurred out of pocket expenses related to this income, they should be reported as expenses on the Schedule C.

Schedule SE will need to be completed to calculate SE tax on the minister’s Form W-2 wages, parsonage and utilities allowance.

This may open you up to self employment tax, which may wind up being greater than the potential social security payments you may receive in the future. This may certainly feel unfair, especially if you are up in age and are donating your time to better causes in the 3rd world – but we are not here to argue fairness, but to help explain your options.

Whole Story at TFX.

Oct 6

IRS Form 8832 and UK Corporations

by julie

Form 8832 is often cited as a source for entity classification. “According to form 8832, the only UK entity classified as a corporation is a public limited company. “ It is important to read between the lines – default entity classification on form 8832 is not all inclusive.

The instructions to form 8832 also contain interesting definitions which we will outline and explain below.

Foreign default rule

Unless an election is made on Form 8832, a foreign eligible entity is:

1. A partnership if it has two or more members and at least one member does not have limited liability.
2. An association taxable as a corporation if all members have limited liability.
3. Disregarded as an entity separate from its owner if it has a single owner that does not have limited liability.

What is a Foreign Eligible Entity?

https://www.irs.gov/irm/part4/irm_04-061-005.html

According to the IRS, a “foreign eligible entity” is generally defined as “an eligible entity that is not created or organized in the U.S. or under the law of the U.S. or any State.“

Now – to determine the classification, the key determinant is whether the members have limited liability.

Whole Story at TFX.

Oct 6

Disaster Relief Deadline & Payment Relief

by julie

If your tax residence is in a disaster area -you should automatically be identified by the IRS and receive automatic extensions for filing as well as payment relief for Q4 2017.

What deadlines are postponed?

The IRS has agreed to postpone certain deadlines for taxpayers who reside or have a business in the disaster area.

  • Most tax returns that have a due date between Aug 23 2017 and Jan 31, 2018 – will receive automatic relief.
  • Types of tax returns: Including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns)

Payment relief

Any payments due between the aforementioned dates will receive relief from penalties and, as long as payment is made before Jan 31, 2018. This affects quarterly estimated tax payments due Sep 15, 2017 and Jan 16, 2018.

Whole Story at TFX.

Oct 5

End of the Social Security number? A White House official thinks so

by julie

According to Rob Joyce, the White House’s cybersecurity coordinator, they are exploring ways to replace Social Security number with a safer system. A possibility can be using cryptographic keys, or a combination of long random numbers, to unlock personal data. The merit of such numbers is that they could be revoked once they are found to be compromised, he said.

“I feel very strongly that the Social Security number has outlived its usefulness,” Mr. Joyce said at a cybersecurity conference hosted by the Washington Post.

The White House official spoke Tuesday morning just as members of Congress grilled former Equifax Chief Executive Richard Smithat House panel hearing, asking questions about how the data breach occurred and how to address cybersecurity risks involving credit-rating firms.

Some Democratic lawmakers are calling for new regulations for the credit-rating industry, including shifting the control of personal data to individuals by allowing them to opt into or opt out of the credit bureaus’ systems.

Original Story at WSJ.