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Expat Tax Blog

Jun 29

Mail Bag #1: Visiting US for Work / Adoption Credit / PFIC Filing / $1000 Child Tax Credit with FEIE

by julie

We get a lot of tax questions by email. They are often too short to warrant publishing a standalone article –  we realized that it would be a good idea to collect some of the most interesting questions and post them on our site.

This is the first installment of this piece that we will endeavour to publish weekly. Enjoy!

1. I live in the UK but visit the U.S. for work – does this affect my tax position? – Andre, United Kingdom

Yes, very much so.

Even if you qualify for the Foreign Earned Income Exclusion, if you visit the U.S for work, this is considered U.S. Sourced Income – and is not eligible for exclusion.

This often catches many taxpayers by surprise. As an example – if you visit the U.S for 5 days to give a speech at a conference representing your company, where 3 of those days were for the conference and two for vacation, 3 days worth of income would be considered U.S sourced and not eligible for exclusion.  If you gave that same speech via SKYPE from abroad, that would not be U.S sourced income.

Now – let’s say you visited the US for a fellowship programme. If you work for a university or something of the sort and these visits for the program are work, then it is work income. If you are, say, a basketball player, and go to the US to do fellowship courses in anthropology, that is not work but you are there on your own intellectual pursuits.

Whole Story at TFX.

Jun 26

Tax Rules for Family Monetary Gifts

by julie

We’ve all been there — a sibling, an aunt, or a cousin, may need to transfer funds to your account for some reason – what are the tax consequences of such a transaction?

Inheritance situation – one family member receives funds and wants to transfer to you.

Our Dad passed away 3 years ago and now his house was just sold. I have now received a payment. I understand that the payment is not taxable. Please let me know if that is not the case.


My brother is asking if he can send his payment of ±18,000 into my US banking account. What implications are there if I receive such a payment that is not intended for me?

Firstly – let’s address the question of the house and if there will be any tax on the sale. 3 years ago when your father unfortunately passed, let’s say the house was worth $100k. If you sell the house now for 100k, you would not pay any tax. However, if you sold the house for $500k, you would have $400k of capital gains; ie your cost basis becomes the price of the home at the time of the receipt from your deceased father. Note – if several people inherited the property (as it appears they have), each would report the sale of the home on their respective tax returns and report his/her share of proceeds/capital gain. Note that sale of inherited real estate must be reported regardless of whether there was gain or loss. Gain would be taxable; loss will be disregarded if house was not used for rental business.

Now – as far as the 18k transfer from one U.S citizen to another. If your brother is married then $18K may be treated as a joint gift from a married couple. In such case they do not have to report it because each spouse can make an annual gift to anyone up to $14K without reporting (ie – 18k is less than the 28k combined gift threshold for reporting by a married couple filing joint return)

If he is single, or his spouse has already made a gift that year to someone else, he may transfer $14K to you this year and $4K next year – also without filing the gift tax return.

Whole Story at TFX.

Jun 26

Bitcoin & Other Virtual Currencies on your U.S. Tax Return

by julie

Welcome to the gold rush of 2017, where the new gold is no longer a physical product, but virtual currency (cryptocurrency).  All the rage in silicon valley, the subject of many confused google searches and medium blog posts of why you should be investing, bitcoin and other virtual currencies are taking the financial world by storm. We won’t attempt to educate you on the specifics of virtual currency, and we certainly will not be providing financial investment advice. What we will do, however, is explain to you the U.S tax reporting requirements from transactions in Bitcoin and other virtual currencies.

What is a virtual currency

“The new money” – Bitcoin and other virtual currencies are a method to exchange money or assets between parties. A “Digital representation of value” – although there is no legal tender status in any jurisdiction (they are not backed by a principal authority or governing body), they operate just like paper money (on the internet) and growing number of vendors are beginning to accept it as payment (although still nascent). Bitcoins are ‘mined’ by powerful computers.

Whole Story at TFX.

Jun 25

Standard vs Itemized Deductions on the US Tax Return

by julie

The age old question everyone has when reviewing their tax return — is my accountant utilizing all deductions available to me? Am I in the most optimal position — explained below.

What is the standard deduction?

The standard deduction is the amount that the IRS allows everyone to deduct from their taxable income, without any supporting documentation. Like all other IRS calculations, the amount will vary depending on your filing status.

Whole Story at TFX.

Jun 1

Self-Employment Taxes When Working Outside the US

by julie

Are you a contractor or an employee? This tax self-identity crisis will depend on how your income is reported. Depending on where you are employed, IRS reporting requirements vary.

You are paid by a U.S firm

If payment for services rendered is listed in box 7 of Form 1099-MISC, Miscellaneous Income, the payer is treating you as a self-employed worker, also referred to as an independent contractor.

What does this mean for your filing requirements?

If you are in a self-employed trade or business, you must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship).

You also need to complete Schedule SE (Form 1040), Self-Employment Tax, and pay self-employment tax on your net earnings from self-employment of $400 or more.

  • Unlike a traditional employer, there is no withholding of tax from self-employment income by the payor.
  • As a self-employed individual, you may need to make estimated tax payments during the year to cover your tax liabilities.

Whole Story at TFX.