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Expat Tax Blog

Nov 9

Frequently Asked Questions from Non-US Citizens about US Taxes

by julie

Q:    Is the status of my residency for tax reasons identical to my status for immigration?

A:    These types of residency status are completely separate and may be different. It is possible to be a resident from a tax perspective, but remain an alien from an immigration standpoint. Persons in the United States on temporary visas could be, from a tax perspective, resident aliens, non-resident aliens, non-resident aliens who can choose to be treated as residents for tax reasons, or dual-status aliens.

Q:    Will I always be a resident from a tax perspective if I’m a permanent resident from an immigration perspective?

A:    Immigration laws consider an immigrant to be a permanent resident when they have been granted the privilege of living permanently within the U.S. Generally, this corresponds to having been issued a green card (which is actually pink) by the US Citizenship and Immigration Services (USCIS). From a tax perspective, permanent residents are considered U.S. residents as of the day they are present within the United States as a permanent resident. So, in the 1st year of residency – assuming they were first a nonresident – they will be considered dual-status aliens for purposes of taxes. Dual-status aliens are not allowed to file jointly, usually can’t claim exemptions for dependents, and are not allowed to claim a standard deduction.

Resident taxpayers are required to report all income worldwide. Once a taxpayer becomes a resident for the full year, they are allowed to claim credits and deductions available to all United States citizens. Full-year residents can file any applicable tax form – 1040EZ, 1040A, or 1040 – and can file joint returns with their spouses if married. The form instructions will explain this in more detail. Even resident taxpayers might be able to claim benefits under any tax treaties with their home country.

Whole Story at TFE.

Nov 5

Affordable Care Act (ACA) Tax Provisions for Americans Living Abroad – Facts vs Fiction

by julie

1. Does the U.S. citizen residing abroad need to have foreign health coverage in order to qualify for the ACA 11012016exemption?

– No, presence of foreign health coverage is not necessary.

2. Does the U.S. citizen/green card holder with foreign health coverage provided by foreign employer or through the  public health system must prove that foreign coverage meets the ACA standards for the essential minimum coverage?

– No, the scope and quality of foreign coverage is not taken into consideration and does not affect the  ACA exemption. Exemption is purely based on the assessment of time spent outside of the US.

Whole Story at TFE.

Nov 4

Simple US Tax Guide for Canadian Retirement Plans

by julie

10252016Tax and retirement planning is a very complex process that often involves accountants, finance professionals, and lawyers. But, cross-border issues make this even more complex, especially when the US-Canada tax treaty is involved and how it treats investment plans like the TFSA, RRSP, and some pensions.

Below, we’ll discuss some recent developments surrounding these issues in international tax law, plus provide guidance in retirement planning, which is a grey area.

Whole article at TFE.

Nov 1

Saudi Arabia considers income tax for foreign residents

by julie

Saudi Arabia’s finance minister confirmed that the kingdom was considering imposing income tax on foreign 11022016residents as it seeks to raise non-oil revenues and cut spending to fund its $72bn plan to diversify the economy.

Income tax on the one-third of residents who are non-Saudis would raise a significant amount of non-oil revenue for the government. However, it could also make luring expatriates to the conservative kingdom more difficult. Like other Gulf states, Saudi’s income tax-free status is key to attracting foreigners.

Ibrahim al-Assaf, the Saudi finance minister, sought to clarify confusion over the tax issue at a news conference in Jeddah on Tuesday, saying it was “a proposal”.

“Nothing has been approved yet and it will be examined,” he added.

Mr Assaf downplayed analysts’ scepticism that The National Transformation Plan is overly ambitious and will fail to break the cultural and bureaucratic resistance to the deep-seated change in a country where citizens are used to generous handouts and benefits.

Original Story at FT.

Oct 31

Information on more than 1 000 relationships to be automatically exchanged between tax authorities

by julie

As a further step to implement the OECD Common Reporting Standard (CRS), the first series of bilateral automatic exchange relationships were established among the first batch of jurisdictions committed to exchanging information automatically as of 2017.taxexchange11012016

With still a year to go before the first exchanges of information on financial accounts pursuant to the OECD Common Reporting Standard (CRS), there are now more than 1 000 bilateral relationships in place across the globe, most of them based on the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (the CRS MCAA). The full list of automatic exchange relationships that are now in place under the CRS MCAA and other legal instruments can be accessed here.

More jurisdictions will nominate the partners with which they will undertake automatic exchanges in the coming months. The next update on the latest bilateral exchange relationships will be published before the end of 2016, with updates to follow on a periodic basis. In total, 101 jurisdictions have agreed to start automatically exchanging financial account information in September 2017 and 2018, under the CRS.

This wave of activations of bilateral exchange relationships is an important step towards the timely implementation of the OECD-developed international standard for the automatic exchange of financial account information, the CRS, and reflects the determination of jurisdictions around the world to deliver on their political commitment to fight tax evasion.This section shows all bilateral exchange relationships that are currently in place for the automatic exchange of CRS information. The relationships shown included those under the framework of Article 6 of the Multilateral Convention and the CRS MCAA, as well as exchange relationships based on bilateral agreements and the EU framework.

As of October 2016, and with still almost a year to go until the first exchange date on 30 September 2017, there are now already over 1000 bilateral exchange relationships activated with respect to jurisdictions committed to a 2017 timeline.

Activated exchange relationships can be sorted and displayed from both the perspective of a particular sending jurisdiction (“FROM”) or a particular receiving jurisdiction (“TO”). For each exchange relationship, the legal basis and, where appropriate, the effective date and/or the activation date are shown. The number in brackets behind each jurisdiction in the drop-down menu indicates the total number of bilateral exchange relationships that are currently activated with respect to that jurisdiction.