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Mail Bag #14: W-2 Abroad, Qtrly Tax, Spouse FBARs, Relocation & Healthcare, Gifts, Repatriation Tax

W-2 Abroad

My company is U.S. based, I’m Austrian citizen but live & work in Spain (Barcelona). I need professional help to understand where & how I pay taxes for 2017 and future years.

If you performed work for a U.S. employer who issued a W-2 in your name, you are required to file a U.S. federal return – even if you had tax withholding throughout the year.

You will likely need to file form 1040NR. 1040NR is $450/$550 (over $100k).

Qtrly Tax

For the first few months of 2016 I worked for Rio Tinto in Mongolia they withheld my US & Mongolian tax obligations, my employment with them ended March 26th 2016.

I started working for Jacobs Mongolia July of 2016 they only withhold my 10%Mongolian tax obligation but do not withhold any US taxes, this is left up to me.

Do I have to pay quarterly taxes now to the USA? If so who can I hire to insure I am following US tax laws & obligations?

Rio Tinto used KPMG for my taxes also they did a tax equalization that I was extremely unhappy with! I would prefer not to use KPMG in the future.

Any advise is greatly appreciated.

If you did not owe any tax last year, you do not need to make estimated payments before April 15. If you anticipate you may owe tax this year, please get your docs in early so that we can prepare your return ahead of April 15 (tax due from this date accrues interest).

If you owed U.S. federal tax last year and did not anticipate tax withholding through the employer you were supposed to pay quarterly estimated taxes. By default, quarterly payments are calculated under the assumption of 10% income increase in the following year. We’d also be happy to prepare a tax projection for you to determine the tax hit. In short, this service requires a $350 retainer, but$250 remains as a credit for when your tax return is ready to be prepared. Thus the net cost (if we prepare your return thereafter) would be $100. And, by the way, it is not KPMG fault that you were unhappy with the results. The way equalization works makes you pay more tax than you could have paid if you just filed on your own, using all benefits available to expats (curtailed by equalization tax principles).

Spouse FBARs

I (US citizen) filed a joint tax return with my non-US spouse in 2015, electing to treat her as a US resident for tax purposes. I also filed an FBAR for my non-US spouse for 2015 – I didn’t think this was necessary. Should 2016 and 2017 FBARs for spouse still be filed?

In 2016, FinCEN clarified in the preamble to the regulations that an election under IRC 6013(g) or (h) is not considered when determining residency status for FBAR purposes. This clarification has resolved the uncertainty on whether an NRA (non-resident alien) spouse electing to be treated as US person for US purposes must file FBAR or not. The spouse does not need to file FBAR anymore but filing for 2015 was the required measure of precaution.

Whole Story at TFX.

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