What is form 5471? (and a Controlled Foreign Corporation)

What is form 5471? (and a Controlled Foreign Corporation)
Form 5471 is used by shareholders of foreign corporations. Several categories are required to report their ownership, starting with an acquisition of a minimum of 10% of the stock of a foreign corporation. But the most relevant is the reporting for Controlled Foreign Corporation (Category 5). What is a Controlled Foreign Corporation? Until the CFC ...

Unfairness to the self-employed accidental American

As a quick follow-up to yesterday’s post, the greatest unfairness again occurs to the accidental American who realizes after the fact his/her status of a US citizen self-employed in a country without a Social Security totalization agreement with the US. In order to relinquish US citizenship without becoming a covered expatriate, he/she would have to ...

Should a digital nomad, or other self-employed US citizen working abroad, pay social security taxes? 1

As we saw yesterday, such people have a choice to pay social security taxes or not. First of all, let me say that skipping social security taxes is not a way to build wealth, the way to build wealth is to generate more revenue. But, what if instead of skipping it, our self-employed person was ...

Do US citizens living outside the US have to pay into the US Social Security System? 1

This is particularly of interest for “digital nomads” and other self-employed people who have freedom in the way they arrange their employment or self-employment. For those living in countries with a Social Security Totalization Agreement US citizens living in these countries would only have to pay into the Social Security system of only one country. ...

State taxes and American expatriates

Should I file a state income if I live abroad? If you are a US citizen or permanent resident living abroad, you not only have to make sure to file a tax return with the IRS each year if you meet the minimum income requirements, you may also have to file a state return. Depending ...

Canadian banks are facing significant compliance costs due to FATCA

It is estimated that the five largest banks in Canada have already spent about C $ 750 million (or US $ 693.5 million). This amount does not include the ongoing costs of compliance -only expenses related to the initial launch for FATCA reporting. The cost of FATCA FATCA took effect on 1 July 2014 and ...

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Santa taxation

Santa taxation
Merry Christmas everyone. So, now the topic that all the good boys and girls were waiting for:   * Is that that thing that you found under the Christmas tree taxable income? This reminds us of the court case of Cesarini v. United States: taxpayer found cash in a piano. Besides the timing issue addressed ...

The Vatican Bank, Christmas Cheer, And FATCA

As seen at http://www.forbes.com/sites/taxanalysts/2014/12/24/the-vatican-bank-christmas-cheer-and-fatca/ For centuries the inner workings of the Vatican Bank have been cloaked in secrecy. That was before Pope Francis, who has pledged to restore public confidence in the administration of the Roman Catholic Church. This week we learned the United States and the Holy See have brokered a FATCA agreement for the ...

PFIC update on Canadian mutual funds

Not an update in that the rules didn’t change, just an update in my reasoning. After reading the private ruling letter #200752029, my opinions tilts even towards the idea that Canadian mutual funds are not corporations and as such the PFIC rules shouldn’t apply to such investments. Following the logic presented in the private ruling, absent ...