Form 8938 not required for those non-residents by virtue of a treaty positions

As a way of background, until now, non-residents who didn’t meet the substantial presence test, were exempted individuals (form 8843) or used a closer connection exemption (form 8840) didn’t have to file form 8938 (the FATCA version of the foreign asset reporting, often seen as duplicative version of the FBAR’s Fincen 114). Those who were non-residents by ...

A child’s tax return, the kiddie tax and the Net Investment Income Tax

A child's tax return, the kiddie tax and the Net Investment Income Tax
Hi, I previously wrote about the filing obligation of dependents at Filing obligation of a 6 year old, with the key points being that: * A dependent would have to file with income as low as $1,000 (if all such income was unearned) due to reduced standard deduction for dependents. * The regular FBAR rules ...

The myth of the US Foreign Earned Income Exclusion

Recently, Paul Delean of the Montreal Gazette wrote an article about the benefit of the US Foreign Earned Income Exclusion and how it may be used to remove the tax obligations of US Citizens living in Canada. Unfortunately, this article continues to promote the fictional view that this is a good thing. Most people think that chopping $90,000 of ...

Filing obligations for foreigners living in the United States

Are you a “US person”? The Internal Revenue Code would apply to you the same way it applies to US citizens if you are a “US person” (IRC 7701(a)(30) – and we’re looking at IRC 7701(a)(30)(A) in particular for what a “resident of the United States” is). You would be a US person if you ...

FATCA explained

The Foreign Account Tax Compliance Act (FATCA) is designed to fight against tax evasion by US persons holding investments in offshore accounts. There are two aspects to the FATCA: 1. Foreign financial assets Some US taxpayers who hold financial assets specified outside the United States must declare these assets to the IRS.   2. Statement ...

Understand the US taxation of RRSPs and RRIFs

The US tax policy The US tax system is a Citizenship Based Taxation, meaning that US citizens (and permanent residents) are taxed on their worldwide income wherever they live. By default, income earned in an investment account would be taxed. Fortunately, income tax treaties allow for the tax deferral of income earned within a retirement account in the ...

Application of the mandatory health insurance requirement (The Individual Shared Responsibility Provision) in the Affordable Care Act (Obamacare) for US citizens living abroad.

Application of the mandatory health insurance requirement (The Individual Shared Responsibility Provision) in the Affordable Care Act (Obamacare) for US citizens living abroad.
I tried to make this post as readable as I could. Please keep in mind that a large part of the interest of this post is to show that the Affordable Care Act as passed into law was unnecessarily complicated (regarding this issue at least). As such, please forgive me if this post seems confusing. ...

Texts From A Dog

A lighter post today…                                                                    

IRS Customs Hold

I’ve seen much talk in the community of American abroad about the ability to of the IRS: To prevent the issuance of a passport to delinquent taxpayers (currently not true, but when applying for a passport, the Department of State will inform the IRS of the address you provided). Interestingly enough, the Department of State ...

1099-K / 1099-MISC dual reporting concern – and a solution

1099-K / 1099-MISC dual reporting concern - and a solution
Question: Would a company be subject to 1099-K & 1099-MISC dual reporting if it receives credit card payments (in excess of $20,000) and over $600 from a given client? Could I not issue a 1099-MISC if I paid a merchant/contractor by credit card? This post is more about US domestic payments but interesting nevertheless. Following ...