Understanding the US tax code is not an easy job and the information is more complex and confusing when you are a US expat. In this post, we have mentioned some of the top things that all US expats must keep in mind when filing US expat taxes to help them sort through the multitude of information. Let's take a look at them.
US expats with simple and straightforward circumstances might consider filing their own US expat taxes . But, most US expats and any with any doubts or questions with regards to filing and US tax filing in the beneficial way possible, and provided their circumstances must seek help from a US expat tax service company to make sure they file in a way that reduces their tax amount in the short as well as long term. You have to research well in order to find a good and reliable US expat professional
2 Comments
What is a Casualty Loss? A casualty loss is a destruction, damage or property loss resulting from events like Sudden event (Swift, instead of gradual or progressive), unusual event (Not a day-to-day occurrence) and unexpected event (ordinarily unanticipated and unintended). For instance: If your home was destroyed by a hurricane and the president has declared to be a disaster area, then you have a casualty loss, and you are able to deduct the loss. But if your home is destroyed by a fire and was not in a disaster area, you cannot claim a casualty loss, even if your loss would be as great as that of the individual residing in a disaster region. Keep in mind that the event must be identifiable, unusual and unexpected. Events that meet these criteria include Car accidents, Earthquakes, Fires, Floods, Disaster-related demolition, Terrorist attacks, Tornadoes, Vandalism, Shipwrecks, Storms, Volcanic eruptions, and Hurricanes. Remember Casualty and Theft Losses Are Tax Deductible in Federal tax for non residents What Does Not Qualify As A Casualty Loss Deduction?
What is Theft? Theft is the taking of money or property with the intent to deprive the owner of it. Remember the taking of property should be illegal under the law of the state where it occurred and done with criminal intent. Theft includes the taking of money or property by Blackmail, Kidnapping for ransom, Robbery, Larceny, Burglary, Embezzlement, Extortion and Fraud or misrepresentation. Theft can be claimed on Form No 4684. How To Claim Casualty Losses Casualty and theft losses are first reported on Form 4684. You can then enter the resulting number on Schedule A when you itemize, then transfer the number from Schedule A to line 40 of the 2017 Form 1040. In addition to this, the line on Form 1040 is different but beginning with the 2018 tax year. How To Prepare For A Potential Disaster Loss Now?
You should make an inventory list of all the items in your home or office, or video all your belongings inside and the outside of your property and your vehicles. Apart from this, you have to make sure you either upload a copy of the video or inventory list to a cloud storage account, a trusted family member or friend or put a copy of all in a safety deposit box in any other place. At dawn 2019, you can obtain a reduction equal to 66% of the amounts paid, up to a limit of 20% of taxable income. But what if the donations exceed 20% taxable? Do not panic! The tax authorities carry the surplus over the next five years. The excess, therefore, gives rise to tax reductions Tax exemption in real estate for you If you want to spend money in real estate and rent it, you can opt for the Pinel plan . You can just as easily get the benefits of the Pinel law by investing in the old as in the new. Indeed, investing in new has the advantage of having a quick rental. You can indeed rent the property, and get tax reductions on the rents received by your tenants. Investing in the old one and obtaining the Pinel advantages will require renovating the accommodation before being able to rent it out. Some of the frequently asked Question If I am Living in USA then How to file us income tax return online Indeed, it is necessary that the housing is new or is already new to purchase to be able to rent under the Pinel regime. you then get a reduction of: 12% for rentals committed for six years 21% for rentals committed for 12 years However, you will need to rent your property as a main residence to the occupants. In addition, rentals are made according to the income threshold of your tenants. This threshold changes depending on the area in which you live. Indeed, zones A, B1, and B2 govern these ceilings as well as the composition of the household (children and dependents, parents). You can view this threshold in our article: " the purchase or rental of an apartment: is it possible to pay less tax?" Declare your energy transition work CITE: a Tax credit for the energy transition If you are about to do some work, you might as well do some green work! The government thanks you for this initiative by providing a tax credit. Your work will, therefore, be as good for your wallet as for the environment. The energy transition works are eligible for a called CITE tax credit (tax credit for energy transition). The future owners feared the abolition of this credit at the dawn of 2019. Indeed this tax credit was to end on December 31, 2018, but there is an extension thanks to the 2019 finance law. This extension was maintained until 2020. You can indeed do work to make thermal and acoustic insulation for:
There are three tax credit rates:
These credits have an overall ceiling of € 8,000 for a single person and € 16,000 for a couple in common taxation (married couple, PACS). In addition, this ceiling is increased by € 400 per dependent. These rates apply over a period of 5 consecutive years.
Do you know that more than 10 million US citizens living abroad? Due to this, the income tax implications of US citizenship can be both times consuming and challenging, due to the complexities of the rules and the lack of professional help in many parts of the world.
Foreign income is the income earned anywhere in the world. The US Internal Revenue service uses it to determine taxable income for both US Citizens and non-US residents. All US Citizens and resident aliens have to report their worldwide income even if they work and live abroad.
New Yorkers pay the steepest state demands: $2,249 per capita in state singular income taxes, as indicated by the Tax Foundation. Seven states don't have singular income taxes on their residents. Considering moving? Try not to put together your choice completely with respect to salary charges. States get income from saddling property, merchandise and that's only the tip of the iceberg. Start spreading the news: New Yorkers are coughing up the most cash in state income taxes. [ Read: Reduce Your US Tax Liability With These Tips ] The Empire State collected $2,249 per capita in individual state income taxes during the 2017 fiscal year, according to data from the Tax Foundation. Connecticut was second, at $2,218, followed by Massachusetts' $2,146. In all, seven states don't tax individual income: Alaska, Florida, Nevada, South Dakota, Texas, Washington state and Wyoming. Tennessee and New Hampshire don't tax wages, but they do so on income from interest and dividends. See below for a map of where your state ranks with respect to income tax, according to data from the Tax Foundation. Income taxes make a significant contribution to states' coffers. Nearly 40 percent of state tax collections come from levies on your wages, according to the foundation. If you're thinking of fleeing to a place with a lower or no income tax, remember that states need to get their revenue from somewhere. "There are other taxes that matter, including sales and property taxes," said Katherine Loughead, policy analyst at the foundation. [ READ: Expat Guide 2018-19 For Us Residents Living Abroad ] "The state estate tax can factor in for a lot of people as to whether they'll be taxed at high rates if they pass their estate along to their heirs." Here's an example: New Hampshire won't levy your wages, yet the Granite State imposes some of the highest state and local property taxes per ca pita — $3,115, the Tax Foundation found. Further, some localities have their own income levies. This means that while the state you move to matters, so does the city or town in which you work or reside. "Local taxes can really depend on whether you live in an urban environment versus rural," said Loughead. Source : CNBC NEWS Does a US Expat have to pay U.S. income taxes? Every person who has income from U.S. sources need to pay U.S. income taxes. There is a huge over-payment of US federal tax for non-residents who do not file. Also, if you do not have any tax liability, then you might be questioning what will happen if you do not file a return. We want to tell you that the IRS (Internal Revenue Service) will not impose any penalties if no tax is due. But, the terms of your visa need you to obey with all laws of the US, including the requirement to file an income tax return. Every nonresident individual on an F, J, M, or Q visa has to file Form 8843. If the person does not have to file a federal tax return but is a nonresident alien on an F, J, M, or Q visa, the person and his dependents on an F, J, M, or Q visa each have to send Form 8843 to the IRS. The person does not need a social security identification number (SSN) to do so. What Documents You Need To Prepare And File Your Federal Income Tax Return: Passport and I-20 or DS-2019 or other visa status form if applicable
How is the tax obligation of U.S. Green card Holder determined? A Non-resident is taxed only on income from U.S. sources, including compensation for services performed in the Country irrespective of the location or currency of the payment. Income effectively connected to a U.S. business or trade, payment for services, and the taxable portion of fellowships and scholarships are taxed at graduated rates using married-filing-separately" or "single" rates. Most of the green card holders are limited to one personal exemption, and the amount of this exemption varies every year. Read Also: Reduce Your US Tax Liability With These Tips You can only claim certain itemized deductions instead of the standard deduction. You may be eligible for tax treaty advantages that may reduce or eliminate your tax obligation. Some types of income may also be exempt under Internal Revenue Code provisions. When and Where to File Your Income Tax Return If a non-resident receives salaries subject to US tax withholding, then the due date for filing the tax return is April 15 of the following year. The due date is the next workday if April 15 falls on a weekend. In case you do not receive taxable wages during the year, then the due date for filing your tax return is June 15 of the following year. Your Form 1040NR or Form 1040NR-EZ must be sent to the Department of the Treasury, Internal Revenue Service, and Austin TX 73301. We recommend you hire a professional tax return preparer if your tax situation is complex. Read Also : Guide for US Income Tax Before providing you some tips on how to reduce US tax liability, I have mentioned a few very common questions asked by US Expats below. Do I Need To File US Taxes While Living Abroad? Yes, you have to! US residents and green card holders have to file and pay US taxes regardless of where they live and work. Can We Stop Of Having To File US Taxes? There is only one way to stop filing US Tax for US Citizens Living Abroad is to expatriate, giving up your US nationality or green card. Do I Have To Pay Taxes Only On Income From The US, Or Overseas Income Too? You have to pay taxes on both your national income and overseas income. But there is some exclusion available and we have discussed them later in the post. US Filing Requirements For Expats Expats, who earn more than 10,000 USD, or just 400 USD of self-employment income, have to file a US return. They can reduce their tax amount as some exclusion available.
To pick it, you must file Form 1116. Many expats are eligible for the foreign tax credit as well as the foreign earned income exclusion, but if you can also claim the child tax credit, picking the foreign tax credit over the exclusion will yield you better savings on your tax liability.
If the person is self-employed instead of employed, he can claim the Foreign Housing Deduction, instead of Exclusion. Keep in mind that for both The Foreign Housing Exclusion and Deduction claimed on Form 2555. Related Post: 5 Best Things You Need to Know About US Expat Taxes How Much Taxes do the American Celebrities Pay? US citizens and permanent residents are obligatory to file expatriate tax returns with the federal government no matter where they reside. Also, many people are required to submit a return disclosing assets along with the typical tax return for income, which is held in overseas bank accounts by using FinCEN Form 114 (FBAR). The US is among only a few governments who tax global income earned by their inhabitants, as well as permanent residents who are living abroad. Also, it does have special provisions to help protect them from double taxation including: New Zealand Income Tax Rates The tax rates from the Inland Revenue Department (IRD) are liberal for all income taxable by the New Zealand tax authorities. Earnings in New Zealand Dollar (NZD) 0-14,000 NZD 14,001 – 48,000 NZD 48,001 – 70,000 NZD 70,000 and above National Income Tax Rate (%) 10.5% 17.5% 30% 33% The overseas earned income exclusion lets you minimize your taxable income on US expat taxes by the first $103,900 in 2018 received as a result of your labors while a resident of a foreign country $105,900 in 2019. The overseas tax credit, which lets you, offset the taxes you paid in your living nation with your US expat taxes dollar for dollar. Also, international housing exclusion lets you exclude certain household expenses that happen as a result of living abroad. If you are Living In any other country for instance suppose in New Zealand, you have understand US Tax Returns When Living Abroad. Non-resident tax cover-up is a rate of 15%, which can be cut because of the double taxation agreement of US with New Zealand. The New Zealand tax rate is similar to that of the US. You no need to worry about paying high US expat taxes (Depending on your income level) because of low taxes. But, the yearly tax year is different in the country of New Zealand than the tax year in US. In New Zealand, it starts on the 1st of April while ends on the 31st of March. So, income has to be modified in the right way on your US tax return, even when you are filing New Zealand taxes in their tax year. Keep in mind that you have to submit tax before the 7th of July. Most income gets taxed, but you have fill tax returns unless you have under NZD 200 not taxed when earned. Besides, submit a return if there are any interest on fixed deposits dividends, interest you got on bonds or other income from employment. Payments for taxes are submitted in 3 installments -1) the 28th of August, 2) the 15th of Jan, 3) The 7th of May. Thousands of Americans move to another country every year. From strong-willed students who want to get work experiences to professionals relocating abroad to get better opportunities to people who want o retired abroad, being an American expat knows no boundaries when it comes to interests and ages. But many expats are not covered under a health plan. For those people, an international health plan must be purchased. Living an expat life is not like any other type of travel and you’re not on a holiday trip from your regular life to see or experience something new and interesting. This is, in fact, your new daily life, which will surely need new health insurance abroad. US Citizens Living Abroad Expat Taxes are eligible to take a medical deduction if the medical expenses exceed 7.5% of Adjusted Gross Income. Expat Health Insurance Vs Normal Travel Insurance Travel insurance is specifically designed for international travellers who temporarily visiting another country. Health plans typically offer things like belongings cover, trip cancellation and many other details which aren’t pertinent to someone who is moving permanently to another country. On the other hand, expatriate health insurance is precisely designed to provide coverage for the same range of medical treatments that you would have in your home country. Besides it also gives you access to private hospitals, prescription medications as well as emergency medical help for the entire time you’re living abroad. Health Coverage Can Be Cheaper Than the US Often Health Plans for US Citizens Living Abroad lower than health coverage at home. The premiums are less expensive as the claims are less expensive outside of the United States. In the U.S., a doctor's visit will cost you around $150 on average but a doctor’s visit about $50 to $60 in Mexico. Additionally, a private hospital room is $300 in South America; it's much less than the US. So, you could save thousands on your health insurance plan. Some expats want the choice of being able to find medical care in the United States while others don't. Expat policies allow you to include or exclude U.S. coverage. But, if you go for exclusion than premiums can be lower. “Free” Healthcare, Be careful Nations with socialized medical care are every so often spoken of as having “free” healthcare. But, do you know that the costs of healthcare insurance in these nations are robotically built into the expenses of everyday life for their inhabitants. This includes taxation on goods and services and necessary payroll deductions. Expat healthcare, in many cases, is excluded from these “FREE” advantages. Just say expats are not rational people so have not contributed to healthcare costs. But many countries have provisions to treat all people who visit hospital no matter what nationality, ability to pay or ethnic group, this is no standby for expat health insurance. Being an international citizen can be a great experience, but it comes with potential hitches as well. Your health care should not be one of those concerns. You can choose from many plan options, tailor your length and area of coverage and pick from multiple deductibles as well as modes of payment. |
Archives
June 2019
Categories |