American Citizens Abroad Town Hall Meeting May 6, 2015 Stuart - - PowerPoint PPT Presentation

American Citizens Abroad Town Hall Meeting

May 6, 2015

Stuart Hearn

Enrolled Agent

Agenda

• Some helpful tips (hopefully) and common

mistakes made in preparing U.S. individual taxes.

• A few 2015 updates.

Some helpful tips (hopefully) …

• Form 8938 Statement of Specified Foreign

Financial Accounts (the IRS’s FBAR copycat…with a few additions!)

– Required if living outside U.S. and value of

Specified Foreign Assets:

> $200k Y/E balance or > $300k max – S, HoH, & MFS > $400k Y/E balance or > $600k max –MFJ

– Required if living in U.S. and value of Specified

Foreign Assets:

Some helpful tips (hopefully) …

• Form 8938…what are Specified Foreign

Assets?

– Everything you report on your FBARs:

• Maximum balances of all non-U.S. bank accounts
• 2nd Pillar Year-end balance (if indeed best est. of max)
• 3rd Pillar Year-end balance (if indeed best est. of max)
• Cash surrender value of non-U.S. life insurance policies

– All that precious metal you have in a safe deposit

box or hidden under your bed (does not include personal jewellery);

Some helpful tips (hopefully) …

• Reporting Retirement Distributions:

– Social Security (Swiss and U.S.);

• Taxable amount depends on filing status and other

income

• Foreign tax credit available against Swiss social security
• n U.S. tax return
• 2/3 of 85% of U.S. social security taxable on Swiss tax

return (per treaty)

– 2nd and 3rd Pillar;

• Lump sum distributions not reported on Swiss taxes –

amounts taxed separately at beneficial rates

Some helpful tips (hopefully) …

• Filing Deadlines, Penalties, & Interest:

– US taxes

• Due date is 3 months and 15 days after the close of fiscal
• year. Interest is due if any tax due past this date
• Automatic 2-month for U.S. persons living abroad. Also

an extension of time to pay

• Other extensions requested using forms 4868/2350. Late

payment penalties (0.5% per month of any unpaid tax, up to maximum of 25%) will apply

• Late filing penalty 5% per month up to maximum of 25%
• Other accuracy-related penalties can apply

Common mistakes made in preparing U.S individual taxes

• Gross income from employment:

– Gross income before the deduction of pension

(LPP) and social tax (AVS) must be declared as wages on your U.S. taxes.

– In addition, the amount your employer

contributes to your pension fund should also be included in income!

Common mistakes made in preparing U.S individual taxes

• Foreign Tax Credits

– Credit can only be taken on taxes paid on

income to a foreign jurisdiction. Wealth taxes cannot be credited (but may be deducted on schedule A).

– Credit can be claimed on either the paid or

accrued basis (even as a cash-basis taxpayer).

– A foreign tax credit cannot be taken for any

income excluded under the foreign earned income exclusion.

Common mistakes made in preparing U.S individual taxes

• Filing Status

– If you are married you can no longer file U.S.

taxes using the filing status ‘Single’. This is the case even if your spouse is not a U.S. person and as of tax year 2013 for same-sex spouses.

– If married you can file ‘Married Filing

Separately’ (MFS), ‘Married Filing Jointly’ (MFJ) or ‘Head of Household‘ (HoH) if your spouse is not a U.S. person and you have a U.S. dependent allowing you to qualify as HoH.

Common mistakes made in preparing U.S individual taxes

• Tax calculation

– Tax tables are always used, but in some cases

must be used in conjunction with other worksheets.

– ‘Foreign Earned Income Tax Worksheet’ must

be used if you are claiming the Foreign Earned Income Exclusion.

– If you have qualifying dividends or long term

capital gains to report, the ‘Qualified Dividends and Capital Gain Tax Worksheet’ will need to be completed.

A few 2015 updates

• 2015 Foreign Earned Income Exclusion

– $100,800 (first time to hit six figures!!!!)

• 2015 Foreign Housing Exclusion

– Geneva: $95,200 - $16,128 = $79,072 (maximum

deduction)

– Bern: $66,200 - $16,128 = $50,072 (maximum

deduction)

– Zurich: $39,219 - $16,128 = $23,091 (maximum

deduction)

A few 2015 updates

• Net Investment Income Tax (NIIT) of 3.8% –

no change from 2014

– Kicks in MAGI > $250,000 MJF – Kicks in MAGI > $200,000 S & HoH – Kicks in MAGI > $125,000 MFS

Questions?

TaxPro Sàrl Avenue de-Luserna 40 1203 Geneva www.tax-pro.ch

• Tel. +41.22.304.1690

shearn@tax-pro.ch