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Love Stole the Day posted:Question: Report your bank account on TD F 90-22.1 ("FBAR") available here: http://www.irs.gov/pub/irs-pdf/f90221.pdf Due June 30. File directly with Treasury, not with your taxes. You are taxable by the US on your worldwide income as a US citizen, it does not matter if you paid Korean taxes. You do get a credit against your US taxes for Korean tax (presuming its an income tax), and you probably qualify for the foreign earned income exclusion. Your investment income will be taxable in the US and you should file a 1040 to report the income (presuming there have been realization events, if your stock just went up without any sale, it is not income). If the account is foreign, you should report it on the FBAR as well as your bank account.
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Mar 19, 2013 02:18
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Backweb posted:I have a question for any qualified goons who may want to take a stab at murky international tax-exemption laws involving a country that semi-officially exists. What kind of income did she receive? I'm presuming the code in box one was 16-19. The US-China treaty exempts income in compensation for research (article 19), subject to some rules. Your GF will qualify for the benefits of the Treaty if she is subject to tax in the PRC. I don't believe citizens of Taiwan are subject to tax in the PRC. I don't think she is entitled to an exemption under the US-PRC treaty. If she is, she would file a 1040NR and claim a refund on the withheld income.
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Mar 19, 2013 02:41
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Love Stole the Day posted:The 1040 asks me for W-2 forms and excluded taxes and whatnot on my income. Because I live in South Korea, I have no idea what to do about this at all because that's a US Employer thing. Sorry, I should have been clearer; you will need to file a 1040 (or 1040EZ etc.) this year. Attach your form 2555-EZ to your 1040. I believe you enter your income from the Korean job in wages on line 7, then subtract the exclusion on line 21, but I don't prepare 1040s and once things get into the nitty gritty of specific lines, etc. I'm just reading the instructions like everyone else. This IRS publication is a good source for any other questions you may have: http://www.irs.gov/pub/irs-pdf/p54.pdf. It sounds like there were no realization events on your investments, but check the paperwork from your account; if it was a US fund, they should send you a 1099 showing any income that would need to be reported. If the fund is foreign, things get a little more complicated, especially if its a PFIC or something. You might want to check with an actual accountant if that's the case (or just in general, as I am but a dude on the internet).
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Apr 7, 2013 17:24
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shodanjr_gr posted:I'm self-quoting since the thread seems to be getting a bit of activity from the resident tax geniuses. I've had a long chat with the IRS on the phone and the lady seemed to agree with me. However, there's this one dude who posts on another tax advice forum online and adamantly holds the opinion that since I am a student, even though I am employeed, I can not establish a tax home (contrarily to what the IRS sites above). I agree with the IRS lady, I think you have established a tax home at the place where you regularly work as an RA; you should be able to deduct deductible travel expenses related to your temporary employment elsewhere. The guy in the other forum is correct that merely being a student does not establish a tax home, but working certainly does. Again, take this with a grain of salt, I have literally never looked at this issue before your post and my research consisted of reading the (really good) article you linked.
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Apr 10, 2013 03:14
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Mandalay posted:Are you supposed to indicate anywhere on the 1040 that you're a nonresident alien living in the US on a work visa? I didn't see any check boxes. Well, if your living in the US on a work visa you're probably a resident alien, not a nonresident. Here's a useful publication: http://www.irs.gov/taxtopics/tc851.html. If you really are non-resident, you would file 1040NR (but you're probably not). If you have a work visa, you should qualify to get a SSN, just visit your local social security office: http://www.ssa.gov/pubs/EN-05-10096.pdf.
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Apr 19, 2013 01:00
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grumbster posted:My wife is filing her 1040 and since I am currently a "non-legal alien spouse" (my green card app is being processed), do I have to file for an ITIN? Yeah, sounds like you're good (unless you need to file yourself). BTW applying for ITINs has become a tremendous pain in the rear end, I've had several client's applications denied because the IRS doesn't understand its own rules and won't accept a certified copy of a passport because it doesn't look the way they expect it to (seals, color, etc.). It's completely absurd to expect people to mail their passports to the IRS for months at a time (or use an acceptance agent, although I'm not sure how viable an option this is in most places).
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Apr 27, 2013 00:32
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Xibanya posted:I have a bizarre situation, but one that might come back to bite me in the rear end. Um, unless your friends are snitches who would call the IRS on you, you can probably tell them. OTOH, as a fine, upstanding citizen you should amend your tax return and report the income: if you were abroad from 2007-2012, you probably qualify for the foreign earned income exclusion and would not have to pay tax on the income anyway. Read about it here: http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Requirements I kinda doubt you're going to get audited on a simple one W-2 $6,000 return, but what do I know.
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May 10, 2013 00:00
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You are way overthinking this; is the problem that you owe tax in April? Don't take any exemptions. Is your refund to big? Take more. There's a calculator online: http://apps.irs.gov/app/withholdingcalculator/
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Jul 20, 2013 03:15
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You're probably going to need some help in navigating this process; I don't practice in tax controversy, but if you qualify, there are many low income tax programs that can help. Generally, a settlement of a disputed debt does not result in COD income; however, if the amount and liability was agreed on, then COD income could result when a settlement was reached. As a guarantor, I am surprised that the 1099-C was issued to you, generally guarantors do not realize income on the forgiveness of debt. You should talk to a tax professional who has experience representing taxpayers before the IRS.
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Jul 28, 2013 04:20
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Well, depends how far you want to go; an enrolled agent or CPA can represent you before the IRS, but not in court (unless they've taken the test and are admitted to the tax court), a tax attorney can file with the tax court or in federal court if your administrative appeal does not work out. If you don't make a lot of money, check out http://www.irs.gov/uac/Low-Income-Taxpayer-Clinics. If you don't qualify, look for someone who has experience in tax controversy. Sorry I can't be more specific, my experience in this area was at a tax clinic as a law student. I know many accounting firms and law firms do this kind of work. What stage are you at? Have you received a notice of deficiency or just a letter with a proposed adjustment? Are you in contact with an IRS agent? It's possible you could explain to the agent what happened and they might remove the deficiency. There should be a number to call on the letter you received. You could also ask for help from the taxpayer advocate's office if you are not getting anywhere after explaining the situation. http://www.irs.gov/uac/Contact-Your-Advocate!.
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Jul 28, 2013 16:48
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The standard is "ordinary and necessary" but case law bears out that that phrase doesn't mean what it sounds like it means. With degrees/certifications, the essential point is whether it qualifies you for a new career, our enhances your current career. For instance a law degree is not deductible, but an MBA is (they made sure to teach this case early to keep us from getting ideas).
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Jul 31, 2013 01:16
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That said, annual gifts of $14k (or whatever the annual gift tax exclusion is each year) are a common estate planning technique used to preserve the lifetime unified exemption.
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Oct 17, 2013 00:44
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Capital gains are sourced where the recipient lives (except real estate cause of FIRPTA). No withholding should be due. You would provide your payors with form W-8BEN and claim the benefits of the US-AUS tax treaty for reduced withholding on dividends and interest. Looking at the treaty, dividends should be subject to 15% withholding and interest to 10%. Still better than 30%. You should not be required to file a US tax return unless you invest in a passthrough entity (such as a partnership) earning business income in the US. edit: forgot to mention: some interest payments would qualify as portfolio interest and would not be subject to withholding, ditto to bank interest. PatMarshall fucked around with this message at 03:59 on Jan 7, 2014 |
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Jan 7, 2014 03:54
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a slime posted:Hey, I a question about the Foreign Earned Income Exclusion Credit and whether or not it will apply to me next year. I am employed and live in Switzerland and have been for the past five years. However, this summer I will spend 12 weeks working an internship in the US at a US company. Then I will return to my job here. Well you arguably maintained your bona fide foreign residence for the entire tax year, despite being in the US for twelve weeks (you also arguably did not). There are some cases that would support your position: (from Postlewaite, INTERNATIONAL TAXATION: CORPORATE AND INDIVIDUAL, Para. 3.04, FN 62) quote:See G.L. Walker, 16 TCM 171, Dec. 22,283(M), TC Memo. 1957-40 (six-and-one-half-month United States stay acceptable); F.F. Hack, 33 TC 1089, Dec. 24,112 (1960) acq. (four-month stay acceptable; taxpayer had been in Peru previously for ten consecutive years). In M.A. Carpenter, CA-5, 74-1 ustc ¶9473, 495 F2d 175 (1974), the court compared factual situations that had previously been considered by the Tax Court in L. Larsen, 23 TC 599, Dec. 20,801 (1955) acq. and in R.A. Henningsen, 26 TC 528, Dec. 21,785 (1956) acq., aff’d, CA-5, 57-1 ustc ¶9637, 243 F2d 954 (1957). The Fifth Circuit considered Larsen's six-week return to the United States as a fact in favor of finding continued foreign residence while regarding Henningsen's two-year United States stay as negative. The court declined, however, to be more specific in determining what length of return visits would be acceptable, saying: "Such an approach would logically require the creation of a presumption of residence in the United States after passage of some specified period of time, a Draconian measure we are unwilling to adopt." See also Rev. Rul. 73-492, 1973-2 CB 291 (13-month domestic stay unacceptable). The key would be to show that your bona fide residence was in Switzerland throughout the year (i.e. your home, family, possessions, papers, friends, activities, etc.) and that the trip to the U.S. was temporary in intention and fact. That said, if you do not qualify for the exclusion, you may take a dollar for dollar credit against U.S. tax for income taxes paid in Switzerland on foreign source income. I should caveat this information with the fact that I do not really encounter the Foreign Earned Income Exclusion in my practice and this is all the result of 15 minutes of research.
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Jan 18, 2014 02:30
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Tim Whatley posted:Sorry if this has been asked. I received two W2s this year because I switched jobs in July. On top of this, I bought a LLC just to have in December 2012. (There has been no money involved anywhere with it besides when I purchased it) Now that it's been over a year, do I need to do anything with it when filing my taxes? New Hampshire, if that matters. NH may want you to do something, but from a federal perspective (if you have not made a check-the-box election and you are the sole owner of the LLC) your LLC is a disregarded entity and there are no special filing requirements. If there were no expenses or income, then there would be nothing to report. You say you purchased the LLC, did you buy a business? Property? Or do you just mean the filing fee?
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Jan 22, 2014 04:13
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If you file jointly, your wife will be treated as a US resident for tax purposes and you would both (theoretically) be subject to US tax on all of your joint income, regardless of where it was earned. You would be able to take a credit, however, for Canadian taxes paid on foreign source income (or the foreign earned income exemption). The EITC would be calculated MFJ using your joint income. She would need to file a W-7 with your return and obtain an ITIN, unless she is eligible for a SSN. Unfortunately, the W-7 is kind of a pain in the rear end; I routinely see them rejected for nonsense reasons, and have had to reapply three or more times for some clients. You have to include your passport or a copy certified by the issuing agency with the application, and the Service rejects a lot of applications with certified copies. My advice is to get several certified copies made at once in case you need to reapply. Another option would be to use an acceptance agent, I believe most of the big four offices are acceptance agents. You could also apply in person at the US Embassy, but only in Frankfurt, Paris, Beijing, or London. Good luck.
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Feb 5, 2014 02:42
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londonmoose posted:edit: I originally posted here knowing almost nothing about the US tax return process, but I've done a fair bit more reading and now I think I know enough to get started. I've rewritten my original post to reflect this. 1. There are free fillable forms on the IRS website that you may use to e-file if you do not want to pay someone to prepare for you. http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free. Otherwise, I think the efile services are all more or less the same. Another option would be an actual accountant. 2. No; probably not, unless she managed to earn income sourced in a state that requires non-residents to file. Why is this her first year filing? Is this her first job? 3. 1040 is the correct form. 2555 for the FEIE. If she needs to take tax credits for taxes paid in the UK, she will need form 1116. Whether she will need any other schedules will depend on her deductions/credits. Read the instructions to the 1040. 4. Use the calendar year. The UK information will need to be adjusted to a calendar year basis. 5. I'm pretty sure that thread is abandoned. I'll repost one of my posts from that thread, as the information will also apply to your girlfriend: quote:Well, from the U.S. side, its essentially the same. You are probably a tax resident of the U.K., but even if you're tax resident in another E.U. country the requirements don't really change. For 2013, you may exclude up to $97,600 of wages under the foreign earned income exclusion. If you earn more, you will probably qualify for credits against U.S. tax for taxes paid in the U.K. or in your country of tax residence. You may also qualify for certain housing cost exclusions or deductions.
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Feb 11, 2014 01:43
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devoir posted:Zeta Taskforce suggested I seek assistance in this thread. I assume you are a US resident for tax purposes (do you have a green card? have you been in the US for more than 183 days in 2013?). If so, you would pay taxes and file exactly as if you were a US citizen. Did your former Australian employer withhold US taxes and provide you with a W-2? (Please say yes, life gets a lot less fun if the answer is no). File 1040 (or A or EZ, depending). If you didn't make a lot of money you can use one of the free file services listed on the IRS website. Your savings in Australia may give rise to an obligation to include form 8938 with your return and file a FinCEN form 114 by June 30 to report any foreign bank or financial accounts over $10,000. As far as bringing it into the US, I don't see any issues, other than maybe a currency gain, but I'd have to do some actual research to answer that question  Multiple streams of income shouldn't matter, just report based on 1099s or W-2s received. If the income is from outside the US and you did not receive any US tax forms, things get more complicated; hopefully that's not the case. As for Oregon tax filings, I'll defer to my colleagues who may know more.
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Feb 15, 2014 01:47
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Yeah, you need an accountant. You're a US resident, probably from March. When you were being paid from Australia, were you providing services from the US or Aus? If it was from the US, the income would likely be US source, and Australian taxes should not have been withheld unless you were still an Australian resident at the time. You might need to file a dual resident return (part US resident, part Australian) or file for a refund from Australia. You can only take tax credits for taxes paid to Australia if you have non-US source income. You would need to report all of your income earned while you where a US resident and pay US tax on it at graduated rates. For your 1099 income, you may deduct business expenses (if any). Posters who actually prepare 1040s could tell you more.
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Feb 15, 2014 02:33
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I'll try to explain the US international tax system, as convoluted as it is: The US taxes its citizens and residents on their worldwide income, but allows a credit for income taxes paid to other countries on income earned in those countries to avoid double tax. The basic model is that the source country gets first crack at the income, but the US reserves the residual right to tax. For instance, say you earn $100 for work you performed in France, France assesses a $30 tax on this income. The US would assess a $40 tax on this income, but allows you to take a credit for the French taxes you paid. You would file a US return and pay $10 of tax to the US. You are no better or worse off than someone who earned $100 in the US and paid $40 of US tax. Now, what if France has a higher tax? Suppose you paid $50 of tax to France, you would not be allowed a $50 credit against US taxes, only $40, the amount the US would have taxed. You now pay no tax to the US, but are worse off than if you had earned the income in the US. On the other hand, you are no worse off than others earning income in France. The theory is that the US should not subsidize another country's treasury by allowing credits in excess of the tax the US would have charged. Problems arise, however, when countries disagree on the source of income. Say that France imposes the $30 tax as before, but for work you performed for a French company from the US. The US would not allow any credit because for US tax purposes you have not earned any foreign source income. The services were all performed in the US and are therefore US source. You would owe US taxes on all of the income, for total French and US taxes of $70. You are now clearly worse off than either French persons or persons earning income only in the US who do not pay French tax. Thankfully, this rarely happens; France would agree that the income was US source and would refund the $30 you paid to France. I believe this is your situation, you had taxes withheld in Australia for income that was actually US source (compensation for services is sourced to the location the services were performed, regardless of the residence of the employer or employee). If you were still an Australian resident at the time, then this would be appropriate: Australia would be the residual tax country and the US would be the source country. You would file a return in Australia and claim a credit for taxes paid on this income in the US. In the US, you would file a dual resident return, filing as a non-resident for the first part of the year when you were an Australian resident, and as a resident of the US for the second part of the year. So in this situation you pay taxes first to the US, and claim a credit and refund from Australia. The other possible situation is that you were a US resident when you were paid from Australia and Australian taxes were withheld. If this is the case, you would file as a US resident for the entire year and would claim a refund of all the taxes withheld from Australia as you would not owe any taxes to Australia for US source income you earned while you were not a resident of Australia. Sorry for all the words, hopefully this makes the situation somewhat clearer.
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Feb 15, 2014 20:15
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Not really. I guess it could have gift tax implications to your parents if it is more than $15k or so a year and the IRS takes the position that the loans are really gifts, but that doesn't seem too likely. Formalizing a loan is primarily about legal protection, not tax. Neither loans nor gifts are (generally) income to you.
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Apr 1, 2014 01:48
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ThirdPartyView posted:Wouldn't the rebuttable presumption under Section 7872 be that if you're lending under the AFR rate, it's a gift loan and the difference between the below-market rate and AFR rate is treated as both (constructively OID) interest income received on the difference and then a gift by the lender/donor for that same amount? I mean, so long as the IRS isn't aware about the loan the parents would be OK, but if the IRS finds out, they'll be screwed. So, wouldn't the proper advice be that Massasoit should, technically, be paying the AFR rate (tables showing such rates as recognized by the IRS can be found here - they use semiannual compounding as of the date that the loan was made to compare to the loan rate in the agreement) and that a formal agreement should exist in case the IRS comes and claims it's a gift loan rather than an arms-length loan? Even if the IRS audited (and why would they?) it's unlikely there would be any real negative consequences to treating the interest (or even the entire loan, depending on the amount) as a gift. You can give up to $14,000 (each, so a married couple can give $28,000) without impacting your unified exemption (which is currently $5.34 million). But hey, if you want to pay your parents interest, go right ahead. I still don't see any need to pay a lawyer to draft a note.
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Apr 2, 2014 03:27
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Love Stole the Day posted:Questions from my girlfriend about foreign income exclusion stuff: 1) As a US citizen, your girlfriend is required to file a US tax return each year she is over the filing threshold. If sh's making $2300 a month, she is likely required to file. 2) If you are living abroad, you do indeed have until June 16th to file a return or extension. 3) She will probably qualify for the foreign earned income exclusion, which would be the simplest way to go. Read this for more information on the requirements. She would file form 2555 or 2555-EZ to take the exclusion. 4) Is she married? If not, she will only need to file Form 8938 if the total value of her foreign financial assets is more than $200k on the last day of the year or more than $300k at anytime during the year. If she is married filing jointly, those figures are doubled (but would include husband's assets). 5) She most likely will, however, need to file an FBAR by June 30. The FBAR (now known as FinCEN 114) must be filed online, here. 6) Form 1116 is only required if she will be taking foreign tax credits for income taxes paid to another country. If all of her income will be excluded under the foreign earned income exclusion, this will not be necessary. 7) If she has a foreign bank account, she will need to complete Part III of Schedule B.
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Apr 11, 2014 00:58
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SoUr posted:I need help understanding how my US taxes are going to work now that I'm a UK tax resident; I've been trying to read about this online, but it's getting close to making my head explode. Just as a general matter,IRS Publication 54 is a good resource for persons in your position. 1) Income earned in excess of the foreign earned income exclusion is subject to US tax at regular rates. You may, however, take a foreign tax credit for income taxes paid to the UK on income earned over the exclusion (i.e. you CANNOT take a foreign tax credit for taxes paid to the UK on earnings which have been excluded). 2) The housing exclusion makes my head hurt. I'm not calculating it for free on the internet, but Pub 54 lays out how it works. Basically, you can exclude your housing expenses up to a limit based on your location (up to $88,200 for London), less a base amount ($15,616 for a full year). Check Form 2555 for more information. 3) You can do it this way if you want, or take the exclusion plus credits for taxes paid on amounts that were not excluded.
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Apr 12, 2014 01:24
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Xandu posted:Your tax bracket is defined based on overall income, even if you're only paying taxes on part of it. You may also need to file Form 8938 to report your stock, depending on the value. Form 8938 is attached to your income tax return.
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Apr 16, 2014 02:06
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A single member LLC is disregarded for U.S. federal income tax purposes. It's no different from a tax perspective than doing business directly (but a much better idea from a legal point of view, of course). Who will own the art? If you will own the art after the Irish artist has completed their work, then you are paying for services, which are generally foreign source when performed overseas. Consequently, you will not be required to withhold. I would still have the Irish artist give you a W-8BEN, however, so you can prove to the IRS that you were not required to issue a 1099/make backup withholding. If the artist will own the work, then you are likely licensing the right to use the art (at least partially) in the U.S., and your payments will be royalties, which are sourced to the place of use, i.e. the U.S. In that case you would need to withhold at 30% unless there is a tax treaty provision that would hold otherwise. Looking at the U.S.-Ireland tax treaty, it appears there is, and no withholding would be due. To claim this treaty benefit, the Irish artist will need to give you a W-8BEN, complete part II claiming Irish treaty benefits, and sign in Part III. They would also normally need to obtain a U.S. tax ID number (ITIN). However, with the latest FATCA regulations, the IRS changed the rule to allow certain persons to claim treaty benefits using their foreign tax ID number. Your Irish artist should qualify and could provide you a W-8BEN including their Irish tax ID numbers and claim zero withholding on US source royalties.
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Jun 17, 2014 00:16
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Bifauxnen posted:PatMarshall, I've seen you post a lot of good stuff about international tax issues. Would you happen to be available to hire? I'm a dual US/Australian citizen and I've been meaning to get my taxes legitimately in order, but I think it's way too much of an unholy mess for a couple quick questions in the thread to cover it. Unfortunately, I am not really in a position to take you on as a client. I am a junior associate at a large accounting firm. I could certainly put you in contact with my firm, but any of the larger firms will also be able to help. I would also note that most large accounting firms tend to be really expensive, you may be better served talking to a local CPA (depending on the complexity of your problem and the experience and practice area of the smaller firm/sole practitioner). If your problem involves substantial unreported income or unreported bank accounts, you would probably be better served retaining an attorney (look for someone practicing tax controversy). poemdexter posted:Percentage of gross receipts from the mobile game he's doing art for specifically, nothing else. Sounds like a royalty, but a partnership is also a possibility (good catch ThirdPartyView). Partnerships can be created unintentionally, and no special documentation is required. If you have formed a partnership, then it is possible that the Irish artist could be considered to be engaged in a trade or business in the U.S. and that their percentage of profits could be attributable to a permanent establishment in the U.S. If so, they would need to file a tax return in the U.S., pay regular U.S. tax on their income, and the partnership would be required to withhold on income allocated or paid to the Irish artist at the highest applicable rate (usually 39.6%). The partnership would also need to file form 8804 to report the withholding, make quarterly payments on form 8813, and provide form 8805 to the Irish artist so they can claim credit for the withholding when they file. I would probably make it clear in the licensing agreement that the payments are royalties based on a percentage of profits, get a W-8BEN claiming Irish treaty benefits, and look into my 1042 filing requirements. I would also probably consult a CPA rather than strangers on the internet before doing anything
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Jun 18, 2014 01:24
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Read this, as it may be something to consider: http://www.irs.gov/uac/Instructions-for-New-Streamlined-Filing-Compliance-Procedures-for-Non-Resident-Non-Filer-US-Taxpayers
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Jun 18, 2014 02:50
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Call the number on the notice and ask them.
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Jul 3, 2014 20:18
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Top capital gains rate is actually 20% now (depending on your income, could be less), plus the 3.8% net investment income tax if you are over the applicable threshold.
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Jul 8, 2014 00:53
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shodanjr_gr posted:Non-resident alien taxation question. No, just file a regular 1040 this year. quote:I don't believe there exists a form to do that and all people that I know just go ahead and file a regular 1040 without other documentation. Is that the right way to do it? My understanding is that I also have to communicate to the HR people at my school that they need to start deducting social security / medicare taxes from my paychecks. Is that correct? Generally, yes. You are a US tax resident and should be paying into SS and medicare, etc. That said, I have no loving idea how visas work, but I think there is an exemption for non-resident students, which would explain why you were not paying these taxes before. quote:e: Does the above scenario place me in a "dual-status alien for taxation purposes" situation? Correct. You are not a dual status alien.
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Oct 23, 2014 01:45
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Gold and a Pager posted:What are the rules for determining foreign tax credits? I live in Europe and got a CPA focusing on expat returns to do my taxes last year and she put down the taxes I paid for social security, state-provided health insurance, unemployment, etc. (all mandatory and determined as a percentage of my salary) as counting towards my foreign tax credit. Kinda depends, taxes for social security, health insurance, etc. could be creditable or could be non-creditable, depending. Stealing from KPMG "The employee portion of foreign social security taxes is generally considered to be foreign income tax available for the credit. Social security taxes are not creditable, however, if paid to a country with which the United States has a social security totalization agreement." Here is the list of totalization agreements: http://www.irs.gov/Individuals/International-Taxpayers/Totalization-Agreements The idea is if there is a totalization agreement, your taxes paid to the foreign country are credited to your US social security.
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Nov 18, 2014 03:25
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You report your income in USD. Use the exchange rate prevailing at the time you received the payment. If you are over the filing limit (see Charts B and C in the 1040 instructions), you need to file, regardless of whether you are claimed as a dependent. Your standard deduction may be reduced as a result. Keep track of your expenses relating to your contract income, as you should be able to deduct them when you file. You will also likely need to pay self employment tax (depending on how much you are earning). You should look into whether you are required to make quarterly payments to avoid penalties for late payment. Your income from your TA position will be reported on the your return for next year since you don't start until January; however, to clarify, you only ever file a single 1040, no matter how many different sources of income you have in any given year. The IRS is a good place to start with this stuff: http://www.irs.gov/Individuals/Self-Employed http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Currency-and-Currency-Exchange-Rates
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Nov 22, 2014 19:20
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Demon Allie posted:I have an international small business tax question. It's unlikely that your partner would bear double taxation as SA would likely grant tax credits for taxes paid in the US (this is an SA tax question, however, and should be checked with an advisor in SA). In addition, the US and SA have a double tax treaty that may apply. If your partner qualifies for benefits and does not have a permanent establishment in the US, then his business income may be exempt from tax. I would advise you both to consult a tax advisor as there are a lot of factors to consider. An offshore structure would likely not be a good choice as it could still be subject to tax in the US, or if it is a pass through would still expose your partner to US taxation.
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Dec 27, 2014 17:07
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Gamesguy posted:If I hire a Chinese national living in China to perform a service on something that physically resides in the US, do I have to withhold taxes and issue a W-2? The IRS says services performed by NRAs in another country are not subject to the federal income tax, but I'm not sure if this counts. For example hiring a foreign webmaster to maintain a website hosted in the US. No, you would not withhold and issue a W2. If the income was US source FDAP you would withhold and issue a 1042S. Services are sourced according to the place the services are performed. If the Chinese individual performs these services in China (i.e., she does not actually come to the US to work) then the services are non-US source and there is no withholding or 1042s required. Note that royalties, for example, are completely different and are sourced according to the place the IP is used, so the character of income in question makes a difference.
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Jul 21, 2015 01:48
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AbbiTheDog posted:And we tax preparers/CPAs don't get attorney/client privileges either, everything we're told is subject to subpoena powers. I've terminated clients because they've told me too much. Well occasionally I've worked under a Kovel letter, but that usually means things have become fairly hosed up (file your FBARs and pay US taxes kids).
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Aug 29, 2015 22:15
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This is all true, but watch out for a few areas with nasty penalties, such as undeclared foreign bank accounts with balances over $10k or ownership of foreign entities or other foreign assets. An accounting firm should be able to help, but if you are comfortable reading the instructions and filing out the forms (assuming no complications) that should be fine. Let us know if you have any general questions about the forms.
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Oct 7, 2015 02:36
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Are you certain China will tax this income? I'd have a quick discussion with the client and check if they would need you to fill out any forms or paperwork to claim the benefits of the US-China tax treaty, which exempts independent personal services income from tax in China where you perform the work outside of China. I'm not a Chinese tax practitioner, but I believe the rules for claiming treaty benefits in China recently changed, read up on Bulletin 60 if you would like to know more, but the client is ultimately responsible for obtaining the appropriate information. If China does not withhold, then you would just report the income on your US return as self employment income and pay tax at your normal rates. If China does withhold, then you may be able to take a foreign tax credit against your US liability on such income. The trouble is that under US rules, income for the provision of services from the US is US source regardless of where the client is located, and you are only allowed foreign tax credits against foreign source income. In addition, as there should be relief available under the treaty, the foreign tax credit may be denied on the grounds that the tax was not compulsory. Given the above, your best bet is to contact the Chinese client and make sure they do not withhold, and supply any documentation they require. Good luck, and let us know how it goes.
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Oct 18, 2015 16:05
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Ramrod Hotshot posted:I'm an independent contractor, and all of my income comes from one client. I used to be an employee of this company. My former boss told me that I can save on my taxes by starting an LLC. Might this be true? What other advantages, if any, might there be for me to start an LLC? An LLC isn't really going to give you any tax advantages, it's principal purpose is liability protection. A single member LLC is typically disregarded for tax purposes.
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Jan 22, 2016 03:20
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lol internet. posted:Question about reporting foreign bank accounts. From the FinCEN 114 Instructions: Certain Accounts Jointly Owned by Spouses. The spouse of an individual who files an FBAR is not required to file a separate FBAR if the following conditions are met: (1) all the financial accounts that the non-filing spouse is required to report are jointly owned with the filing spouse; 2) the filing spouse reports the jointly owned accounts on a timely filed FBAR electronically signed; and (3) the filers have completed and signed Form 114a, “Record of Authorization to Electronically File FBAR’s” (maintained with the filers’ records). Otherwise, both spouses are required to file separate FBARs, and each spouse must report the entire value of the jointly owned accounts. See instructions for specific items, Part III, Items 25-33.
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Feb 7, 2016 17:22
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