us taxes for epats residing outside the us

Prepared by : Anafin Consulting

Date : June 2016

US Taxes for Expats Residing Outside the US

Email: [email protected] © Copyright Anafin Consulting

• This presentation is for individuals who are residing outside

the US and who need to comply with US tax laws.

• This presentation will give you an overview of various tax

provisions which need to be complied with.

Who is this presentation for?

http://www.anafin.net


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Email: [email protected]

This presentation is generic in nature. Every situation is unique and the facts mentioned in this presentation may not be applicable in your situation. So it is always better to check the facts applicable in your case or consult a professional.

© Copyright Anafin Consulting

Disclaimer




You are required to file your US tax returns if :

• You are a US citizen or a resident alien AND

• Your income exceeds the maximum amount chargeable to tax.

At times, even if your income is less than the maximum amount chargeable to tax, you may still be required to file a return if you are claiming certain deductions, credits and exemptions.

Are you required to file your US tax returns?





Who is a US citizen or a resident alien ?

You fall under the definition if you comply with any of the

following

You are a US citizen OR

A Green Card Holder OR

You comply with the substantial presence test





In order to comply with this test, you must be physically present

in the United States for at least

• 31 days during the current calendar year, and

• A total of 183 days during the current year and the 2 preceding

years, counting all the days of physical presence in the current

year, but only 1/3 the number of days of presence in the first

preceding year, and only 1/6 the number of days in the second

preceding year.

What is Substantial Presence Test ?





What is the minimum income chargeable to tax ?

Filing Status Amount

Single 10,300

Married Filing Separately 4,000

Married Filing Jointly 20,600

Head of Household 13,250

Qualified Widower 16,600

The above amounts are different for taxpayers 65 years and older.





If you fall in the above categories, you need to file US tax

returns and disclose your “global” or your “world wide”

income.

Disclosure of Global Income





Is my income subject to double taxation?

The fact that you need to disclose your global income

does not mean that you are subject to double taxation.

You can avail the different provisions in the US tax laws,

tax laws of your country of residence and the Double

Taxation Avoidance Agreement (DTAA) signed between

the two countries which help you to avoid double

taxation.

You need to have a thorough knowledge of the provisions

applicable in your case





What is the deadline to file my taxes ?

June 15, 2016

Normal deadline to file taxes for individuals residing outside

the US.

October 15, 2016

A 2 month extension can be applied for by filling Form 4868

December 15, 2016

Can be applied to the IRS in special circumstances or if you

need time to comply with the bona fide residence test or the

physical presence test.





• Form 1040/ 1040A/ 1040EZ – Individual Income Tax Return

Form

The following forms may required to be attached to Form

1040/1040A/ 1040EZ

• Form 2555 – Foreign Earned Income Exclusion

• Form 1116 – Foreign Tax Credit

• Form 8621 – Foreign Mutual Funds

• Form 8939 – Statement of Specified Foreign Financial Assets

Tax Forms commonly required to be filed





• Form FinCEN ( commonly known as FBAR)

• Form 3520 – Information regarding gifts received from

foreign persons

• Form 5471 – Report Ownership in foreign corporation

Other Forms




What are the different tax provisions which help you to avoid

double taxation ?



Form 2555 – Foreign Earned Income Exclusion

• This form allows you to “exclude” a certain amount from

your taxable income which is “earned” in a “foreign

country”

• Available on salary or business consultancy income up to

$ 100,80 for 2016 “per earning member”

• In order to claim this deduction, you need to satisfy

either the “boa fide residence test” or the “physical

presence test”





Form 1116 – Foreign Tax Credit

• This form allows you to take a credit of taxes paid in a

foreign country on your US tax return

• In order to claim the credit, your income should have

been “taxed” in a foreign country and taxes should have

been paid on that income

• Foreign tax credit can be availed only to the extent of

taxes paid.





Form 8621 – Foreign Mutual Funds

• Investments made by US persons in foreign mutual funds

may be subject to US income taxation as in investment in

PFIC (Passive Foreign Investment Company)

• Tax and reporting requirements of PFIC are very complex.

• Not reporting PFIC in your tax returns could lead to

severe penalties and future complications.





Form 8938 – Statement of Specified Foreign Financial Assets

• You need to fill out this form and send it with the tax

return if you have certain foreign financial assets

exceeding a certain amount.

• Please check the definition of “Foreign Financial Assets”

has been defined by the IRS.

• The amount depends on your filing status and place of

residence.





FBAR – Report of Foreign Bank and Financial Accounts

• You need to file Form FinCEN commonly known as FBAR if

you had any financial interest, signature or other

authority over a bank, securities, or other financial

account in a foreign country.

• This form is to be filed if the aggregate account balance

exceeds $ 10,000 at any time during the tax year.

• The due date for filing this form for the tax year 2015 is

June 30th, 2016. It is to be filed electronically at

http://bsaefiling.fincen.treas.gov/main.html




http://bsaefiling.fincen.treas.gov/main.html


Form 3520 – Receipt of Foreign Gifts

• If you receive gifts from a foreign person exceeding $

100,000 in a year, you need to file Form 3520.

• This is only a information return. No tax is required to be

paid.

• The due date for filing Form 3520 is the same as your tax

return, but it is filed separately from your tax return to a

separate address.





Form 5471 – Report of Ownership in Foreign Corporations

• If you own more than 10% of a Foreign Corporation, you

need to file Form 5471 with your personal tax return.

• On this form, you need to report the ownership of the

corporation, Balance Sheet and Income statement for the

current year.

• This form is filed as an attachment to the tax return and

filed by the due date (including extensions) for that

return.





IRS Amnesty Program

• For all those who have not been compliant, the IRS has

given a chance to non will full violators to become

compliant.

• You can file your tax returns for the last 3 years and

FBARs for the last 6 years under the IRS Amnesty

Program without any penalties.

• The timeline for the amnesty scheme has not been

specified. So you need to act fast if you want to

streamline. Check the IRS website or visit us for more

details.




Get in touch for a 15 minute free consultation

Email : [email protected]

Website : www.anafin.net

If you want any additional information on any of the topics covered in these slides, visit our website or


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