Christine Hradsky No Comments

K-1s & Passive Foreign Investment Companies

K-1s

PFICs are a serious tax matter and should be given a great deal of consideration when reporting elections.

By Bethany Bouw

The IRS allows certain entities to use a pass-through taxation via Form K-1. Essentially, this moves the income tax liability from those earning the income to those who benefit from it. Many individuals receive Form K-1, due to their investments in flow-through entities like partnerships and S-Corporations. Those K-1 forms will include additional supplementary information behind the K-1 itself. This supplementary information is often where information on passive foreign investment companies (PFICs) is located. PFICs are a serious matter and require great consideration with reporting and elections.

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Christine Hradsky No Comments

Individual Retirement Accounts & Foreign Earned Income

Individual Retirement Accounts

Those saving for retirement while living abroad will need to be aware of the contribution limitations.

By Bethany Bouw

As US individuals look to save for retirement, it is important to note that those residing abroad may face some additional considerations. Many people seek to save for retirement via traditional and ROTH IRAs. Residing abroad doesn’t automatically preclude one from contributing to these types of accounts, but there may be limitations and other things to consider in making an investment.

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Christine Hradsky No Comments

International Tax Alert- Registration-Required Obligation

Proposed Regulations Provide Guidance on the Definitions of Registration-Required Obligation and Registered Form

Summary

On September 19, 2017, the Department of the Treasury and the Internal Revenue Service (collectively, “Treasury”), published in the Federal Register proposed regulations (the “Proposed Regulations”) that provide guidance on the definitions of registration-required obligation and registered form, including guidance on the issuance of pass-through certificates and participation interests in registered form. The Proposed Regulations also withdraw a portion of previously proposed regulations regarding the definition of a registration-required obligation. The preamble to the Proposed Regulations (the “Preamble”) states that the Proposed Regulations are necessary to address changes in market practices as well as issues raised by the statutory repeal of the foreign-targeted bearer obligation exception to the registered form requirement.  Read more

Christine Hradsky No Comments

Technical Update- September International Tax Alert

Notice 2017-42 Delays Effective/Applicability Dates in Dividend Equivalent Rules

 

Summary

Notice 2017-42 (the “Notice”) provides taxpayers with additional guidance for complying with final and temporary regulations under Sections 871(m), 1441, 1461, and 1473 of the Internal Revenue Code (collectively referred to as the “Section 871(m) regulations”) in calendar year 2018 and 2019. The Department of the Treasury and the Internal Revenue Service (collectively, “Treasury”) announced in the Notice their intention to amend the Section 871(m) regulations to delay the effective/applicability date of certain rules in those final regulations and also extend the phase-in period provided in Notice 2016-76 for certain provisions of the Section 871(m) regulations.  Read more

Christine Hradsky No Comments

Extending Your Individual Filing When You Reside Abroad

Individual Filings

Those living abroad may be eligible for extensions on individual tax returns.

By Bethany Bouw

The due date for extended individual income tax returns (October 16, 2017) is rapidly approaching. For individuals who live abroad, there may be questions about when to file and when to extend, especially if you are struggling to gather your tax information across multiple countries/continents. Fortunately, the IRS understands that residing abroad may pose problems with gathering the pertinent information. They have provided a variety of extensions to meet the needs of the affected filers. Read more

Christine Hradsky No Comments

Expiring ITINs – Do You Need to Renew?

By Bethany Bouw

The IRS has recently begun mailing letters to over 1 million taxpayers whose Individual Taxpayer Identification Numbers (ITINs) are expiring at the end of 2017. In accordance with the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act), ITINs that have not been used on a federal return at least once in the last three years will expire on December 31, 2017. Additionally, ITINS bearing specific middle digits are also due to expire on the same date. The IRS is encouraging taxpayers to renew their ITINS as soon as possible to avoid delayed tax refunds and return processing. Read more

Christine Hradsky No Comments

Seven Foreign Bank Account Report (FBAR) Reminders

Foreign Bank Account

Make sure you know these seven things before filing your FBAR.

By Bethany Bouw

With globalization reaching new heights, many individuals and entities are faced with questions about reporting their foreign bank accounts. This is a serious matter from both a penalty standpoint and a multi-country perspective. In an effort to locate those attempting to hide taxable income, many countries have agreed to share information regarding accounts held by foreign owners. Failure to file informational reports related to your foreign bank accounts can lead to hefty penalties and stress. Read more

Christine Hradsky No Comments

Eight Things to Look Out for When Reviewing A Tax Treaty

By Bethany Bouw, CPA

Tax Treaty

Know the eight key areas to look out for when reviewing a tax treaty.

One is often directed to the tax treaties when beginning to consider the tax ramifications of foreign activities or related to foreign persons. When faced with a complicated question and hoping that the income is tax exempt, we are drawn towards the treaties and their wealth of information. However, there are serious problems that can arise if the treaty is accidentally misused or misunderstood.  Read more

Christine Hradsky No Comments

Foreign Reporting: What to do When You Forgot to File

By Bethany Bouw, CPA

Foreign Reporting

What to do when you forget to file your FBAR.

Picture this, you are sitting at your dining room table and suddenly you realize you missed the Foreign Bank Account Report (FBAR) deadline. Or you remember that you need to tell your accountant about that foreign company you own part of and wonder, “Was I supposed to report anything about this company?” Thankfully, the IRS has provided procedures to follow if this happens to you.  Read more