Larry's 2016 U.S. Tax Guide 'Supplement' for U.S. Expats, Green Card Holders and Non-Resident Aliens in User Friendly English. Laurence E. 'Larry'

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      That was 2012. Now, going into 2016, all banks, brokerages and realty companies are starting to send out this notification. If you reside outside of the U.S. but have assets in the U.S., it is time to look at exactly how up-to-date your estate planning really is. Or, for that matter, whether your U.S brokerage will permit you to trade any longer because you live outside of the United States. Those brokerage houses are quite happy to sell your stock but what if you want to buy another stock? Times have changed for American tax filers living outside the U.S. And now to the book itself…..and what a better way to start than telling you what is new for 2016, based upon a bi-partisan vote, mid-December, 2015, The PATH Act (Protecting Americans from Tax Hikes):

      •The F(u)Bar form, FinCEN 114 – no, nothing new this year but for next year, 2017, you’re going to be able to get an extension to file by October 15, 2017 for calendar year 2016. Now let’s look at things a bit more closely for 2016 – you are supposedly going to be penalized if you file on or after June 30, 2016 but before October 15, 2016. Do you really believe that penalties in this time period are going to be enforced? No, I am not telling you to file past this coming June 30^th but do you think the IRS will pour money and manpower into this?

      •Teachers, year after year, were given a $250 automatic deduction from adjusted gross income to offset the costs of items they purchased without reimbursement to enhance their effectiveness as teachers. For the most part, the teachers I work with outside of the U.S.don’t even realize that I am taking a deduction for them as they are not earning as much as they are entitled to under the foreign earned income exclusion provisions and are not going to be paying any U.S. taxes, anyway. Well this is one of the two Adjustments to Income items that is made permanent…..finally. The tuition deduction finally has been made permanent, too as well as retroactively validating 2015 tuition deductions because Congress simply didn’t get around to it last year.

      •Itemized deductions – there’s a whole slew of them but since few expats itemize, taking the standard deduction, instead, then this ain’t no big deal. Actually, if you are a big contributor to charities, then there is something here that you should look at.

      •Tax Credits – there’s a whole slew of them included in PATH, too. The ‘enhanced’ Child Tax Credit is now permanent but there is also now a due diligence requirement and tax preparers are going to be subject to a $500 penalty for ‘negligence’ in this area. Same for the American Opportunity Tax Credit – there is also a preparer tax penalty – will this have any impact?

      • But of course, there’s also an abundance of small, special interest provisions. The impact of all of these will eventually be written about but none of them are likely a benefit to the overseas U.S. tax filer. That’s it. Lots of pages in a Congressional act that does not impact you all neatly packaged in an executive summary of five cynical but correct paragraphs.

      O.K. now for the balance of the book……..Read on.....enjoy.....and if you have any questions, email me at [email protected] !

      What is income?

      And so we begin! WHAT IS INCOME. This is my take – my ‘real’ executive summary of the U.S. tax system as it applies to you – the person living outside the U.S. who may or may not owe any tax to the IRS but who is subject to a whole lot of penalties if he or she is responsible for filing an annual tax return but is not doing so…..or is not doing it correctly.

      There are actually three sections, here: an overview of what is income and the categories you might fall under for reporting that income; a calendar of your tax filing deadlines for 2016; the ‘working basics’ for U.S. tax filers living overseas.

      Yeah, you can skip the first two parts if you want but really, there’s not that much reading, so go ahead and skim through the preliminary stuff – you are really better off doing so! It’s just about 2,000 words, and this brief section explains what the IRS considers income and the categories under which you the tax filer fall and thus, how that income is treated. Yes, it is a convoluted process but if you believe in the ‘cover your ass’ doctrine, then read this ‘prelude’ and …..CYA! And go online, too!

      The online stuff: GO TO THE IRS WEBSITE: www.irs.gov ! Don’t just take my word for it – this is where the IRS wants you to go to learn about what you are responsible for. See it for yourself….try it…..and then come back to this book as it’ll be a whole lot easier to understand! There’s an awful lot that you will find in the IRS site - some say that there’s too much and thus too difficult to navigate.

      Anyhow, now that you’ve been thoroughly confused, here’s what you really need. Yes, sir, folks, here it is, the list of what you have to declare as taxable income - at least, according to the IRS, almost (but not quite) using their very own words:

      *All wages, salaries and tips, no matter where from

      *Taxable interest (yes, there is a non-taxable variety as well.....)

      *Dividends - both qualified and not qualified (a lower tax rate for the latter)

      *State tax refunds- this only applies if you itemized your deductions last year

      *Alimony received

      *Self-employment, sole-proprietorship business income or loss

      *Capital gains or losses (maximum loss: $US3,000 after you’ve offset all of your gains)

      *Other gains (the capital gain laws are complicated!)

      *IRA distributions

      *Taxable portion of pensions or annuities

      *Rental real estate (income or loss), royalties and a whole slew of K-1 reporting

      *Farm income or loss

      *Social security benefits

      *Other income (but losses, too: this is where you offset your foreign earned income with your foreign income exclusions.)

      That's it! All of the above is added up to become your total income, which, if you have any, you have got to report it. If you don't have any, you don't have to report it (unless your gross income is over $US10,300, as a single person, for tax year 2015).

      Then there are various adjustments you can use to further reduce total income to arrive at what the IRS calls your Adjusted Gross Income from which you either itemize your deductions or take a standard deduction. Frankly, most expats take the standard deduction, accounting for all of their excludable housing expenses on the form 2555 they file. The Foreign Earned Income Exclusion, Form 2555, is ONLY applicable to expats, but that's why you are reading this, in the СКАЧАТЬ