Common Tax Issues
If you have individual income tax issues in the areas mentioned below, or in any other area, please feel free to contact me to discuss. Initial general consultation (up to 15 min) is at no charge. More detailed analysis will be at $300/hr., or a mutually agreed upon fixed rate.
- Expatriate ” assignment or working overseas as a “Local Hire”
- State Tax issues – Resident/Nonresident?
- Set to transfer abroad as a “local hire” – will it make economic sense?
- Transferring to the U.S on an “Inpatriate” assignment, or as a local hire
- Tax Equalization/Tax Protection Program questions?
- U.S. Citizen or Resident with a Nonresident Alien Spouse
- Sale of a Principal Residence / Capital Gains
- Delinquent Tax Return(s) / Other filings
- Delinquent FBAR(s) or other information returns
- Delinquent tax liabilities
Transferring abroad on an “Expatriate” assignment? Already working and residing overseas as a “Local Hire”?
Although, as a U.S. citizen or permanent resident, you are still required to file a U.S. tax return and report your income, there are special rules to offset the U.S. tax, if the qualifications are met. The Foreign Earned Income Exclusion, Foreign Tax credit, and tax treaty provisions are three potential means to reduce or eliminate U.S. tax liability. For some types of assignments, significant business expenses can be deducted. I can advise you as to the applicable tax rules and prepare your U.S. and any required state tax filings, all without the necessity of any face-to-face meetings, where logistics would preclude one. Will continued state filings be required? I can do the necessary analysis and recommend steps for any desired residency termination.
State Tax Issues – Resident/Nonresident?
When one departs from a U.S. State to begin a foreign assignment, residence in that state may or may not have been severed. This could determine whether or not foreign source earnings are subject to tax by that state. (E.g. California taxes residents on worldwide income, but nonresidents, even domiciliaries, only on California Source Income.) Proper structuring might be crucial in such a case. Even with cessation of state residence, a state tax return could still be required, as in a case where real property is owned and rented in that state.
Transferring abroad as a local hire with increased compensation?
Many times an employer will offer to send an employee overseas with a (seemingly) significant salary increase and pay the costs to move over and back. However, to determine if such an arrangement makes economic sense, the costs (e.g. taxes, housing) to be encountered in the country of assignment must be considered. I can do the necessary analysis to determine if you will come out ahead or behind.
Transferring to the U.S. on an “Inpatriate Taxation Assignment”? Coming to the U.S. as a “local hire”? Contemplating Immigration to the U.S.?
In any of these cases, determination of the optimal tax filing status in the year of arrival in the U.S. can be fairly straight forward, or very complex, depending upon the facts of the particular case. A determination of the U.S. residency status is necessary. The rules in this area are very specialized and taxation is very different for Nonresident Aliens than it is for Residents. There may, in some cases, be leeway to select one status over another, while in other cases pre-arrival planning might be necessary to secure the desired tax status/ tax treatment. In some cases, tax treaties may provide increased flexibility.
Tax Equalization/Tax Protection Program questions?
I can analyze and explain (with sufficient basic information as to the program). Your employer may have a well-established tax equalization program designed to ensure you pay a tax amount roughly equivalent to your liability in the U.S. or a Tax Protection Program designed to ensure you pay no additional tax due to the foreign assignment. Then again, your employer may have no established program, and it may be up to you to request relevant tax reimbursements. In either case, I can analyze, explain, and help present your case should you need to seek additional reimbursement from your employer.
Are you a U.S. Citizen or Resident with a Non-resident Alien spouse? If so, should you file jointly or separately?
The answer will depend upon your individual facts and circumstances. An analysis should be done to determine the optimal filing status and how to secure it. There are elections available in this area, but there are consequences to making such elections, which should be carefully considered.
Have you sold or will you sell a principal residence? Confused by the rules?
There may be an Exclusion of Gain available of (up to $250,000 on a single return and $500,000on a joint return) on the sale of a Principal Residence, depending upon the specific facts. I can provide the analysis as to whether any or how much exclusion could be available, as well the resulting federal and/or state tax.
Have Delinquent Tax Returns?
If you have not yet filed one or more years tax returns by the due date, it could be prudent to attend to that as soon as possible. I can help! For Expatriate returns, it could be crucial to file your return before the IRS requests it of you, as your ability to claim the Foreign Earned Income Exclusion could be jeopardized. Voluntary compliance will also aid in potential decrease of penalties.
Do you have other problems with the Internal Revenue Service? Federal Tax Lien, Levy? As a California tax attorney, I can help you resolve such problems.
Have FBAR (report of Foreign Bank and Financial Accounts) or other information Returns filings to be done? I can help you resolve such problems.