ExPat Guide 2017 edıtıon Premier Offshore International Tax & Business Guide 2017 Edition The Complete Guide to U.S. Taxes for Americans Living, Working & Investing Abroad Author: Christian Reeves Published by Premier International Consultancy, LLC [email protected] www.premieroffshore.com © Copyright 2016, 2017 Premier International Consultancy, LLC, 1330 Market Street, Suite 513, San Diego, CA 92101. All rights reserved. No part of this report may be reproduced by any means without the express written consent of the publisher. The information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. Table of Contents INTRODUCTION ........................................................................................................................................ 1 The Rules for Americans Overseas ................................................................................................................ 3 Foreign Income Must Be Reported ........................................................................................................... 3 Tax Advantages for Americans Overseas .................................................................................................. 4 Foreign Earned Income Exclusion ......................................................................................................... 5 Housing exclusion or deduction .......................................................................................................... 14 What exclusion will I take? ................................................................................................................. 16 Form 2555 or Form 2555EZ? ............................................................................................................... 17 Married couples claiming exclusions .................................................................................................. 17 Waiver of time requirements ............................................................................................................. 17 Exclusion of employer-provided meals and lodging ........................................................................... 17 Withholding income tax and social security tax ..................................................................................... 18 Withholding from pension payments ................................................................................................. 18 U.S. Social Security taxes .................................................................................................................... 19 Credits and Deductions on Foreign Income Taxes .................................................................................. 20 Claiming a Deduction for Relocation Expenses................................................................................... 21 Avoiding Double Taxation ................................................................................................................... 21 Double Taxation Treaties .................................................................................................................... 21 Foreign Bank Accounts Must be Reported ............................................................................................. 22 Filing Deadlines, Extensions, and Penalties ............................................................................................ 26 Automatic two-month extension for Americans overseas ................................................................. 26 What to do if you need more time ......................................................................................................... 27 Time to pay tax due on a return ......................................................................................................... 28 Where to file ....................................................................................................................................... 28 Electronic filing is the way to go ......................................................................................................... 28 Foreign post marks and electronic filing ............................................................................................. 29 Interest and penalties ......................................................................................................................... 29 U.S. State Taxation of Foreign Income .................................................................................................... 30 Different states…different rules ......................................................................................................... 30 What if I don’t know which U.S. state I will return to? ....................................................................... 32 Currency Issues with the FEIE ................................................................................................................. 32 Expatriation – The Final Solution ................................................................................................................ 34 Second Citizenships and Passports ............................................................................................................. 37 Taxation of Foreign Real Estate Investments.............................................................................................. 43 U.S. Tax Breaks for Offshore Real Estate ............................................................................................. 46 Tax Deals Only Available in Puerto Rico ...................................................................................................... 57 U.S. Tax for Business Owners & Self Employed .......................................................................................... 63 Employees ............................................................................................................................................... 63 Self-Employed ......................................................................................................................................... 64 Tax Benefits of Incorporating .................................................................................................................. 65 Where to Incorporate ............................................................................................................................. 69 Shelf Companies ...................................................................................................................................... 71 International Foundations ...................................................................................................................... 72 Offshore Corporation or LLC? ................................................................................................................. 73 Risks of Offshore Corporations ............................................................................................................... 76 Offshore Merchant Accounts .................................................................................................................. 78 Offshore Filing Requirements ..................................................................................................................... 84 International Bank and Brokerage Accounts .......................................................................................... 84 Corporate and Trust Filing Requirements ............................................................................................... 84 How Careful Structuring of Your Affairs Can Help Minimize Taxes ............................................................ 86 Multiple Bank Accounts .......................................................................................................................... 86 Transfer Title of Accounts to One Spouse............................................................................................... 86 Form a Discretionary Trust ...................................................................................................................... 86 Estate Planning ........................................................................................................................................ 87 2014 IRS Offshore Voluntary Disclosure Program ...................................................................................... 88 OPTIONS AVAILABLE FOR U.S. TAXPAYERS WITH UNDISCLOSED FOREIGN FINANCIAL ASSETS .................................................................................................................................................. 89 OFFSHORE VOLUNTARY DISCLOSURE PROGRAM (OVDP) ...................................................... 89 STREAMLINED FILING COMPLIANCE PROCEDURES................................................................. 99 Streamlined Procedures for U.S. Taxpayers Residing Outside the United States ............................. 100 Streamlined Procedures for U.S. Taxpayers Residing In the United States ...................................... 102 DELINQUENT FBAR SUBMISSION PROCEDURES ...................................................................... 103 DELINQUENT INTERNATIONAL INFORMATION RETURN SUBMISSION PROCEDURES .. 104 TRANSITIONAL RULES .................................................................................................................... 105 Dealing with the IRS .................................................................................................................................