Webinar: New tax savings & tax credit opportunities for expats

TFX has recently hosted a comprehensive webinar on new tax savings available to many expats as a result of a recent court ruling.

Wendy Christensen, CPA, covered a range of topics discussing pertinent to US expats, American citizens with non-US investments and real estate.

Attendee demographics

The webinar attracted a diverse international audience, including participants from the UK, Mexico, South Korea, Germany, Israel, Canada, Ecuador, Japan, Lebanon, Denmark, South Africa, and other countries, showcasing our global client base.

Key webinar insights

1. Christensen v. United States: A game-changer for expats

The webinar highlighted the case of Christensen v. United States, emphasizing its significance in potentially providing additional tax credits to expatriates.

This ruling pertains to the interpretation of foreign tax credits and tax treaties.

2. Understanding Foreign Tax Credits (FTCs), Net Investment Income Tax (NIIT), and Treaties

Wendy explained these complex topics in layman's terms, focusing on how US citizens abroad can navigate these issues.

The importance of understanding different income types and applicable taxes in various countries was underscored, along with the intricacies of tax treaties.

3. Which years are affected and upcoming filing deadlines

The session addressed the impact of the court ruling on previous years and upcoming deadlines, stressing the opportunity to claim warrant tax credits going back as far as 10 years.

4. How TFX assist expats

Wendy outlined the comprehensive services offered by our CPAs, including free introductory consultations, tax planning, and preparation for various client scenarios, emphasizing the firm's expertise in handling complex tax situations for expatriates.

Live Q&A highlights

Tax treaty interpretation and application

One key discussion point was how different tax treaties with various countries could affect the application of this ruling.

Wendy explained the need for personalized assessments based on each individual's circumstances and country of residence.

Specific questions addressed

Key areas touched upon during the webinar included:

• The applicability of the ruling: Understanding how the recent court ruling applies to both US investment income and foreign income was a primary focus.
• Amended returns: The process and potential benefits of filing amended returns for up to 10 years, a significant point of interest for many attendees.
• International considerations: Specific considerations were discussed for taxpayers in countries like Germany and the UK, where the timing of tax return issuance could affect US filing.
• Tax planning: The role of strategic tax planning consultations in optimizing tax liabilities and ensuring compliance was another critical topic.

Q&A session summary

Q: What are the upcoming filing deadlines we should be aware of?

A: Key upcoming deadlines include March 15th for business filings and April 15th for individuals inside the US.

For those outside the US, the deadline extended to June 15th, but taxes owed are still due in April.

Q: Is Switzerland included in previous years?

A: Most European countries qualify, but it varies treaty-by-treaty. The court ruling specifically covered France only, so all other treaty countries' texts must be interpreted carefully.

As part of tax preparation, TFX will analyze your specific case and ensure that all possible credits and deductions are taken.

 

Q: So...for Kenya? Is that a country that is affected by the court ruling?

A: It’s a no-go for Kenya, unfortunately.

The US must have a treaty with the country. There’s no treaty with Kenya.

Some treaty countries qualify. It’s case-by-case.
 

The fact is - the US appealed the ruling. Therefore, they are not processing amended returns at the moment until the appeals process plays out. As such, we suggest filing only 2013 claims at the moment, to get these on the record before the 2013 statute expires.

The ruling didn't delve into any of the mechanics or give examples. It really just said, "Yes, you can" without providing any helpful advice. There are still many unresolved questions, like on what sources of income the credit can be taken.

There will be a second ruling that actually resolves Christensen's case and the viability of their refund in these countries:
 

Australia	Austria	Bangladesh	Belgium
Bulgaria	Canada	Denmark	Finland
France	Germany	Iceland	Ireland
Italy	Japan	Luxembourg	Malta
Mexico	Netherlands	New Zealand	Slovenia
South Africa	Switzerland	United Kingdom	Morocco

 

Q: I'm a green card holder in France right now. Does it apply to me?

A: Generally, it's for US citizens only. I think France is limited to US citizens only, but many treaties need to be interpreted.

You can sign up and ask for the treaty interpretation during your tax preparation.

 

Q: I have residence in Italy and, according to the tax treaty with the US, Italy has the right to tax my Social Security payments. How does that Italian tax show up as a tax credit on my US return? Should the credit appear on the IRS form 1116 or somewhere else?

A: Yes, US FTCs are claimed on Form 1116 for individuals.

 

Q: I don’t have much faith in the people that prepared my taxes the last few years - do you offer any option to review past years' taxes?

A: Yes, please take a look at our "check my return" services: TFX Check my return services.

 

Q: Living in Denmark since the 1980s and I have the Danish equivalent of the USA 6166 form, declaring Denmark as my worldwide tax home. Am I still required to pay USA capital gains tax on my USA stock gains through a USA broker no matter how much or little I’ve paid in Denmark?

 

A: When we prepare your return, we’ll take care of everything for you and ensure your return is filed optimally and avail of every credit and deduction for your personal situation.

If you would benefit from prior year amendments, we’ll cover that, as well.

 

Q: How to put foreign tax credits for NIIT on the 1040? No obvious way is evident.

A: We take care of everything including proper filing of your tax return, including application of NIIT and applicable credits.

If you’re not yet a client, please sign up on our website: TFX Sign Up, we’ll take care of everything for you.

 

Q: Do you include the UK in the definition of Europe? :)

A: We don’t make political statements here :) But the UK is one of our biggest markets and home to many US expats.

The UK treaty is different from the French treaty, we’ll review your specific case during tax preparation.

 

Q: Do you handle US and UK filing?

A: We prepare US taxes only but deal with thousands of UK residents each year, so we are familiar with UK taxes to prepare the US return competently.

 

Q: I am currently living in the US but hope to retire in Egypt. I would be living from my Social Security and pension plan. I am making payments to purchase an apartment in Egypt. I recently got married to an Egyptian woman. The apartment is in her name now. Is it better to leave it that way for tax purposes?

A: Thank you for your question. Our qualified tax experts can answer your question in-depth during a tax planning consultation.

For more information, please follow this link: TFX Tax planning consultation.

 

Q: If we have rental income, but we pay tax in Portugal, do we still have to pay this to the US?

A: Depends where the rental is located and how much tax you pay to Portugal.

You may have to pay to the US, but there won’t be double taxation — that’s where we step in, to prevent double taxation.

 

Q: Is it applicable for the UAE where I work, even though I am from Trinidad and Tobago and a US citizen?

A: No, not for residents of the UAE.

The US must have a treaty with the country. There’s no treaty with the UAE.

 

Q: If I only have German income (but not from investing, i.e., only from a German employer), does the tax credit expansion apply to me?

A: No, you shouldn’t need it. The expansion is for NIIT, which is a tax on investment income, not a tax on employment-type income.

But, it’s good to know for the future in case you might have investment income!

 

Q: How do I answer if I don't know whether or not I've been taxed with NIIT?

A: You’ll have Form 8960 in your return.

 

Q: I have been told that I have to file US taxes even though I am just a green card holder. I have also been out of work and on medical leave for the past year and a half. Not sure if this impacts me favorably as well?

A: In general, there is a filing threshold based on income.

Our qualified tax experts will be able to look at your specific circumstances and provide you a more in-depth answer to your question during an introductory phone consultation.

For more information, please follow this link: TFX free intro consultation.

 

Q: Would this apply to South Korea for previous years?

A: The Christensen ruling covered France, so each other treaty is case-by-case.

During tax preparation, we’ll review your unique case.

 

Q: Have you worked with retired, USA civil servants, dual citizens, US and Switzerland? There seems to be confusion on who gets to tax my spouse’s pension income due to being a retired firefighter.

A: We’ve worked with everyone from every stratosphere by now :).

We can definitely tell you who taxes what. This is one of the most common issues arising in international taxation, and though some issues are trickier than others, there’s always a conclusion to discover, no matter how much digging must be done.

If you sign up for 2023, we can provide advice at that point.

 

Q: Is mortgage interest on rental property deductible when calculating net income from investment?

A: We’ll handle everything for you during tax prep, including any applicable credits on mortgage interest, rental income, and more.

 

Q: Can TFX help with tax planning consultations for specific situations like selling a rental property?

A: Yes, TFX offers tax planning consultations for various scenarios, including selling rental properties or handling income from foreign corporations.

These consultations help clients understand how such transactions will impact their US tax liabilities.

 

Q: About your service, what happens if the IRS audits a return? Are you involved?

A: Of course – If you ever receive a letter from the IRS, the first step is to analyze the nature of the IRS notice. We review all letters for you free of charge.

 

Q: Current TFX customer here. What's the best way to engage TFX to check if the NIIT I've paid over the past few years can be credited back?

A: Get in touch with us for this year. We can take a quick look at past years.

 

Q: Hey! Thanks for the presentation and the great info. How do you handle countries where you do not have experience? How similar is one country to another?

A: That’s the thing – this is what we do, so we have experience with all countries.

Of course, some you see more often (UK vs New Caledonia) – but this is our business :)

 

Q: How does TFX handle cases where expats have multiple types of foreign income and taxes from different countries?

A: TFX is experienced in handling complex cases involving multiple types of foreign income and taxes from different countries.

They assess each type of income and the associated taxes paid in each country to accurately calculate the foreign tax credit and ensure compliance with US tax laws.

 

Q: Are there any specific considerations for expats in countries with fluctuating tax rates or complex tax systems?

A: Expats in countries with fluctuating tax rates or complex tax systems may face additional challenges in claiming foreign tax credits.

TFX can help navigate these complexities by analyzing the specific tax laws of the country and advising on the most beneficial approach for US tax filing.