6 Steps to Turn Boring Meetings Into the Best Meetings Ever

Jurate Gulbinas   |   10 Dec 2016   |   2 min read

Meetings become ineffective when they combine different types of discussions, because we aren’t good at changing the pace or tenor of a conversation once it starts. Make things easier by splitting discussions into categories. The manufacturing team could split operational discussions about issues on a line or scrap rate concerns from discussions about progress on the introduction of a new line.

Key Takeaways:

  • The first key is to send out an agenda in advance that has the subject line–with a verb–announcing the point of the meeting.
  • An important part of your agenda is to review the action items that were assigned to individuals during your last meeting on the topic.
  • Ideally, meetings are shorter than ninety minutes, because that is the ideal amount of time that the mind can effectively focus on a subject before needing a break.

“The verb is there to direct people, from the get-go, toward some sort of decision or action. Unless it’s a standing meeting just for updates, all great meetings end in some sort of decision or action.”

http://www.inc.com/jessica-rovello/6-steps-to-turn-boring-meetings-into-the-best-meetings-ever.html

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Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

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Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we discussed the ways in which US states themselves...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients, family offices, and established privately owned...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in a foreign corporation that own more than 10% of...

 

Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients,...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in...

The 11 Bad Habits Killing Innovation in Your Company

Jurate Gulbinas   |      |   2 min read

Find out how to strategize for an effective future at your company! Alexander Osterwalder offers remedies for 11 common problems that may already be affecting your productivity. Learn how flexibility, evidence-based decisionmaking, and focusing on the customer can maximize your capacity for innovation. Improve your business model today!

Key Takeaways:

  • Big companies have great execution habits to manage and improve successful business models and value propositions.
  • Create a protected space in your org chart where you invent and test new business models and value propositions.
  • Senior leaders acquire a lot of knowledge and experience about their business over the course of their career.

“Amazon distinguishes between non-reversible decisions with substantial sunk costs (like e.g. investing in a new warehouse in Amazon’s case), and reversible decisions like experimenting with a new offer.”

https://steveblank.com/2016/10/13/the-11-bad-habits-killing-innovation-in-your-company/

Download our eBook “Moving To The US”

Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

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Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we discussed the ways in which US states themselves...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients, family offices, and established privately owned...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in a foreign corporation that own more than 10% of...

 

Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients,...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in...

Entrepreneurs are Everywhere Show No. 43: Tina Fitch and Alice Brooks

Jurate Gulbinas   |   9 Dec 2016   |   2 min read

When you sell into the enterprise, there’s a very fine line between making your customers happy and potentially having them influence the product a little bit too heavily. You have to have conviction in your product to balance making them happy, but not necessarily changing your entire product priorities based on what they think they currently need.

Key Takeaways:

  • Doing customer discovery isn’t the same as running a focus group. And customers don’t always know the best way to solve a problem or fill a need they have.
  • You have to have conviction in your product to balance making them happy, but not necessarily changing your entire product priorities based on what they think they currently need.
  • We did a testing session with a group of girls where we had to make this spinning-disco-ball-dance party.

“Doing customer discovery isn’t the same as running a focus group. And customers don’t always know the best way to solve a problem or fill a need they have.”

https://steveblank.com/2016/09/27/entrepreneurs-are-everywhere-show-no-43-tina-fitch-and-alice-brooks/

Download our eBook “Moving To The US”

Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

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Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we discussed the ways in which US states themselves...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients, family offices, and established privately owned...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in a foreign corporation that own more than 10% of...

 

Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients,...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in...

American CEOs are thrilled with Trump

Jurate Gulbinas   |      |   2 min read

There is perhaps no greater compliment CEOs can give Trump than this: U.S. businesses now expect to hire more workers and sell more stuff in the next six months because executives are optimistic about Trump’s agenda. “America’s business leaders are encouraged by President-elect Trump’s pledge to boost economic growth,” says Doug Oberhelman, CEO of Caterpillar (CAT) and chair of the Business Roundtable, a major business advocacy group that says it has been talking with the transition team.

Key Takeaways:

  • Businesses now expect to hire more workers and sell more stuff in the next six months because executives are optimistic about Trump’s agenda.
  • Oberhelman gave a big thumbs up to Trump’s plans to cut corporate taxes, spend more on infrastructure and scale back regulation.
  • Trump went after Boeing (BA) saying he wants to cancel the government’s contract to build a new air force one because costs are “out of control.”

“There is perhaps no greater compliment CEO s can give Trump than this: U.S. businesses now expect to hire more workers and sell more stuff in the next six months because executives are optimistic about Trump’s agenda.”

http://money.cnn.com/2016/12/06/news/economy/donald-trump-ceos/index.html

Download our eBook “Moving To The US”

Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

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Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we discussed the ways in which US states themselves...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients, family offices, and established privately owned...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in a foreign corporation that own more than 10% of...

 

Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients,...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in...

How To: Improve Your Client Relationships

Jurate Gulbinas   |   8 Dec 2016   |   2 min read

The success of a B2B company hinges largely on strong client relationships, especially for a small or early stage company. Exceptional client service constitutes a core value for the business, and we always aim to become a trusted partner of our clients, rather than viewing ourselves as a vendor. We have been able to differentiate ourselves from the competition through strong relationships, and our level of service is one of the very reasons clients continue to work with us. The list below outlines what I believe it takes for companies to transition from a vendor consideration set to trusted partner.

Key Takeaways:

  • The phrase “it’s cheaper to keep ’em,” doesn’t apply just to spouses but to clients as well. Consider Bain & Co. research that found increasing customer retention rates by 5 percent boosted profits 25 to 95 percent.
  • This is hardly surprising news, but what exactly can you do to nurture your personal relationship with clients so they stick around for the long haul?
  • Perfecting the customer experience is one way. Nicholas J. Webb, a speaker, holder of more than 42 patents and longtime management consultant, has conducted extensive research on this topic.

“The initial interaction with your product, team or location. “Eighty percent of your client’s permanent impression of you comes from that first touch,” Webb says.”

http://www.success.com/article/how-to-improve-your-client-relationships

Download our eBook “Moving To The US”

Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

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Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we discussed the ways in which US states themselves...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients, family offices, and established privately owned...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in a foreign corporation that own more than 10% of...

 

Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients,...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in...

Shelby GT350 could be the best Mustang yet

Jurate Gulbinas   |   7 Dec 2016   |   2 min read

Ford’s pony car on steroids, the Shelby GT350, is more than just a quarter-mile monster. Yes, the 5.2-liter V-8 can hustle it down the straight at a brain-melting pace. It’s not the 526 hp, the 429 lb-ft of torque, or the 4.3-second zero-to-60-mph run that has us drooling—it’s that Ford has finally built a muscle car that can hold its own through corners. True speed freaks can opt for the GT350R, which cuts 0.4 second off the zero-to-60 time. Both the GT350 and GT350R are 2017 10Best winners.

Key Takeaways:

  • The main ingredient is the engine. And, wow! What an engine. It’s a 5.2-liter V8 that spins to a coarsely shrieking 8,250 revolutions per minute.
  • It makes an amazing noise that sends a chill fingering its way up from the base of your spine as the engine winds itself up.
  • Considering its overall practicality, which includes usable back seats and a fairly capacious trunk, even an ordinary Mustang offers a really good driving experience.

“The Ford Mustang and I are roughly the same age. This gives me hope because I recently spent some time with what very well may be the best Mustang ever made.”

http://money.cnn.com/2016/12/06/luxury/ford-shelby-gt350-mustang-review/index.html

Download our eBook “Moving To The US”

Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

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Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we discussed the ways in which US states themselves...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients, family offices, and established privately owned...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in a foreign corporation that own more than 10% of...

 

Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients,...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in...

Do you have income tax return filing requirement?

Jurate Gulbinas   |   2 Sep 2016   |   6 min read

Author: Jurate Gulbinas

“I had no tax liability, so I did not need to file….” This is a common phrase from callers to our office.  Is it true?  Well, usually not.

U.S. individual income tax return filing requirements are different for U.S. citizens and residents, and for non-residents.  Let’s start with U.S. citizens and residents (U.S. taxpayers) income tax return filing requirements.

Filing requirement for U.S. taxpayers depends on gross income, filing status, and age.  IRS annual Publication 17 can be your starting point for annual filing requirements.  Let’s say you were single and under the age of 65 at the end of 2015 – you will need to file individual income tax return if your gross income was at least $10,300.  Gross income includes wages, interest, dividends, capital gains, rental income.

Most U.S. taxpayers who live abroad are familiar with a foreign earned income exclusion.  For 2015 up to $100,800 of foreign salary can be excluded from the U.S. taxable income.  Thus a U.S. citizen living outside of U.S. and earning less than $100,800 will not have U.S. income tax liability.  This often confuses U.S. taxpayers and even some tax practitioners abroad.  Zero tax liability does not eliminate U.S. income tax return filing requirements.  In fact, an individual income tax return has to be filed to properly claim a foreign earned income exclusion.

Failure to file U.S. individual income tax return can lead to significant tax and compliance issues.  First, income tax return has to be filed to claim foreign tax exclusion.  Second, income tax return most likely will have Schedule B, Interest and Ordinary Dividends, marked “yes” for a question regarding an interest in a foreign bank account.  You have to file Schedule B with your return if you had an interest in a foreign bank account.  Filing a FinCen Form 114 (also known as an FBAR) does not eliminate the need to report your interest in a foreign bank account on Schedule B.  In addition, FATCA introduced a new form several years ago.  Form 8938, Statement of Specified Foreign Assets, is yet another form that you might have to file.  The reporting thresholds are much higher than FinCen Form 114 – $10,000 accumulated balance.  The IRS website has a handy comparison table of FBAR and Form 8938 requirements which you can access here.

Form 8938 requires you to report not only interest in foreign bank accounts but also your interest in other foreign financial assets, like your 1% interest in that foreign corporation that you invested years ago and forgot.  There is no duplicate reporting for Form 8938, thus if your interest in foreign entity was already reported on any other international information returns (Form 5471, 8621, 8865, 3520 or 3520-A), you do not need to report it again on Form 8938.

Form 8938 noncompliance carries $10,000 penalty under IRC 6038D.  Form 8938 has to be filed with U.S. income tax return.  When a taxpayer has no income tax filing requirement, Form 8938 does not need to be filed.  As you can see finding whether you have an income tax return filing requirement is quite important.  Please remember that numerous international informational forms have to be filed even if taxpayer has no income tax return filing obligations.

A foreign taxpayer has U.S. income tax return filing obligations if he or she has U.S. source income, for example a U.S. rental property.  Usually rental property is not profitable for at least first few years.  It is important to file U.S. income tax return and claim losses on the property.  While not currently deductible, losses will be carried forward and used when foreign owner sells U.S. real estate property.

But what about a foreign investor who invested in U.S. investment partnership and received a schedule K-1 reporting interest and dividends income?  If U.S. partnership properly filed Form 1042-S, there is no return filing obligation for the foreign investor.

Form 1042-S is used to report amounts paid to foreign persons that are subject to income tax withholding (U.S. source income).  Dividends from U.S. corporations are U.S. source income; portfolio interest on the other hand, is not considered to be a U.S. source income.  Thus if your Schedule K-1 shows $100 interest income and $200 dividend income, the partnership would issue two Forms 1042-S.  First form is going to report $100 and exemption code 05 with zero withholding.  It tells IRS that you received $100 interest income and that this interest income is portfolio income.  Another form, Form 1042-S is going to report $200 dividend income and income code 06.  If you live in a country that has a tax treaty with the U.S. (like Australia) and you properly filed W-8BEN, your withholding rate is not standard 30% but instead a lower treaty rate.  For example, according to the U.S. – Australian Income Tax Treaty , dividends are taxed at 15%.

What about if you invested in various U.S. stocks and received dividends and you did not receive Form 1042-S?  You have to file U.S. income tax return (Form 1040NR), U.S. Nonresident Alien Income Tax Return, report U.S. source dividends and pay tax (either 30% general rate or lower treaty rate, whichever is applicable to you).

As you can see, determining filing obligations is a first step for U.S. and foreign taxpayers.  The IRS offers free and useful guidelines on their website at www.irs.gov.  Make sure to check the IRS website and talk to your tax preparer.  If in doubt, check again.  If you find out that you had tax return filing obligations in the past, do not wait, talk to your tax preparer and, if needed, hire international tax specialist.  Ignorance of a tax law is not a reasonable cause for penalty abatements.

Download our eBook “Moving To The US”

Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

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More articles like this

 

Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we discussed the ways in which US states themselves...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients, family offices, and established privately owned...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in a foreign corporation that own more than 10% of...

 

Online Business with No Physical Presence May Be Liable for US Sales Tax


29th Nov 2019
Jurate Gulbinas

In our previous article on the topic of sales tax in September 2018, titled “Understanding Sales Tax in the US” Click here to read the post, we...

 

Tax Accountant/ International Tax Advisor


8th Aug 2019
Jurate Gulbinas

About CST Tax Advisors CST Tax Advisors is a global firm of CPAs, chartered accountants, and attorneys that advise globally mobile private clients,...

 

FAQ


14th Jun 2019
Jurate Gulbinas

What is a CFC A CFC is a foreign corporation in which more than 50% of the shares are held by US Shareholders US Shareholders are shareholders in...

Foreign Earned Income Exclusion – You think you don’t need to file a US income tax return? Think again.

Jurate Gulbinas   |   3 Aug 2016   |   6 min read

Author: Jurate Gulbinas

At least a couple times a month I hear, “I live in a foreign country and earn less than foreign earned income exclusion amount.  I do not need to file a U.S. income tax return”.  This is a common misconception among U.S. citizens and Green Card holders living and working outside of the U.S.

Let’s review Foreign Earned Income Exclusion (FEIE or IRC Section 911 exclusion) requirements.  To claim FEIE you must have foreign earned income, your tax home must be in a foreign country, you have to meet either Bona Fide Residence or Physical Residence Test, and you must make a valid election.  Let’s briefly analyze every FEIE requirement below.

What is a foreign earned income?  Usually it’s your salary in a foreign country.  It can also be severance pay, sick leave pay, and noncash income such as an employer provided lodging or car.  If you live outside of the U.S. and you are self-employed, your income from self-employment is earned income.

The IRS has ruled that tax home is the location of the taxpayer’s principal place of employment.  Tax home is not the location of principal residence.  Tax home must be in a foreign country or countries for FEIE purposes.  Antarctica is not considered a foreign country and as a result income earned there won’t qualify as foreign earned income and residence won’t be considered eligible for either bona fide residence or the physical presence test.  There were numerous cases regarding U.S. citizens employed on fishing vessels.  Generally income earned while working on a fishing vessel won’t qualify for the foreign earned income exclusion as fishing vessel do not meet the foreign presence requirement.  For those more interested in fishing vessel employment cases, check Revenue Ruling 73-181 and Bebb v. Commissioner, 36 T.C. 170.

Bona fide residence is another term that is not defined by the Internal Revenue Code.  All relevant facts and circumstances are analyzed for each particular case.  You won’t automatically acquire bona fide resident status by merely living in a foreign country for one year, despite that the bona fide residence test is met if you are a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year.  As per Section 911(d)(1)(A), your bona fide residence must be maintained for an uninterrupted period that includes an entire taxable year.  Taxable year for U.S. income tax purposes is generally a calendar year.  Thus your first year in a foreign country most likely won’t qualify under the bona fide residency test.

Physical presence test is slightly easier to understand.  You meet this test if you are physically present in a foreign country 330 days during 12 consecutive months.  Once you meet the physical presence test requirements, you are eligible for Section 911 exclusion despite your nature or purposes of your foreign stay. Also keep in mind that 330 days during 12 consecutive months do not necessarily have to start January 1 and end on December 31.  If you left the U.S. June 1, 2015, came back for vacation for 35 days in December 2015 and January 2016, you were physically present 330 days on May 31, 2016 and you are qualified to claim foreign earned income exclusion on your 2015 U.S. income tax return for the period of June 1, 2015 – December 31, 2015.

Most taxpayers do not have any problems meeting the above requirements (foreign earned income, foreign tax home, bona fide residence or physical presence in a foreign country).  The most misunderstood requirement is an election to claim foreign earned income exclusion.  Foreign earned income exclusion is an election that a taxpayer makes on a timely filed U.S. income tax return.  The mere fact that you earned less than the applicable FEIE for the year (USD 100,800 for 2015) and met the other requirements discussed earlier does not automatically qualify you for the Section 911 exclusion.  You have to file Form 2555 and attach it to the timely filed individual income tax return for the year.  In our practice we see many taxpayers who live in foreign countries and who do not file U.S. tax returns for years simply because they misunderstood or were erroneously advised about foreign earned income exclusion requirements.  In many circumstances there were other reporting requirements (such as foreign bank account ownership, interest in a foreign entity or a trust, distribution, gift or inheritance received from the foreign entity or foreign individual).

In a recent tax conference, IRS speakers emphasized Form 2555 and a foreign tax home requirement to claim foreign earned income exclusion.  IRS recently released a fact sheet (FS-2016-22) describing the foreign earned income exclusion and how to claim it a month ago.  IRS also had a free webinar on foreign earned income exclusion for U.S. taxpayers residing in foreign countries on June 29.  The webinar recording will be available later on the IRS website (www.irs.gov).  The IRS technical specialist for the International Individual Compliance unit that I spoke with at the Tax Forum last week could not emphasize more that the Internal Revenue Service finds the foreign earned income exclusion requirement misunderstood by the taxpayers and as a result wants to educate and bring into compliance U.S. residents living abroad.

Please feel free to email me your questions regarding foreign earned income exclusion at jurate.gulbinas@csttax.com.

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Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

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Expat Blog Post Featuring John Marcarian

John Marcarian   |   17 Jul 2015   |   2 min read

Leading expat social network Expat-blog.com has recently posted an article about John Marcarian and his experiences as an expatriate.

In the article John talks about important issues such as establishing the CST Singapore office, finding the right accommodation, settling in to the Singaporean lifestyle and how Expatland the book can help soon-to-be expatriates.

Specially designed for those living or wishing to live abroad, Expat blog provides you information and advice to settle and live overseas.

Expat blog helps you throughout your project. Discover life in your host country, get in touch with the other expats and find all the info needed for your everyday life.

To read the article, visit the Expat Blog site on www.expat-blog.com or click on the link http://www.expat-blog.com/en/interview/426_john-in-singapore.html

Download our eBook “Moving To The US”

Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

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Expatland by John Marcarian Official London Launch

Jurate Gulbinas   |   22 Apr 2015   |   3 min read

Expatland, the Guide Book for Global Citizens Launches in London

ExpatlandTM may not have its own government or a specified geographical territory, but its inhabitants all need legal, tax and living advice before they move to this ‘country’ of more than 230 million.

John Marcarian, author of the book bearing the same name, coined the term “Expatland” to describe the ‘special country’ where global expatriates live.

The Singapore-based Australian expat has developed a business around helping fellow expats organise their tax, accounting and legal affairs to suit their impending international move, and wrote Expatland as a guide book for future residents of this vast ‘country’ of global citizens.

Expatland will be launched at The Royal Air Force Club, 128 Piccadilly, London, on Thursday, May 7, at 7pm. Guest speakers include Socceroos Captain Mile Jedinak; former Australian Cricket Captain Greg Chappell; and Australian Fast Bowler Jeff Thomson.

“If ExpatlandTM were a country, its population would be that of more than 230 million people of different nationalities. In fact, if it were a single ‘country’, it would be the fifth largest in the world after China, India, US and Indonesia,” Mr Marcarian said.

“Global citizens are travelling to live and work more widely than at any time in the past 50 years. This means the need for cross-border taxation, accounting services, legal and estate planning is essential,” he said.

Some of the myriad challenges facing expats on arrival in their new global home include:

  • Terms and conditions of employment
  • Finding a local support network
  • Staying in touch with family, friends and colleagues
  • Understanding the cultural differences between their home country and adopted Expatland country
  • Whether they need to register with immigration authorities.

“The goal of the book is to guide the reader on how to consider strategies for adapting, living, surviving and thriving in Expatland,” Mr Marcarian said.

To RSVP to this event please email RSVPLondon@csttax.com

Download our eBook “Moving To The US”

Disclaimer:
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication.

NEED ASSISTANCE FOR YOUR SITUATION?

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"*" indicates required fields

Do you need tax services in our other regions?
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