If you are a citizen of a country other than the United States who has generated investment income within the US, you may be eligible to claim the Foreign Tax Credit. This particular credit is open, with certain conditions, to income that would otherwise be taxed by both the United States and your country of residence. However, the requirements for claiming the credit are complex; it is best to partner with a tax preparer who is knowledgeable in matters of foreign investment in the US.

Foreign investment in United States real estate is not for faint of heart. Volatile exchange rates and a less than ideal housing market make for risky business. If you are new to real estate investing, a basic understanding of the risks and benefits can mitigate these risks.

Foreign investment opportunities in the US appeal to investors across the globe, most commonly in the form of stocks, commercial property, or currency. As a citizen of a country other than the United States, you must be mindful of the tax requirements set by the Internal Revenue Services.

If you are a resident or non-resident alien earning income in the United States, you can expect to pay taxes to the IRS.

Depending on your status, you may not be able to use the same requirements and forms as someone who is a US citizen.

Investments in US real property, while potentially lucrative, are sometimes too costly to individual investors outside the United States, as well as to small groups of foreign investors. Ann Irons, CPA provides tax services for foreign investors in Bellingham, MA. She explains that debt instruments are a more accessible, less prohibitive means of generating income for investors who are not residents of the United States. How do you know which instruments of debt are subject to tax and which are not?

The Foreign Tax Credit can be used to reduce tax paid on income that is taxed both by the United States and a foreign country. Claiming the credit can save you thousands of dollars, but only if you can provide adequate documentation. For this reason, it’s advisable to work closely with an international tax preparer in Bellingham, MA, says Ann Irons.

In our last post, Ann Irons, CPA shared two essential tax breaks for expatriates filing international taxes in Bellingham, MA: the Foreign Tax Credit and the Foreign Earned Income Exclusion. Today, we’ll look at foreign currency gain and reducing the value-added tax.

Foreign Currency Gain

Even the relative value of the USD and your new home country may be subject to taxation. For example, suppose you’re a US citizen residing in Japan, and while there you’ve purchased stock valued at $1,000. Over the next few years, the value of your stock neither increases nor decreases, but the value of the US dollars decreases while the value of the yen increases dramatically. You decide to sell the stock, but you end up with more USD than you paid for the original purchase. This profit must be documented on your income tax forms.

Relocating is a stressful and complicated process even if you’re only moving a few blocks away. For someone who opts to live abroad, these concerns are compounded by international tax requirements. Whether you’re considering a job-related move or a (very) extended vacation, you’ll need international tax planning in Bellingham, MA. Ann Irons, a Massachusetts CPA, shares a two-part guide to navigating tax planning for expatriates.

An Eye-Opening Requirement

Believe it or not, just because you live outside of the United States doesn’t necessarily mean you won’t be required to continue paying your taxes to the IRS. If you earn foreign income, this rule applies—even if you’re also paying taxes to the country or countries in which you’re staying. As far as the IRS is concerned, residents and citizens alike can be taxed on their worldwide income, not just income earned within the United States. Your host country may or may not require worldwide income reporting. For example, Canada does not have a similar requirement for its citizens.

Fortunately, multiple tax breaks are available from the IRS, reducing the amount of long-distance taxes you can expect to pay.

Foreign Tax Credit

After a prolonged amount of time (six months for most countries), you will be expected to pay taxes to the country in which you’ve taken residence. This means you’ll also be paying the US; this is called double taxation, and our tax code permits a foreign tax credit. First, you’ll look at the tax rates for the US and your country of residence. Subtract the lower rate from the higher rate, and pay the amount of the higher tax rate, divided evenly among the US and the other country.

Foreign Earned Income Exclusion

As an expatriate, you may be eligible to claim the Foreign Earned Income Exclusion. Effective 2013 and on, you may exclude as much as $97,600 of your foreign-earned income. However, you must first be able to prove that you have lived in your country of residence outside the US for a minimum of 330 days. These 330 days must fall within a consecutive 12-month period. Irons adds that you cannot claim this inclusion if you are living on the high seas, or if you are living somewhere with no government, such as the continent Antarctica.

Questions about filing taxes as an expatriate? To learn more about international taxes, or to schedule a consultation with Ann Irons, CPA, LLC, contact us at (508) 966-0700. We welcome businesses, individuals, and law practices based in and around Bellingham, Woonsocket, Medway, Milford, and the surrounding areas.

As someone who is not a citizen of the United States and bequeaths or inherits an estate or gift situated in the U.S., you are subject to taxation of gifts and worldwide estates. Because requirements for reporting and paying gift and estate taxes are so complex, foreign investors are encouraged to enlist the professional services of an experienced international tax expert in Bellingham, MA. CPA Ann Irons offers insights into tax planning for non-U.S. citizens.

Choosing the appropriate ownership vehicle is an essential step for foreign investors building their portfolio with investments in the United States. A good fit offers advantages in several financial areas, not least of which are tax-related. Even so, investing as a corporation rather than an individual carries certain risks; working with an accountant experienced in foreign investment tax returns in Bellingham, MA is the best way to enjoy these benefits while avoiding costly missteps. Ann Irons, a certified public account who prepares tax returns, explains.