Faqs


Frequently Asked Questions

 

Yes! The whole site is secure and encrypted.

That's why the URL (domain name) for the website starts with "https" and not "http". The "s" means the site is secure.

Hyper Text Transfer Protocol Secure (HTTPS) is the secure version of HTTP, the protocol over which data is sent between your browser and the website that you are connected to. The 'S' at the end of HTTPS stands for 'Secure'. It means all communications between your browser and the website are encrypted. Once we have your data it is stored at Tresorit, one of the safest and most secure storage systems in the world. Learn more about our security here: Expat Tax Online Security

Why does your domain name show "worldsecuresystems.com" in the URL address?

worldsecuresystems.com is the secure web-platform that is owned and managed by Adobe. This Adobe secure platform is fully PCI DSS compliant for maximum online security. Adobe provides one of the most secure website platforms in the world, which is why we use it, to keep your information safe.

The IRS considers many aspects of your income as taxable, here is a rough list of compensation items you need to include;

  • Basic salary
  • Call back, standby and overtime income
  • Airfare allowances and home leave
  • Administration allowances
  • Transportation and internet allowances
  • Education assistance
  • Settling-in allowance
  • All other cash or benefits received in-kind

Examples of some income that generally isn't taxed;

  • Reimbursement of business expenses
  • Moving expenses as long as they are dollar for dollar
  • Living away from home expenses
  • A lump some that you don't have to account for can be considered taxable income.

 

Typically, the following four tests must be met for any foreign tax to qualify for the credit:

  1. The tax must be imposed on you
  2. You must have paid or accrued the tax
  3. The tax must be the legal and actual foreign tax liability
  4. The tax must be an income tax (or a tax in lieu of an income tax)

The tax must be imposed on you

You can claim a credit only for foreign taxes that are imposed on you by a foreign country or U.S. possession. For example, a tax that is deducted from your wages is considered to be imposed on you.

Foreign Country

A foreign country includes any foreign state and its political subdivisions. Income, war profits, and excess profits taxes paid or accrued to a foreign city or province qualify for the foreign tax credit.

Tax must be the Legal

Your qualified foreign tax is only the legal and actual foreign tax liability that you paid or accrued during the year. The amount of foreign tax that qualifies is not necessarily the amount of tax withheld by the foreign country. The amount of the foreign tax that qualifies for the credit must be reduced by any refunds of foreign tax made by the government of the foreign country or the U.S. possession.

Example 1: You received a $1,000 payment of interest from a Country A investment. Country A’s withholding tax rate on interest income is 30% ($300), but you are eligible for a reduced treaty withholding rate of 15% ($150) if you provide a reduced withholding statement/certificate to the withholding agent. Your qualified foreign tax is limited to $150 based on your eligibility for the reduced treaty rate, even if $300 is actually withheld because you failed to provide the required withholding statement/certificate.

Tax Must Be an Income Tax or Tax In Lieu of Income Tax

Generally, only income, war profits, and excess profits taxes (collectively referred to as income taxes) qualify for the foreign tax credit. Foreign taxes on wages, dividends, interest, and royalties generally qualify for the credit. The tax must be a levy that is not payment for a specific economic benefit and the predominant character of the tax must be that of an income tax in the U.S. sense.

Foreign tax is not an income tax and does not qualify for the foreign tax credit to the extent it is a soak-up tax. A soak-up tax is a foreign tax that is assessed only if a tax credit is available to the taxpayer. This rule only applies if and to the extent the foreign tax would not be imposed if the credit were not available. Foreign taxes on income can qualify even though they are not imposed under an income tax law if the tax is in lieu of an income, war profits, or excess profits tax. The tax must be a foreign levy that is not payment for a specific economic benefit and the tax must be imposed in place of, and not in addition to, an income tax otherwise generally imposed

Foreign taxes where you can't take credit;

  • Taxes on excluded income (such as the foreign earned income exclusion)
  • Taxes for which you can only take an itemized deduction
  • Taxes on foreign mineral income
  • Taxes from international boycott operations
  • A portion of taxes on combined foreign oil and gas income
  • Taxes of U.S. persons controlling foreign corporations and partnerships who fail to file required information returns
  • Taxes related to a foreign tax splitting event, and
  • Social security taxes paid or accrued to a foreign country with which the United States has a social security agreement.

For more information about these agreements, refer to Totalization Agreements.

 

The Foreign Bank Account Reporting is part of FATCA (Foreign Account Tax Compliance Act)

The law states that US citizens and Green Card holders must report bank accounts held offshore if the highest balance of those accounts, when added together exceeds $10,000 or more at any time during the tax year.

Reporting includes the name and address of the bank, the account number, the highest balance during the year, and the names on the account.

Which offshore bank accounts do I need to include?

  • All your personal accounts
  • Any account that you have signing authority over
  • Business accounts Business bank accounts that you own or have signing authority over
  • Foreign Pension accounts
  • Stock trading accounts

What's the easiest way to check if I need to file?

Gather monthly statements for each bank account that you need to include Look through the statements for the highest balance in the tax year and write it down Once you have been through every statement add up the highest balances If the total number is over USD $10,000 then you need to file an FBAR.

How do I file?

  • We will complete your FBAR filing along with your IRS Federal tax return
  • The FBAR is due at the same time as your tax return extensions aren't the same
  • Our expat tax specialists will take care of it all for you.
  • You'll be notified once the FBAR has been submitted.

 

In the event a that an IRS refund is not issued or partly issued due to a calculation or tax return preparation error on our part, you may be eligible to have Paid Fees refunded to you, in part, or in full.

In the event of any part of a refund being paid to a third-party or other US government office, this is deemed as issued and a Refund of Fees Paid will not be considered.

Please note, the IRS can issue your refund to cover outstanding debts such as US Student Loan which has not been repaid and is in default.

 

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Date published: 07/20/2016