FAQ: Expat's Guide to US Tax

Finance, Taxes, Banking, Insurance and Retirement
41
After doing some research I think I do not need to file an FBAR bc I've only just recently opened a bank account abroad and I doubt that it will ever contain more than $10K at any point in time.

42
Note that the limit of $10K is the sum of all your foreign accounts, not any single account. When calculating this, take into consideration things you might not consider like:

- Retirement accounts / pensions

- Stocks/shares that you might have been awarded

- If you rent an apartment, the account where your deposit is held

Particularly in regards to the pension account, you can quickly find yourself over the threshold.

43
Hi!

This tax guide is so helpful, thank you!!

I am still trying to decipher if I can claim that I am a bonifide resident or not. If not, I will have to limit my time visiting the US this summer. Any advice would be greatly appreciated! Here is the basic situation:

These are my locations of work in 2014:

Jan 1-Apr 20 2014 Worked in Switzerand (seasonal job)

(then travelled in Europe x3 weeks)

May 25- Aug 7 Worked in USA

Aug 18-present (contract currently through June 2016 with view to extend)

When I file my 2014 US taxes, I cannot qualify as a bonfide resident, correct? Or can I claim my tax year from Aug 2014-Aug 2015?

(I know will qualify as bonafide resident for 2015 US taxes).

If I go for the physical presence test for my 2014 US taxes, can I count Aug 2014-Aug 2015 as my 12 consecutive months even though a majority of it is in 2015?

Any expertise would be very helpful! I would like to go home and visit family during summer break, but since I was home for Christmas (Dec 20, 2014-Jan 10, 2015), I am feeling like I need to limit my time visiting the US to only 14 more days this year (or at least until Aug)

Thank you in advance!

44
Since when have you had a work permit in Switzerland?

45
Hi! I have had a D permit for my current job since August 18th 2014. When I worked from Jan-Apr. 2014 in Switzerland I also had a permit...

46
Whilst living in Switzerland and filing a Swiss tax return you:

1. Must declare your world-wide property assets

2. Must declare any rental income from those assets

3. Can happily deduct all the mortgage costs and

4. Can happily deduct all the maintenance costs

So you may find it very beneficial on your Swiss tax return to have a non-Swiss rental property!

47
I'd like to ask for clarification of one more item: Do ALV and NBUV qualify as eligible income taxes for which I can take a credit on Form 1116?

Background: I read on the IRS web site that social security taxes are not eligible foreign income taxes for purposes of calculating the foreign tax credit (Form 1116). From the US-Switzerland Totalization agreement, I understand social security taxes to include AHV (retirement and survivors' pension insurance) and IV (disability insurance). On my year-end summary (Lohnausweis), these disallowed items (AHV and IV) are clustered together with ALV (unemployment insurance) and NBUV (non work-related accident/injury insurance). ALV and NBUV amounts are calculated based on my salary and are mandatory payments, so they would seem to fit the definition of an income tax that is eligible for credit on Form 1116, but I haven't found any statement here or elsewhere on the web confirming this and their clustering with disallowed items makes me question this logic. Thank you in advance for any clarification you can provide regarding the proper treatment of ALV and NBUV for the purposes of calculating the foreign tax credit on Form 1116.

48
ALV and NUBV are payroll taxes and not income taxes. They can't be used on Form 1116.

Also, be sure to remove the Swiss wealth tax from the income tax for Form 1116. Wealth tax can be deducted as a property tax on Schedule A, Itemized Deductions. Only Swiss income tax belongs on Form 1116.

49
Thank you very, very much for this clarification, Mullhollander!

50
Good afternoon! I would like to ask if any of you have a recent good experience with an accounting company specialized in US tax declaration (with reasonable prices), in Zurich. Thank you.

51
I have a friend (no, not the self-referring friend, but another genuine person, I'm up to date!) who hasn't filed US taxes since leaving the States about 9 or 10 years ago.

Income is low, no FBAR filing necessary - suggestions on how this should be handled? I know the IRS office in Paris used to say just file 4 years back forms and that usually was sufficient. Anyone have any recent experience?

This friend lives in the UK, but expats are expats, and taxes in the States are universal so I figure the info you guys might have would be equally relevant to someone in the UK.

Many thanks!

52
Hi,

Regarding 2nd pillar pension contributions; I understand that both employer and employee contributions are considered income as well as interest, is this correct? Is any of this earned income? Where should this be declared? Does this become a PFIC problem?

Can one opt out of this pension plan?

Should this account also be declared on the FBAR? Assuming yes, and if one has mistakenly not been doing this, can it be corrected?

Can someone recommend a US tax specialist near Zürich?

Thanks!

53
Thanks for the FAQ on US Taxes. I wish I had that in the past to do my taxes.

I'm preparing to do my US taxes for 2017, but I have retired in September 2017 and have begun receiving my pension earnings from the UN (UNJSPF). I just discovered that I can't use the Foreign Earned Income exclusion and I'm beginning to panic because I may have to pay a lot of taxes on an already reduced income (which is also taxed in CH).

I began studying the IRS rules for my situation and it's really not easy. Unfortunately, your FAQ has very little information for taxes on retirement earnings. Do you have any suggestions/help? Thanks.

54
Well, its quite simple, pension income is ordinary income and taxed by IRS and you are correct that FEIE no longer applies. I have said in this or some other thread here on EF before, that retiring abroad and keeping US citizenship is financial suicide. As such, I have long made plans to avoid being in that situation when the day comes for retirement. I guess you did no advance research and planning, unfortunate in this day and age. Yes, you will be taxed by CH and IRS, certain things can be offset, others maybe not. Time to read the US-Swiss Tax Treaty or find yourself a tax advisor well versed in CH/US double taxation issues. Reading or joining ACA, https://www.americansabroad.org/ would be a good start in educating yourself and also finding a tax advisor.

55
Ok, thanks a lot for your quick and helpful (and scary) reply, runningdeer... I actually did prepare for my retirement 2 years before and went to week-long seminars in the UN for that. I heard a lot about retiring in CH and France but absolutely no warning about the issues for US citizens...

So I was under the assumption that FEIE would continue to apply and I would be safe... Oh well... Yes, of course I will now contact a tax adviser and see how to survive this... Thanks again.

56
Taxbert, I feel your pain. Though I am still too young to retire, I was made redundant last year and was collecting unemployment insurance (RAV) for 6 months. Unemployment insurance is treated the same way as pension income (i.e. it is "unearned"), and therefore FEIE does not apply. I expect to have to pay taxes on my reduced income from my Swiss unemployment benefits, which is completely unfair. Way to kick people when they're down, USA!

57
Thanks for your input Zuridri, and sorry for your pain too... I can't believe how unfair this is! And most of all: what is the logic of giving a 102,000$ tax deduction to expats who earn a salary, but not to those who typically earn much less (retirement/unemployment) but are in the same expat situation???!!!

58
"There's definitely, definitely, definitely no logic

To human behavior" - Björk

...and even less logic to US taxation of expats!

59
Hi all

I need some help with this tax stuff. I do not understand it at all.

I am an American and I am married to a french man who isnt a US citizen. I do not work. We have lived here for 10 years (switzerland) and since he works for a Swiss Company not a US one and isnt a US citizen and I am unemployed, well I didnt think US taxes applied to me.

I have recently told though I need to apply with the US Taxes. All of this goes right over my head. Is there someone or somewhere near Bern that I can go to that can help me with this tax thing?

60
Two questions:

1 - You say he's not a citizen. Does he have a Green Carrd?

2 - Do you have shared bank accounts?