PFIC Examples
A passive foreign investment company (PFIC) is a corporation, mutual fund, insurance company, or other type of entity that is not located in the United States. PFICs are also called foreign-operating corporations. Generally, these entities are not considered tax havens. There are a number of factors that determine whether or not an entity is a PFIC. These include the characteristics of the entity and the income or gains the entity receives. However, there are exceptions and exclusions to PFIC status. The Tax Reform Act of 1986 changed the income tax rules regarding PFICs. Specifically, the IRS imposed a series of record-keeping requirements for PFICs. This new regime made PFICs a lot more complex. In addition to handling their own legal analysis and tax preparation, PFICs are required to report unreported foreign income. PFICs may be owned by U.S. persons as well as foreign investors. If you are an investor in a PFIC, you should consult with a qualified international tax attorney. Having a proper understanding of PFICs will help you to avoid any unpleasant tax consequences. PFICs may be invested in a variety of assets. For example, you can invest in foreign mutual funds, hedge funds, segregated funds, and Exchange
US Tax Service for Americans in Portugal. Simplifying Tax Compliance for Expats in Portugal
American expats living in Portugal should consult a US international tax specialist who specializes un US tax Portugal prior to making plans to reside. Since the United States imposes taxes on worldwide income, planning ahead is crucial. Are You Retiring in Portugal or Digital Nomading Abroad? - When living abroad in Portugal there are various US expat tax deadlines you need to be aware of and adhere to. FATCA Portugal, known for its high quality of life and temperate climate, is becoming more attractive to Americans and other expats as an expatriation destination. US taxpayers should keep in mind that living abroad entails unique tax considerations similar to living in their home country. US citizens and permanent residents must file tax returns based on worldwide income, even if you only reside abroad for less than 183 days each calendar year. Furthermore, those with foreign bank accounts should submit an FBAR report with the IRS as required. Thankfully, compliance with filing requirements has become much simpler for Americans living abroad. If you are a citizen or green card holder residing primarily in Portugal, and meet certain requirements, then the Non-Habitual Resident (NHR) program could offer significant tax savings through preferential rates
The Advantages of Offshore Tax Planning for Remote Workers in UAE
For US expats in Dubai, UAE, the international taxation system can be confusing and challenging. It is important to seek professional help from a firm that specializes in US expatriate tax planning. Despite the complexity of international taxation, US Expats can take advantage of some key benefits when they have a strong understanding of their situation. The advantages of offshore tax planning include: Offshore taxation can be a powerful tool for remote workers who are paid on a salary basis, even if they live in a country that has no double tax treaties with the U.S. Rather than paying a high US income tax rate, they can pay a lower income tax rate in their host nation and then claim any foreign income tax credits available to them in the U.S. In addition, the Foreign Earned Income Exclusion allows Americans abroad to exclude a limited amount of foreign earned income from U.S. taxes, as long as they meet certain IRS requirements. However, these FEIE benefits are not automatic and must be claimed using Form 2555 as part of their US tax filing. Once expats stop claiming the FEIE, they will generally not be eligible to claim
The Tax Implications of Starting a C Corporation
Starting a C Corporation (C Corp) is a popular business structure choice for larger businesses and those looking to raise capital through the sale of stock, but it's important to understand the tax implications of this type of business structure. Here's a breakdown of some of the key considerations for C Corps and taxes: Double Taxation: C Corps are subject to corporate income tax on their profits, and any dividends paid to shareholders are also subject to personal income tax. This is known as double taxation. Corporate Tax Rates: C Corps are subject to corporate tax rates, which can be higher than individual tax rates. Tax Deductible Expenses: C Corps can deduct a wide range of expenses such as salaries, rent, and supplies, which can lower their overall tax liability. Stockholders: C Corps can raise capital by issuing stock, but shareholders are subject to capital gains tax on any profits from the sale of their shares. Shareholder Benefits: Shareholders of C Corps are not personally liable for the debts and obligations of the corporation, which provides some level of protection for their personal assets.