Bankruptcy New

By Roberto Garabell

 United States citizens, as well as people classified as resident aliens, are liable for U.S. income taxes, irrespective of where in the world the income is earned or where they are living. Simply put, it you are a citizen or resident alien living abroad, you must comply with the same filing requirements that you would face if you lived in the U.S. However, there are certain benefits that may accrue in special circumstances, in addition to the many areas that require your careful attention as usual.

For example, depending on your specific situation and filing requirements, you might be allowed to exclude a certain, limited part of your foreign income. You might also find that your housing costs can be deducted from your gross income, excluded or otherwise reduced. If you find that you are eligible for either, to claim them you have to file a return that includes Form 2555, Foreign Earned Income. To get the exclusion only, you might use the shorter Form 2555-EZ instead, which is called, sensibly enough, Foreign Earned Income Exclusion.

Other credits and deductions

It may be possible to get a tax credit, or an itemized deduction, to cover any foreign taxes you pay on your income. Interestingly, since the Constitution gives treaties a special standing in law, various tax treaties and conventions to which the U.S. is a signatory (along with many foreign nations) offer opportunities to reduce foreign tax liabilities. The requirements and legal issues can be complex at times, so when things begin to get complicated, you might consider consulting an expert in this kind of tax law.

You can also get the answers you need to most questions of this kind from the IRS itself. The IRS publishes thousands of guides for taxpayers, and Publications 54, 514 and 901 - Tax Guide for U.S. Citizens and Resident Aliens Abroad, Foreign Tax Credit for Individuals and U.S. Tax Treaties, respectively - provide copious amounts of information concerning how to treat foreign income, understand the foreign tax credit and discover how tax treaties may benefit you in your particular situation.

Filing requirements

For resident aliens in foreign countries, as well as American citizens living abroad, the filing requirements are essentially the same as if they were living in the U.S. To find out if you have to file, you consider the same things wherever you are living - namely, filing status, your age, gross income from all sources and your dependent status (being claimed by another taxpayer on his or her return).

When determining if you meet the gross income requirement, make sure to include all the income you receive, from both foreign and U.S. sources. This is required even if that income gets paid in foreign currency, the foreign country where you are living taxes the income or the income can (later) be excluded with the foreign earned income exclusion.

Self-employed people

If you are self-employed you must file a U.S. tax return if you earn at least $400 in net profits from self-employment, and your age is irrelevant. These net earnings from your self-employment must include all income, whether it is earned in a foreign nation or in the United States. Even if you earn it all in a foreign country, or it is all excludable as foreign earned income when calculating your tax, you still have to pay self-employment tax on the income.

Deadlines, penalties, exceptions

If you are like the majority of tax filers, you will be using the calendar year as the tax year and will therefore have the usual April 15 deadline for filing taxes on the preceding year. You can apply for an extension just as if you were living in the States, but you will have to remit the tax you estimate is due when you file the Form 4868 extension request. In fact, in the overwhelming majority of instances you will be subject to the same filing requirements, deadlines, penalties and interest as citizens and resident aliens filing in the U.S.

There are a number of special situations that arise with armed service personnel, some civilian government employees and others. You need to review the IRS publications that pertain to your particular circumstances, beginning with the three main guidebooks mentioned previously. If you have difficulty determining the correct course of action, you should definitely acquire the services of a tax professional with specific, recent experience dealing with resident aliens and U.S. citizens living abroad. Filing taxes is a serious undertaking, and more than most activities in life, it benefits you greatly to get things right the first time. Don’t proceed if you are uncertain, as it will cost you much more that way than doing it correctly with professional assistance.

1040-Tax Extension Wizard will file your online tax extension with the IRS and guarantee that the IRS will accept your application. Visit online for automatic extension on your individual tax return.

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A Look at International Money Transfers

By Dillon Norris

 International Money transfer is an essential part of your international move and/or business, which, if handled correctly can boost your bottom line or settling funds dramatically. Anybody looking to move overseas, send money to family or conduct business with an overseas company will need to purchase or transact in the destination currency. In order to complete any property acquisition ahead of your move or just simply transfer your existing assets over to your new country, the method you choose will make a big difference.

In today’s volatile currency markets, a small change in the currency rates, coupled with the high commission charged by most banks can make an enormous difference in the net currency amount received when converting your currency, you are placing what is possibly your life savings into someone else’s hands. Depending on the size of transaction, this could make a tangible difference of several thousand dollars; money you may prefer to put towards starting your new life! This can leave you exposed to the market fluctuations and could give you a handsome boost to your funds or put a big hole in your budget.

To start with you have several choices how you move your money:

1. Use your normal Bank and accept the charges and the fact that you may not be talking to an expert when you discuss the transfer.

2. Use a specialist international currency transfer company

3. Use a normal money transfer agent (again accept the charges)

4. Buy a huge amount of traveler’s cheques or take cash (not recommended)!!!

Lets discuss each one with a bit more detail:

Possibly the most important piece of advice I was given when emigrating was that the high street banks were not the best people to entrust with your money transfer overseas. How do you know that the bank teller has any idea what you are talking about (not being belittling but it probably isn’t an everyday service)? They charge commissions, transfer fees and then to cap it all off they give a reduced exchange rate.

Essentially, the high street money transfer agencies are similar to the banks. They may know more about the transactions but will hit you with commissions, charges and not the best rates.

Travellers cheques and cash speak for themselves - don’t do it! They are easily lost/stolen, some countries only allow a limited amount of cash to be carried into the country and in the case of travelers cheques, you may have to pay to buy them and then to cash them in. Just plain don’t do it!!!!

Last, but not least, it’s the international currency transfer companies. I had no idea that international currency transfer specialists even existed, never mind the exceptional services on offer.

Naturally, securing the very best rate of exchange becomes all important. There are several money transfer companies that offer an alternative to the banks - in fact “alternative” is too weak, they outclass the banks by a mile! When we first heard about the services on offer it really did seem to be too good to be true and we were very skeptical. We thoroughly researched the major high street banks in the UK and the rates they were offering (adding the fees and commissions!) and then compared to the service we were offered. Again, there had to be a catch.

The transfer company had no commissions, transfer fees and also gave a rate that was close to 3 cents to the pound better than the banks. All the funds would be transferred electronically to the bank account of our choice normally within 2 working days. We were even offered a choice of payment methods which included direct debits/debit cards/electronic wire transfers and the ability to “book” a rate in advance for a small deposit and then pay the balance prior to the contracted transfer date.

We had to find out how these people could offer such a service so quite bluntly asked. The answer was very simple. This was a dedicated, specialist company that dealt on the Forex markets in large volumes - this meant that there would be a low profit margin on each individual deal but the overall volume made it worth while. Because they are a specialist company, they could pass on the savings to their customers and the use of modern, electronic transfers ensured the costs were low with no need to pass them on to us! A true Win-Win situation.

The other added bonus is that these people are dedicated foreign exchange experts who research the markets and accurately forecast the trends and can advise action accordingly. If it makes sense to “book” a rate for settlement up to 2 years ahead then that will be recommended - you pay a deposit and commit to the deal and then they buy the currency at the agreed rate of the day. They hold the currency on your behalf and then at the agreed date you pay the balance and the money is transferred. This protects you against fluctuations and allows you to budget accurately.

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