Tag Archives: international tax

2013 Foreign Bank Account Reports Due June 30, 2014 – New FinCEN Form 114 and Mandatory E-Filing

calendarThe U.S. Financial Crimes Enforcement Network (FinCEN) Form 114 is the Report of Foreign Bank and Financial Accounts.  The FinCEN Form 114 is commonly referred to as the “FBAR,” which replaces the prior Form TD F 90-22.1.  A U.S. person must file an FBAR if the U.S. person has a financial interest or signature authority over foreign financial accounts and the aggregate highest balance or value of all reportable foreign accounts exceeds $10,000 during the calendar year.  The due date for the 2013 FBAR is Monday, June 30, 2014.  The due date of the FBAR cannot be extended.  Effective as of July 1, 2013, all FBARs must be filed electronically, rather than by paper.  The Form 114 (FBAR) is filed through

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Net Investment Income Tax Applies to U.S. Shareholders of CFCs and PFICs

Net Investment Income TaxThe new 3.8% net investment income tax applies to U.S. individual, trust and estate taxpayers for tax years beginning after December 31, 2012.  For U.S. individual taxpayers, the tax is 3.8% of the lesser of net investment income or the excess of modified adjusted gross income over a threshold amount.  The threshold amount is $250,000 for joint filers, $125,000 for married filing separately and $200,000 for other U.S. taxpayers.  For purposes of the tax, investment income includes:

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U.S. Taxpayers and Foreign Tax Credits

globeThe U.S. federal tax system provides for the direct foreign tax credit and the indirect foreign tax credit.  U.S. taxpayers may claim the direct foreign tax credit as a dollar-for-dollar offset against their U.S. federal income tax liability.  The credit is claimed for foreign taxes paid directly by the U.S. taxpayer on foreign source income earned outside the United States.  The direct foreign tax credit can be claimed by a U.S. individual or corporation that pays foreign tax on foreign source income from activities engaged in directly in a foreign country.  The direct foreign tax credit is also available for

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Caution: More than One Type of U.S. Federal Tax Withholding Could Be Required for Foreign Partners in a U.S. Partnership

It is very important for a U.S. partnership to determine the residence status of all partners in the partnership. A U.S. partnership is required to report whether a partner is a foreign partner on the Schedule K-1 filed with the Form 1065 federal partnership tax return. A partner is considered to be a foreign partner if the partner is a foreign company formed under the laws of a foreign country. A partner is considered to be a foreign partner if the partner is a foreign individual who is not a U.S. citizen, does not hold a U.S. green card or does not meet the substantial presence test to be treated as a U.S. resident for U.S. federal tax purposes. The U.S. partnership is also required to comply with

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Transfer Pricing – General Principles, Penalties and Contemporaneous Documentation

General Principles – Transfer pricing is relevant for U.S. companies with foreign subsidiaries or foreign parent companies that engage in certain intercompany transactions.  U.S. transfer pricing rules require that intercompany pricing between a U.S. company and a foreign affiliate must be based on an ‘arm’s length’ price that would be charged in a similar transaction with an unrelated third party.  The arm’s length principle is typically applied to intercompany transactions in which goods, services or property are sold between a U.S. company and a foreign affiliate.  The transfer pricing rules also can apply to

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