American Expat Tax Services Pte Ltd

U.S. Persons and Others Required to File

The far-reaching U.S. tax code has world-wide tax implications for U.S. Citizens and Residents and potentially all others doing business in the United States.  Even aliens who have sold U.S. based assets are subject to U.S. taxation.  We can assist with all personal tax issues such as foreign-earned income (Form 2555), foreign tax credits (Form 1116), sales of U.S. assets, responding to notices from the I.R.S., tax abatement, & Department of Treasury reporting requirements.  If you are interested in reading more please review publication 54.

We can also advise on the US tax implications of setting up your own business in Singapore and provide advice and support on the types of filings required.  These types of filings require US GAAP conversion work and as such as labor intensive and expensive. 

Other Tidbits:

Did you know? You may be able to write off some of the expenses associated with child care even while living overseas.  If both parents are working (or actively seeking employment) and you are not excluding your entire income, you may be eligible.

Did you know?  You may be able to write off mortgage and interest of two homes no matter where in the world they are located. 

Did you know? Filing late can jeopardize your ability to exclude foreign-earned income.  The first year foreign-income exclusion must be elected on a timely return.  However, under the law, you can advise the IRS of your intention to use it on a late return if you file prior to being contacted by the IRS.  Don't delay old filings any longer!  (If you have unfiled returns over six years old with zero tax due the IRS has indicated that it isn't necessary to file informational returns.)  It is always better to file voluntarily, before being discovered by the IRS.

Report of Foreign Bank and Financial Accounts (FBAR)

Who must file:  Anyone with a financial interest in, signature authority, or other authority over one of more financial accounts in a foreign country.  Financial accounts are broadly defined.

What types of Accounts trigger the reporting requirement?:  Generally, any bank, securities, or other financial instruments accounts.

What is the penalty for failure to file?: Criminal penalties for failure to file a report, supply information, or willful filing of a false or fraudulent report can result in penalties of up to 50 percent of the amount in the account at the time of the violation.  See 31 USC 5322(a)&(b), and 18 USC 1001 for more details.  Also, be sure to look closely at your tax return to see if your tax preparer checked the correct box on schedule B. 

I work for the U.S. Federal Government or an Active Duty U.S. Military stationed overseas.  Do I have to file?  Yes, if you have foreign accounts exceeding the aggregate limit.  For example, if you live in Singapore and have opened a local account to pay rent and local bills or run a local business, then you most likely will hit the trigger for reporting.

When is the form due:  June 30th.

Do I file the form with my taxes?:  No. Send it directly to U.S. Department of the Treasury, P.O. Box 32621, Detroit, MI 48232-0621. 

Will filing this form increase my tax liability?  No.  This is a reporting document only.  Money in your account should have already been reported to the IRS on a previous year's tax return.

What if I was supposed to file for a previous year, but didn't?:  You should seek assistance from a tax attorney and/or schedule an appointment with a tax advisor to review your options.

Can I file the form myself?:  Yes.  You can download the form and its instructions from www.irs.gov. 

Foreign Trusts (U.S. Beneficiaries) 

There are two pieces of legislation in recent years that have created important reporting requirements for foreign grantor trusts.

First, the 1996 Small Business Job Protection Act and secondly, the 2010 Hire Act which included the FATCA provisions.  Under the 1996 Act, IRC 6048(b)(1) U.S. owners of foreign grantor trusts became responsible to ensure that the foreign grantor trust (Trustee) file the annual trust tax return: form 3520-A.

The 2010 HIRE Act, codified at IRC 6048(b)(1)(A) & (B), makes the grantor responsible to submit the information to the IRS with respect to the Trust.  The HIRE Act also increases penalties and increasing reporting requirements.

The following mandatory U.S. tax filings are required when a U.S. taxpayer forms a Foreign Grantor Trust:

1.  Form SS4

2. Form 56

3. Form 709

4. Form 3520

5. Form 3520-A

Civil & Criminal Penalties may be imposed.  IRC sections 6048(b), 6677(b), 7203, 7206 & 7207.

Estate Planning 

If you have significant assets outside the United States, don't forget to have a will drafted in Singapore to protect your loved ones.  For basic wills we recommend the services of Simply Wills.  (Please tell them we sent you:  our keyword is Expat Tax.)  If you have a more complex situation or are considering a trust please ask us for a referral to a tax attorney.

Fast Fact:  There is no Tax Treaty between the US and Singapore. 

Fast Fact:  A US Green Card holder working outside the US will be presumed to be on a short term contract.  If a US Green Card holder can satisfy the day requirements of the Physical Presence Test they may be able to exclude income. 

US Green Card Holders (LPR)

Permanent Residents of the United States must continue to file tax returns, as an actual US citizen. Even if you did not return to the US during the year and meet the definition of resident for another country, you must continue to file. Further, for those holding the card for 8 years or more, if your greencard was taken from you for failure to comply with INS immigration regulations and you have not yet filed Form 8854, then you are still subject to US worldwide taxation until Form 8854 has been filed.

IRS Commissioner Doug Shulman's testimony before the US Senate provided an update on collection efforts for Offshore Tax Evasion Legislation.

 Click here to read the transcript.

Legal Developments:

UPDATE:  JAN 2010

Whistleblower in the UBS case ordered to jail. 

 

UPDATE:  Jan 2009

UBS is closing all offshore accounts of US clients as it comes under pressure from the IRS.  Many US clients of UBS have already voluntarily submitted themselves to the IRS thus avoiding more serious punishment.  Clients closing accounts will have the option of transferring assets to onshore wealth management units in the US, Switzerland, or Hong Kong or receive a check (thus creating a paper trail for US federal prosecutors who are reviewing the files now to see if such accounts were used to evade taxes.)  Sources: Singapore Business Times,  Wall Street Journal.  Reuters.

JULY 1 2008.  

Federal Judge Approves IRS Summons For UBS Swiss Bank Account Records:

A Federal Judge in Miami issued an order authorizing the IRS to obtain information from Zurich, Switzerland-based UBS AG about U.S. taxpayers who may be using the Swiss bank accounts to evade federal income taxes.  The "John Doe" Summons comes after a former UBS banker submitted a statement alleging that $20 billion of assets under UBS AG's management in "undeclared" accounts.

www.usdoj.gov/tax/txdv08584.htm