Larry's 2012 Tax Guide For U.S. Expats & Green Card Holders - In User-Friendly English!. Laurence E. 'Larry'
DISCLAIMER: Pursuant to regulations governing the practice of attorneys, certified public accountants, enrolled agents, enrolled actuaries and appraisers before the Internal Revenue Service, unless otherwise expressly stated, any U.S. federal or state tax advice in this book is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of (i) avoiding penalties that may be imposed under federal or state law or (ii) promoting, marketing or recommending to another party any transaction or tax-related matter(s addressed herein.
Let the buyer beware: If you have a tax problem, you’d better discuss that problem with someone else who can help you resolve that problem – True, the cost you pay for this book is worthwhile, assuming you read the book – and it will help you narrow down some of your options when you have to make a tax decision. But by no means should you think of this book as your sole means of ‘authority’ when you are making a tax decision. Besides, if you want to sue me, you’d have to come to China!
Now…..have I made myself perfectly clear?
The sections of this book
The introduction – A literary (assuming you do not think that ‘tax literature’ is an oxymoron) wonder, this opening section – an absolutely delightful way to ease on down the tax system road that the IRS has placed before us! Not only are you sufficiently warned about the new goodies the IRS has added to your workload of ongoing tax obligations but if you die without having planned properly, even with a minimum estate, Merrill Lynch provides an example of how it will make it rough for your heirs to get that to which they are entitled…..and need!
The final tax acts of 2011 – tax changes we need to know in 2012…..On 23 December, 2011, the House of Representatives, Republican controlled, rather than be blamed for a possible economic sink hole that would cost the Republicans the 2012 elections, agreed to the Senate passed legislation that will impact you, the expat, ONLY if you are earning wages from which social security tax is being deducted – read on to find out what you have for 2011 and 2012 but is subject to end, 31 December 2012…..
What is income – at least what the IRS considers income and which categories you fall under, having to classify your income. For all intents and purposes, this is a good ‘executive summary’ of what the U.S. tax system is like. Other than some numerical updates, in fact, nothing has been changed in this section – after all, if it works, then why ‘tamper’ with it???
Tax rules applying to you, the expatriate U.S. tax filer (the real ‘nuts and bolts’ reason you’ve probably thought of that justified buying this book – We’ve updated where updates are necessary. Otherwise, we’ve left this section pretty much the same as that of last year because we had such wonderful comments about it. This section contains the things you really need to know to take advantage of the various and sundry exclusion laws, rules and regulations – the only ones you truly want to take advantage of!
F(u)BAR & TDF90.22-1 – my narrative about that F(u)BAR form you have to file by 30 June 2012 as your calendar year 2011 report. A copy of this form and its instructions is at the back of the book, within the appendix. By the way – I take sole responsibility for adding that ‘u’ between the F and the B for FBAR…..Let’s face it, you cannot pronounce the two letters FB – you need a vowel! Besides, that FUBAR acronym is truly fitting and proper for these regulations!
FATCA – with a little bit about the voluntary disclosure programs thrown in – Foreign Accounts Tax Compliance Act is one of the dumbest things the U.S. Congress has ever passed. Just how disastrous is it? Read this section and see! I’ve added a bit about voluntary disclosure, as ‘envisioned’ by the IRS here because I just like the way this essay reads – but it should probably have been included within the F(u)BAR section…..such is life…..
Forms 2555 and 5471 (with mention about the partnership information return, Form 8865) – Do you own a business – either a corporation or a partnership – outside of the U.S.? Then you have to adhere to filing requirements for Form 5471 and/or Form 8865. Are you earning income overseas that is eligible for exclusion from U.S. individual income taxes – then you MUST file Form 2555. Here’s an attempt to make these forms appear ‘user-friendly’…..
Form 8938….again! Now it is for real, folks….. THIS IS BRAND SPANKING NEW FOR THE TAX RETURNS YOU DO IN 2012!!!!! After reading this essay, if you are liable for filing the 8938, how much time do you think it’s going to take you to do it?
Gifts, the Gift Tax and Trusts….. and those trust returns forms 3520 & 3520A and the gift tax return you might have to file in 2012 – This is the year to give – if you’ve got it, do it!!!!! Of course, any year is a good year to receive! But if you are a recipient of anything from someone who is not a ‘U.S. person’ did you know that you are responsible for reporting it, with the burden of proof falling upon you to prove that it is free of tax…..and that even if it is free of tax, if you don’t report it you are still potentially liable for a steep penalty?
Penalties, penalties….and more penalties – Here it is, folks, in one fell swoop! All the penalties you need to give you sleepless nights – They are, by and large, ‘confiscatory’!
The U.S. – Canada Tax War Oh yes, there is one that is taking place right now – ask any dual citizen – especially those who didn’t even know they were dual citizens. Speak with them and you’ll hear all about rage, north of the border.
Expatriation, the ‘ultimate’ experience – Were you amongst the ‘best and brightest’ from your homeland, leaving for the States during the 1970s when there was so much uncertainty regarding the future? Have your returned to the land of your birth, now that your children are grown and have lives of their own? Are you concerned about your ongoing US tax obligations even though you are no longer there? If all this applies, then this section is especially for you.
The ‘India Papers’ - extracts from a series of articles about the U.S. tax system that Larry wrote for Tax India International during 2011. This is where Larry is truly ‘unleashed’ as he criticizes the U.S. tax system and its treatment of U.S. tax filers abroad.
2012’s Voluntary Disclosure Program – Yes, there is a reason for not publishing this towards the end of 2011: on 9 January 2012, IRS Commissioner Doug Shulman announced the new program.
Phil’s List, Plus One – Every tax form that the overseas American tax filer might encounter is listed here….and those forms with the asterisk are included in the appendix!
The appendix – These are the “essential” overseas forms that one should always be able to find at the U.S. Consulates but never can…..they are available off of the IRS website but that site is so ‘busy’ that it ain’t very user-friendly (although, I’ve got to admit, it is easier to download most IRS forms than it is to get a refund from the iTunes store for an incorrect bill!)
Introduction
…..in the beginning…..there’s always got to be an INTRODUCTION: A literary (assuming you do not think that ‘tax literature’ is an oxymoron) wonder, this opening section – an absolutely delightful way to ease on down the tax system road that the IRS has placed before us! Not only are you sufficiently warned about the new goodies the IRS has added to your workload of ongoing tax obligations but if you die without having planned properly, even with a minimum estate, Merrill Lynch provides an example of how it will make it rough for your heirs to get that to which they are entitled…..and need!
Welcome, dear reader, to the 2012 edition of Larry's U.S. Tax Guide for Expats and Green Card Holders - in User-Friendly English! You guys are doing something very, very bold: you've actually purchased a book about the world's most confusing tax system. I am trying something equally as bold - to write a book that is readable! Now, my friends, go on and do something more bold than that: read the sections of this book which interest you.....you don't have to read the whole thing but read those sections that are applicable to you. You'll find it informative.....I guarantee it! Well.....not