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Common tax and financial planning challenges 2010
- 1. Common Tax & Financial Planning Challengesin the US Expat Life Christine Elsea Mandojana, CPA October 28, 2010
- 3. The Dependent Care Credit & Foreign Providers
- 6. Owning & Renting Real Estate Unrelated Party? YES NO Fair Market Rent? Schedule E YES NO Schedule A Note: This example assumes a primary residence converted into rental status. Other rules apply to vacation homes rented less than 15 days and residences rented > 15 days but used for personal purposes for more than the greater of 14 days or 10% of total days rented.
- 7. Owning & Renting Real EstateSchedule E Deductible Expenses Capital Expenses
- 10. Repairs
- 11. Management Fees
- 12. Commissions
- 13. Insurance
- 15. Prolong the Life of the Property
- 16. Adapt the Property to a New or Different UseExamples 1§263(a)(1)
- 17. Owning & Renting Real EstateSchedule E Deductible Expenses Capital Expenses
- 18. Line 20: Depreciation Expense What is Depreciation Expense? Recapturing the cost of a capital asset over it’s useful life (or recovery period as defined by IRS tables!) Owning & Renting Real EstateSchedule E How Do You Calculate It? Depreciable Basis divided by Recovery Period (apply convention & in some cases pro-rate)
- 19. Line 20: Depreciation Expense What is the Recovery Period? Owning & Renting Real EstateSchedule E IRS Publication 527 US Outside US
- 20. Line 20: Depreciation Expense What is the Depreciable Basis? Owning & Renting Real EstateSchedule E Example: Residential Rental Assume Adjusted Basis > FMV at rental conversion date
- 21. Line 22: What Happens to a Rental Loss? Owning & Renting Real EstateSchedule E
- 23. If MAGI is between $100k and $150k, pro-rate the $25k
- 26. Must recapture on the tax return in year of sale up to the capital gain realized (even if no capital gain tax due to Section 121)
- 29. Household employee or daycare; not Kinder+
- 31. Multiply the total eligible expenses by the applicable % based on income…usually 20%
- 33. School fees for Kindergarten and higher do not qualify; but after-school care does qualify
- 36. Physical Presence Test (outside the US for at least 330 full days in a rolling 365 day period—prorate if 365 days cuts between tax years)
- 38. Must prorate if qualifying period cuts tax years
- 39. Can take two exclusions if married filing jointly and both taxpayers have qualifying income and meet exclusion test
- 41. Itemized Deduction of Foreign TaxesOnce you elect the Foreign Earned Income Exclusion, you must continue using it for all eligible income until/unless you revoke the election. Once you revoke the election, you cannot elect to use it again for 5 tax years. Foreign Earned Income
- 42. Foreign Bank Accounts & Their Reporting Requirements
- 46. Any foreign financial account (in aggregate) with balance $10k or more at ANY time during the year
- 48. Foreign Bank Accounts Sample Page 1
- 49. Common Tax & Financial Planning Challengesin the US Expat Life Christine Elsea Mandojana, CPA October 28, 2010