US Tax
| Offshore Financial Products | Offshore Center | Regular Savings | Health Insurance | Life Insurance | US Tax | Land Banking |
|---|---|---|---|---|---|---|
| Offshore Funds | Hedge Fund | Mutual Fund | Capital Protected Fund | Real Estate Investment Trust |
The U.S. has one of the most complex taxing systems in the world and Americans working or relocating outside the U.S. face an extremely complex tax situation. Knowledge of these tax laws can save you thousands of hard earned tax dollars.
Your U.S. Income Tax Obligation while Living Abroad.
As a U.S. expatriate residing abroad, you still have a legal obligation to file U.S. tax returns each year on your worldwide income.
Foreign Earned Income Exclusion
If you have your full time residence abroad for a full calendar year, or live there for 330 days out of any consecutive 12-month period, you can exclude up to $80,000 of earned income from U.S. Income Taxation for 2004 and beyond. If you are married, and both of you earn income and reside abroad, you can also exclude up to another $80,000 of your spouse's income from taxation. These exclusions can only be claimed by filing a tax return and are not automatic if you fail to file your Form 1040 for the year it applies as well as the appropriate forms claiming this exclusion.
Earned income is that which is paid to you for your work or services and does not apply to rental income, dividend or interest income, or other types of income that is not paid for your own personal efforts.
You can also claim an additional exclusion from your U.S. taxes in excess of the $80,000, if the rent you pay on your residence abroad and other living expenses exceed a standard amount established by the IRS. This exclusion only comes into play when your earnings are in excess of the $80,000 foreign income exclusion.
Tax-advantaged investing is any type of investment program or vehicle that strives to reduce the impact of taxes on investor earnings. There are tax-advantaged investment vehicles in just about every asset category. The name "tax-advantaged" generally refers to two different kinds of investments: tax-deferred and tax-free.
Tax-deferred investments simply defer taxes until investment earnings are withdrawn, at which time the investor is more likely to be in a lower tax bracket. Tax-free investments produce earnings that are actually free from federal taxes, and sometimes free from both federal and state taxes. Tax-deferred investments include most retirement investing vehicles, like Traditional IRAs, 401(k)s, pension plans, annuities, etc. Municipal bonds, municipal bond funds and Roth IRAs are considered tax-free. 101A plans are somewhere in the middle and are one of the best planning tools the IRS allows for.
The Tax-advantaged accounts & investments we recommend, use up-to-date strategies that are IRS approved products within the USA. Depending on the client's circumstances we are capable of recommending certain IRS compliant structures based offshore.
Tax-advantaged accounts. If you use a tax-advantaged account such as an IRA or 401(k) to invest, you defer income taxes until you begin to take out the money. As a result, a tax-advantaged account benefits more from compounding than a taxable account. Tax-advantaged accounts are aimed at encouraging savings for retirement or college. "It's not how much you make that matters, it's how much you keep." When considering tax-advantaged investments, make sure you compare the after-tax yield of a comparable taxable investment with the yield of the tax-advantaged investment.
US Tax Rate Table
Taxable income is net of deductions and foreign earned income exclusions.
Federal Personal Income Tax Rates for 2005
Filing Status and Taxable Income Level
