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Working Aboard?  There are tax issues!

10/26/2019

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Here are three quick things to know about working abroad.

Issue 1: Section 199A

To qualify for the Section 199A deduction, your business income must be effectively connected with the conduct of a trade or business within the United States. The preamble to the proposed Section 199A regulations clarified that in almost all circumstances, this means the income has to be U.S.-source income to qualify.

Issue 2: Income Tax

You have two ways to reduce or eliminate the U.S. income tax on your foreign-source income. The only way you’ll know for sure is to calculate your return using either method and pick the one with the better outcome.

Issue 3: Self-Employment Tax

If you file a Schedule C, you already know you need to pay self-employment tax on your net Schedule C income. However, the U.S. has totalization agreements with certain countries to avoid double Social Security taxation. These agreements usually apply to self-employed individuals.

The IRS expects to see self-employment tax when there is a Schedule C on a tax return, there are two steps that you will need to take satisfy the IRS and avoid costly audits. 

Warning

If you have an interest in or signature authority over foreign financial accounts or other foreign financial assets, you may have to file special forms in addition to your tax return.

If you don’t file the forms but had a filing requirement, the penalties could be severe: as high as $10,000 per form per year.

If this is your situation contact us so we can develop a tax plan.
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    Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.

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    To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
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    These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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    Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion.  Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.

    Keana founded this website and decided and created this blog page to offer a space for those seeking knowledge to understand, however not to be confused with advice or planning strategies.

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