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You have migrated to the US, what is your tax exposure?

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I am pleased to present this timely tax information from our guest blogger, Ini Adesanya, CPA

It is important that you are aware of the Offshore Voluntary Disclosure Program (OVDP), which allows foreign nationals to disclose specific information about their offshore investments without being penalized. There are various processes involved, and various returns that would need to be filed. Failing to fulfill these obligations can lead to the payment of high penalties and interest.

There are foreign tax credits available. The United States has tax treaties with many countries. This allows foreign nationals residing in the US, to claim a tax credit for taxes paid in their country of citizenship, thus preventing the issue of double taxation. This foreign tax credit is also available to US Citizens/Resident Aliens who pay taxes in other countries. Claiming these tax credits can reduce your tax liability

As a foreign national, Effectively Connected Income (ECI) is subject to withholding, but there are exemptions. In addition, Fixed, Determinable, Annual and Periodic Income (FDAP) such as dividends, interests, rental income that are not ECI are subject to 30% withholding unless a tax treaty exists which can provide a lower rate. Failing to fulfill these obligations can lead to payment of high penalties and interest.

What does the New Tax Reform have for me?

Even if you are a foreign national, for tax purposes (different from Immigration law) you can be considered a resident alien, either by holding a green card or meeting the substantial presence test. If you are a resident alien you are taxed in the same way as a US citizen.

There are various changes in the tax law; we will mention some of the changes.

Employee expenses: Effective January 1, 2018 claiming employee expenses as a deduction is now eliminated. As an employee, claim your expenses from your employer; for example, you are no longer able to deduct training, meals and entertainment or uniform expenses as a W2 employee. There is also another way around this.

Business Incentive, Effective January 1, 2018, there is an additional 20% qualified business income deduction that is available to pass-through entities but limitations and thresholds apply. Businesses are encouraged to take advantage of this new tax incentive. Proper structuring of the business is important.

*Please note that tax laws change, it is important to keep abreast with these changes

Resource- Internal Revenue Code.,

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