Tax planning can provide extraordinary benefits when we use it to avoid the two situations that we will focus on today: tax cliffs and surtaxes. For example, through tax planning one can turn $1 (one!!!) of income reduction into $6,659 of additional cash in one’s...

What is the difference between tax evasion and tax avoidance? Let’s start with tax evasion, as that’s the most straightforward the two to understand. The Merriam-Webster dictionary defines tax evasion as the willful attempt to evade the imposition or payment of a tax....

This week we are going to discuss how the USA taxes married couples. In many countries, married spouses each have to file their own tax return. In others, they are forced to file a combined tax return. The USA, instead, gives spouses options. For US tax purposes,...

Anticipating that many of you may not yet be ready to file, I am going to explain this week a way that allows overseas US taxpayers to obtain more time to file. Some of you may already know about this, especially if you live in a foreign country where it is always...

In last week’s post, we discussed the taxation of nonresident aliens, ECI and FDAP income, as NRA is the most common status of green card holders after they leave the United States and surrender their green cards, and that of US citizens who give up their citizenship,...

Last week we discussed sourcing of income, when income is from sources within the USA and when income is from sources without the USA. We are going to devote this issue to the taxation of US source income of NRAs. US tax residents are taxed on their worldwide income,...

Last week we discussed how, per our tax code, “by default, all income is gross income” (insight #4), from whatever source derived, unless specifically exempted. That’s the law. The week before last we discussed who is a US tax resident and who is a nonresident for US...

In the past two weeks we covered The Ultimate US Tax Guide’s first three Key Tax Insights: #1 - IRS correspondence does not necessarily equal error #2 - Lack of IRS correspondence does not necessarily equal agreement #3 - Your US tax residency status determines how...