Whether you are a U.S. citizen living abroad or a non-citizen who needs assistance in the U.S., estate planning is crucial. This can be difficult, especially if you are living internationally. By contacting an attorney today, you can discuss the following to ensure that you do not make mistakes in your estate plan.
Which Parties Can Profit from International Estate Planning?
Whether you are a U.S. citizen married to a non-U.S. citizen, a U.S. citizen living abroad, a non-U.S. citizen with children that are U.S. citizens, a non-U.S. citizen resident in the U.S., or a non-U.S. citizen staying in the U.S. with a temporary visa, international estate planning services can be very beneficial. In the event of your passing, an estate plan can help preserve your assets and make sure your desires are carried out. Additionally, an estate plan can help you avoid probate and save on taxes.
More people than ever before are moving to and living abroad in a world where mobility is on the rise. People are also investing, starting businesses, and purchasing real estate abroad. Sometimes, they forget their obligations to report, and this can result in huge penalties.
US Persons & Foreign Persons with Investments Moving to the US: Beware!
All money earned by U.S. citizens is subject to taxation, including income derived from abroad. The income can be liable to Social Security and Medicare taxes, depending on the circumstances. Taxes on assets held abroad are likewise due by U.S. citizens. It is crucial to comply with all reporting requirements for foreign assets, take advantage of all income exclusions and credits available to you, and pay close attention to the precise language of the income tax treaties that apply to your circumstances in order to avoid unnecessary tax burdens or double taxation.
You can prevent double taxation by carefully reading the terms of the relevant tax treaty of the nation where your property is held. While some accords solely permit the foreign government to tax the property, others also permit the United States to do so. The taxation of donations made to heirs varies by nation and is based on how closely related the donor and recipient are to one another. You can get enlightening, individualized legal counsel for your circumstances from skilled international estate planning experts.
Did you know that FIRPTA applies if you invest in real estate?
The Foreign Investment in Real Property Tax Act (FIRPTA) imposes United States income tax on foreign persons selling real estate in the United States. FIRPTA may require you to withhold 15% of the money from the sale as a guarantee to pay capital gain taxes. As the buyer, you are responsible for setting this money aside and may face legal action if you do not do so. As a foreign seller, you need to know that you will not receive the full amount of the sales price, and this may be an inconvenience for you. Since the tax due is generally less than 15% of the purchase price, you will have to apply for a withholding certificate or wait until next year to get a refund.
Do you have a Single-Member LLC?
If you are a foreign investor and have a Single-Member LLC, you should file Form 5472. This form may cause confusion. Many people think that just because they do not have to pay taxes or because their LLC has not generated income, they do not have to file anything in the United States. What they ignore is that Form 5472 is an informational return, and failure to file it can result in a penalty of up to $25,000.
Penalties are Painful
Tax fraud is a serious charge that can lead to thousands of dollars in fines and even jail time. Making sure your estate plan is well-planned can help prevent this. Here at Legacy Counsel, our firm is dedicated to identifying workable legal solutions for various estate planning problems, no matter the circumstance. Call us at 305-907-5540 to schedule a free 15-minute consultation or visit our website at www.LegacyFreeCall.com. Don’t hesitate to start your international estate planning today. We look forward to hearing from you!
