Recommendation On Tax Advisor Please

[adventurer1 42]

Hi All

 

Any recommendation on who to use for Tax Advisory?

We did our first Entry in October 2014, but only moved in Jan 2015.

 

 

[SJ27 185]

Hi All

 

Any recommendation on who to use for Tax Advisory?

We did our first Entry in October 2014, but only moved in Jan 2015.

 

Your best bet is to get a recommendation from expats in your area. Remind us where you are please?

You'll be liable for filing for last year as you technically became an LPR in October, but almost certainly won't have to pay anything in.

Warning: normal tax people aren't good at this especially first filing. We had an idea of what was needed and met about 4 or 5 consultants before we found one who understood what the requirements for first filing after landing was. Also, they are expensive. Once you are settled and its less complicated you can use H&RBlock, turbotax, etc for much cheaper.

[adventurer1 42]

Hi Sj27

 

thanks

we are currently in Greenwich CT, but only became CT residence after 2014 tax year. Was ''Texas" residence after LPR for state purposes.

[Superkruz 104]

we are currently in Greenwich CT, but only became CT residence after 2014 tax year. Was ''Texas" residence after LPR for state purposes.

For Federal tax purposes you were LPR's and as such are liable to file for 2014

[adventurer1 42]

Hi Superkruz

 

Yes we know we are liable. We just need some help with the actually filing part.

Do we file from date of LPR as Residence without any USA based income? (is there an option like this?) or will we be taxed on SA income in USA from LPR date?

How does that work?

 

 

Already paid 40% taxes in SA, don't want to have to be taxed again

[SJ27 185]

This is why you need an advisor. Technically you may be liable for tax but in practice the tax treaty and foreign income exemption should cover you. I know some people here have done it themselves but honestiy - the experts know exactly how to file for the exemptions and you should be ok. The only potential pay-in issue I seem to have come across so far is capital gains tax (but not on house due to more generous exemption in US) is more than SA.

[adventurer1 42]

SJ27,

you sold your house in Cape Town? If the sale date and the actual transaction date fall I 2 different tax years, which one counts?

 

We will ask around who to use locally.

Thanks

[Superkruz 104]

For income tax purposes in South Africa, the date that you should use is the date that the transaction becomes final. Put differently, it is the day when all suspensive conditions are met. It could be, for example, the day that the buyer gets financing to buy the house, or satisfies any condition in the sale agreement. The date that you sign the contract can only be used if there are no conditions in the sale agreement.

 

Here is the relevant extract from Schedule 8 to the Income tax act:

 

13. Time of disposal.—(1) The time of disposal of an asset by means of—

(a) a change of ownership effected or to be effected from one person to another because of an event, act, forbearance or by operation of law is, in the case of—

(i)

an agreement subject to a suspensive condition, the date on which the condition is satisfied;

(ii)

any agreement which is not subject to a suspensive condition, the date on which the agreement is concluded;

 

Edited March 30, 2015 by Superkruz

[SJ27 185]

SJ27,

you sold your house in Cape Town? If the sale date and the actual transaction date fall I 2 different tax years, which one counts?

 

We will ask around who to use locally.

Thanks

That is what happened to us - the date of actual sale/transfer is the date that counts.

 

Edit: this doesn't seem to be what Superkruz's extract says however it is what my tax consultant said. Which makes sense because the deal can still fall through any time before actual transfer eg the buyer loses all his money in a pyramid scheme and can't pay/take transfer.

Edited March 30, 2015 by SJ27

[Superkruz 104]

That is what happened to us - the date of actual sale/transfer is the date that counts.

 

Edit: this doesn't seem to be what Superkruz's extract says however it is what my tax consultant said. Which makes sense because the deal can still fall through any time before actual transfer eg the buyer loses all his money in a pyramid scheme and can't pay/take transfer.

SJ27, with respect to your tax consultant, but he is 100% wrong - the law says different. I get what you're saying about the buyer losing all his money and if that should happen and the deal gets cancelled somehow there is obviously no sale and no tax implication. However if the sale does go through and the property gets transferred to the buyer, you have to determine the date of sale for tax purposes which is as I explained earlier. Nobody files their taxes on 1 March (in SA) so I can safely assume that the sale (and transfer) is complete by the time you file your taxes so the whole question of whether the buyer will go bankrupt prior to the transfer is a mute point at that stage.

[Superkruz 104]

Do we file from date of LPR as Residence without any USA based income? (is there an option like this?) or will we be taxed on SA income in USA from LPR date?

How does that work?

 

Already paid 40% taxes in SA, don't want to have to be taxed again

There has been extensive discussion of these exact issues on the forum - just search and you will find a lot of info on this topic. In short, yes you are liable to file a tax terurn for the whole year in which you became a LPR. From 1 Jan up to the date that you became LPR you file as a Non-resident (only report USA income, if any) and from the date of becoming LPR you file as a resident (report all income, USA & SA). Your SA income will be taxed as if it was earned in the USA but there are also credits and deductions available that would likely offset any tax liability you might have.

[adventurer1 42]

[at]Superkruz

 

Actually, I did the search. Even narrowed my wording to Tax only, and couldn't find anything

 

I don't know why. Maybe the historical threats are available anymore

[Superkruz 104]

[at]Superkruz

 

Actually, I did the search. Even narrowed my wording to Tax only, and couldn't find anything

 

I don't know why. Maybe the historical threats are available anymore

I will also take a look and post a link if I find anything. I also struggle to find old threads sometimes.

[Superkruz 104]

Here are some links on Income tax:

 

In topic - Returning to SA after Green card activation

In topic - Taxes and the Green Card Landing

In topic - Taxes (State and Federal)

 

Then there are also the FATCA and FBAR requirements:

 

Link 1

Link 2

Edited March 31, 2015 by Superkruz

[SJ27 185]

SJ27, with respect to your tax consultant, but he is 100% wrong - the law says different. I get what you're saying about the buyer losing all his money and if that should happen and the deal gets cancelled somehow there is obviously no sale and no tax implication. However if the sale does go through and the property gets transferred to the buyer, you have to determine the date of sale for tax purposes which is as I explained earlier. Nobody files their taxes on 1 March (in SA) so I can safely assume that the sale (and transfer) is complete by the time you file your taxes so the whole question of whether the buyer will go bankrupt prior to the transfer is a mute point at that stage.

Sorry, yes I was getting confused with the US return. It was all in the same SA tax year but different US tax years. My taxes are quite complicated and I do sometimes lose track, lol, which is why I pay other people to do the hard work.

 

(You did however forget, when you said that no one files taxes on 1 March in SA, that provisional taxpayers have to file and pay in any estimated tax shortfall by 28 Feb. So yes all my CGT-liable transactions have actually already been reported to SARS.)

Edited April 1, 2015 by SJ27