Jump to content
Sign in to follow this  
Heidi556

Taxes; federal, state, and FBAR

Recommended Posts

Hi all

This will be my first time complying with reporting requirements. Checking to see if I am on the right track. As I have it us new permanent residents have to submit:

1. Federal income tax returns to the IRS. April 15. Form 1040. This is global income. But US and SA has a double taxation agreement, so you may not have to pay tax on your foreign earnings, but you have to report it.

2. State income tax returns. (Hawaii April 20)

3. FBAR Foreign bank account report. April 15. Form 8938 and 114. No tax or fee associated with filing, but you have to report.

 

I arrived 09/24/2019, so I have to file for the whole 2019 year by April 15 2020. I am a shareholder and director of a few companies in SA, so I will have to file quite a few forms, so will consult a local tax preparer, as the online tools i have found do not account for foreign earnings.

Share this post


Link to post
Share on other sites

Hello Heidi556

Yes, you are on the right track.  The first year of filing is always tricky, because of the dual residency status - i.e. income you earned before the date you landed and became a PR, and the income you earned afterwards.

If you earned any USA source income BEFORE you became a PR, I believe you will fill on form 1040NR for that, and attach to your 1040.  However, if you had no USA source income before you landed, only SA source income, you will skip that step. Non-USA source income - e.g. from South Africa - that you earned AFTER your date of landing - i.e. after you became a PR, is indeed reported on your 1040.  

For that SA income,  you can claim the Foreign Tax Exclusion - up to a limit of $105 900 - which may be the easiest way of dealing with it - if your income was below that. Look at form 2555 and related instructions for that

Alternatively, you can file form 1116 for a foreign tax credit - i.e. declaring the income you earned in SA, declaring the amount of tax you paid to SARS for that income, and then only being accountable for the difference (if any) if the Federal tax on that amount is higher than what you actually paid. 

In my first year, I tried - and failed - to find someone who could assist - the big online filing companies like HR Block and TurboTax, can't handle this type of filing, and even the people in their pop-up stores don't really get trained to handle this. so it is indeed hard to find someone who can guide you through this, but would definitely be your best bet.

However, you sound like you have a good grasp on what needs to be done!  Good luck with it all.
 

Share this post


Link to post
Share on other sites

I concur you will do much better at finding someone to help prepare it the first time, and indeed if there is anything less than just straightforward salary income we’ve found it still pays to get a preparer after that as they know much better the most efficient way to file. We found someone with experience preparing foreign plus local for first year through word of mouth from other local immigrants, that could be an avenue for you. I do my FBAR myself because it’s very straightforward, but everything else I just give a pile of paper to my consultant and voila, I get a completed form and a bill back :D

Edited by SJ272

Share this post


Link to post
Share on other sites
On 1/29/2020 at 9:45 AM, SJ272 said:

indeed if there is anything less than just straightforward salary income 

Oops, I meant anything more, not less! Lol

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

×
×
  • Create New...