New (to the board) tax preparation expert here to answer your questions

Hi there,

My name is IJ Zemelman and I am a professional tax preparer (EA) authorized to represent clients before the IRS. I am the owner of the tax preparation site www.taxesforexpats.com. Our site is dedicated to helping Americans living abroad stay on top of their US tax obligations.

This is my first post - and I look forward to answering your questions on this message board with regard to US expatriate tax issues.

Thank you,

--Inna

Did you agree this with the board owners? This is kind of like advertising, isn't it?

Tremula, thank you for your concern, the forum terms of use state that people can make one post about their business in a relevant area, it's multiple posts of the same which are discouraged.

Hi there,

My name is Inna Radzinsky and I am a professional tax preparer (EA) authorized to represent clients before the IRS. I am the owner of the tax preparation site www.taxesforexpats.com. Our site is dedicated to helping Americans living abroad stay on top of their US tax obligations.

This is my first post - and I look forward to answering your questions on this message board with regard to US expatriate tax issues.

Thank you,

--Inna

Welcome to the forum Inna, thank you for joining us.

Inna, thank you for the offer to help.  I'm sure you'll be kept busy here!  Welcome!

Thank you for the kind words, I look forward to helping those who are looking for U.S. tax advice.

Hello Inna, thanks for your offer.  I do have a question about US taxes.  I am a US citizen and have been living and working in the UK for 15 months on a Tier 1 visa.  I was only back in the States for 8 days in 2010.  My current salary/income is £35K a year.

My question involves my mortgage back in the States.  I own a house with a friend and in the past we have split the mortgage interest 50/50 on our tax forms.  Based on my tax withholding/taxes taken out by my US employer, the mortgage interest usually allowed me to receive 4K USD back on my tax return.

The mortgage interest deduction decreased my tax liability and then using the charts in the tax book along with what I paid in for tax through my work/employer, I've always had a return.

So my question is, since the only tax paid out of my current employment checks go to the UK government, does it really matter to decrease my liability for US tax by using the mortgage interest?  I am guessing that because I come no where near the 91K income line that I won't have to pay US taxes this year, but my question is whether or not I can get a return even if I didn't pay US taxes through employment.  Can you get a US 'return' even if my only taxes paid out of my employment check went the UK government?
If I can't use the UK taxes withheld from my checks on my US forms, should I let my house partner take all the the mortgage interest this year?

As you can tell, I am a bit confused and need a little help on how this is going to work.
Thanks in advance,
Christian

Hello Christian,
Your reasoning is absolutely valid. Having 15 months spent in UK, you qualify for the Foreign Earned Income Exclusion, which will bring your U.S. taxable income to zero. In your situation, it does not matter how big your mortgage interest deduction is - this is a non-refundable amount. In other words, you will not get a refund. It makes sense for your to let your house partner take all the mortgage interest rather than have it lost.

You have to make sure that the bank holding your mortgage enters full interest deduction amount on each form 1098 issued to you and your partner. Some banks indicate full amount on forms for each borrower and let them decide how to split the deduction. However, some institutions indicate on each form the amount that represent individual borrower's share of the amount allowable as a deduction. If in the previous years you received full amount on each form 1098, than you can decide who takes full deduction this year. Otherwise, you have to contact your bank and ask for corrected forms 1098.
Regards,
Inna
www.taxesforexpats.com

Ah, thanks Inna, that is a big, big help.

Just one other question that really doesn't relate to me, but how do people who don't pay much tax or any (say they weren't employed, but no unemployment payments), receive refunds?  I know you have to look at what you paid in for the year through your employer and what your taxable bracket is, but I thought the, for lack of a better term, 'poor' usually get a refund. (maybe this is due to dependents or other credits?)

Can you only get a refund if you have paid in tax, in my case, through an employer?

Christian

Hi Christian,

There are two types of credits: refundable and non-refundable. For example, credit for higher education expenses or student loan interest deduction are non-refundable. It means, you can only receive a refund to the extent of taxes paid.

Other credits, usually those for the low income taxpayers, are refundable and a refund can be issued even when there is no tax obligation. Examples of such credits are EIC (Earned Income Credit - only for the low income taxpayers) or additional child credit. It does not matter whether taxes are withheld through employer or taxpayer is self-employed and pays taxes on his own.

Obama economic stimulus payments ($800 for the couple and $400 for the individual) distributed through 2009-2010 are also refundable. Even the expats with zero U.S. tax obligation can receive this credit. All they have to do is file the U.S. tax return.

Regards,
www.taxesforexpats.com

Hi,
It's good to have another professional on here. I'm sure you'll be busy and that some people will follow up with your company.

I have a question that I posted about a while ago. I'm a US/UK citizen living in the US  and one of three executors on my mother's will. She is a UK citizen, lives in the UK and has no US assets. The will is simple, with the assets being divide 3 ways between my brothers and myself, but I will have to take it through probate, sell the house and distribute the estate from my mum's accounts or one set up in probate.

I understand that I will have to declare any inheritance over $100k on form 3250, but does being the executor on a foreign estate have any FBAR, FATCA or other US tax implications.

Your mother's estate will be treated as foreign estate for the purpose of filing form 3250. At the same time, it will be treated as a domestic estate for FBAR reporting purposes. If one or more executors on the estate are United States persons, the estate is treated as a domestic estate, subject to FBAR reporting.

Estates have no independent filing obligation but their assets are treated as owned by their executors for purposes of determining whether those persons have any filing obligations. Answer two: you do not file TDF 90-22 in the name of the estate. You file TDF 90-22 in your name.

www.taxesforexpats.com

Your mother's estate will be treated as foreign estate for the purpose of filing form 3250. At the same time, it will be treated as a domestic estate for FBAR reporting purposes. If one or more executors on the estate are United States persons, the estate is treated as a domestic estate, subject to FBAR reporting.

Estates have no independent filing obligation but their assets are treated as owned by their executors for purposes of determining whether those persons have any filing obligations. Answer two: you do not file TDF 90-22 in the name of the estate. You file TDF 90-22 in your name.

www.taxesforexpats.com

Yes I got very "turned around" by all this I was even thinking that FBAR might not be required as I only have a 33% interest in the account and am executor with 2 non-US citizens.

Still I took the safe way out and got my mum to take me off the will as executor so now I'm just a beneficiary and when the worst happens I'll just get the estate to pay any assets directly into my US back account.....so I assume no FBAR will be required.

Thank you for the mortgage interest information...I own a house in the US with an EX and I always claim but this year seems no point.
The house interest and it is a rental at a loss so I am going to let him claim it since it won't do me any good. He just has to send me goodies when I want them ;-)

Still I took the safe way out and got my mum to take me off the will as executor so now I'm just a beneficiary and when the worst happens I'll just get the estate to pay any assets directly into my US back account.....so I assume no FBAR will be required.

You are right; as a beneficiary you do not have FBAR reporting obligations with regard to the estate. Since the funds will be transferred to US account, no FBAR with regard to this transfer, too. Just file 3250.

something occurred to me the other day.  I've been filing every year since moving to the UK but I'm wondering will my children have to file US returns once they start working?  Bit early as my daughter is two and a half and baby number two not due for six weeks LOL but I was wondering.