As you may know, the US taxes its "persons" based upon their citizenship status. This is called universal tax jurisdiction. And the US is a bit of an outlier -- no other country in the world truly taxes in the aggressive manner the IRS does. While we were promised a fix in the 2017 tax reform package to change to a Territorial Tax For Individuals (TTFI), that definitely did not happen. In fact, things got worse. But there is a strong movement to get the TTFI that we were promised signed into law.
Live TTFI Event August 16, 2018
If you happen to be in Toronto, you will definitely want to check out the AmCham event "A Light at the End of the Tunnel or Another Oncoming Train: the possible end of U.S. citizenship-based taxation." Link here. If you are unable to pre-register, just mention John Richardson of citizenshipsolutions.ca and he will make sure you get in.
More AmCham events around the world are upcoming and we will keep you posted.
The big TTFI news
By far the biggest TTFI reform news is that Representative George Holding (R-SC) will introduce a stand-alone TTFI bill. We expect the draft to be released at the end of this month or early next month. You might want to contact Representative Holding to let him know how much you appreciate his efforts to bringing fairness to the US tax code.
If TTFI passes, will it be retroactive for 2017?
Tax Reform made tax filings for people with simpler returns even simpler. But for taxpayers with income and assets abroad, they did not make out as well. We have the transistion tax and the Global Intangible Low-Tax Icome (GILTI). Because the transisiton tax was passed so quickly, there was little planning possible to lower a transistion tax bill. However, as far at GILTI goes, there are definitely things you can do to eliminate or greatly reduce this tax. We think anyone with a US controlled foreign corporation should run a GILTI analysis to see what this will cost them and what tax planning can do to reduce it. Contact us if you need help running a GILTI analysis.