Laurence “Larry” Lipsher has done it again. In fact, he’s now done it seven times. Larry just published a US tax guide for the perplexed American who lives abroad and who takes his US tax obligations seriously but is bewildered and at times, overwhelmed by the complexity of the system. Larry recognizes that not all Americans living abroad have easy access to US tax help and that those who do, might not be getting the correct advice if their advisor is not very familiar with the international tax scene.
Larry, a colleague on the Professional Tax Advisory Committee of American Citizens Abroad Inc., has 49 years of experience as an American CPA. He is one of only a very few foreigners ever to have been given a business license to practice as a certified public accountant in the People’s Republic of China. Lest you think he’s a bore, please note that in addition to counting beans (and grains of rice), he is a past president of the American Chamber of Commerce of South China and was for twelve years a writer of the Asian Tax Review for Worldwide Tax Daily of Tax Analysts, Washington, DC. He has been featured on China Central Television World Wide Watch, the most widely viewed evening television news program in the world. He has appeared frequently on CNN , Wall Street Journal television, Reuters TV and CNBC. There’s even more to tell about Larry’s accomplishments, but I wanted to keep this blog post a bit short.
Larry’s book contains various sections, all of which are extremely helpful to the layperson living abroad who needs to understand the nuances of the US tax system for overseas filers. For example, there is a section based on Larry’s 25 years of experience working in Asia with US taxpayers. This FAQ section contains the most commonly asked questions posed by expats living abroad. The answers are understandable, honest, and at times, downright amusing. I’ve provided an excerpt below:
• Is it possible to use my foreign income tax as a deduction under itemized deductions instead
of a credit if it would be more advantageous?
Of course you can – but you have to make that choice! Remember, the chances are that you
are not going to have a large mortgage interest deduction, living overseas. Consequently, the
chances of your being able to advantageously use itemized deductions over the standard
deduction are going to be very difficult. And remember – you cannot claim a deduction for
foreign taxes paid on the income excluded under the foreign earned income exclusion or
housing exclusion. Thus, unless there are ‘exceptions’, plan on using the standard deduction
and the foreign tax credit!
• Because of the differences between the U.S. tax year and the tax year of the foreign country
I currently reside in, I cannot be certain, now, that the choices I make regarding tax credits or
tax deductions are the best ones for me. Can I change my mind?
Yes, you can! Simply file an amended tax return within three years of the due date of the tax
return in question or within two years of the date you paid the U.S. tax.
• Apart from the special exclusions for foreign earned income, will I apply the rest of U.S. tax
rules the same way as I did when I lived in the states?
Alas, no. Unfortunately, areas of U.S. tax laws draw a distinction between taxpayers inside
and outside of the U.S. In many cases, this is an economic disincentive to living and working
abroad. For example, contributions to foreign charities generally cannot be deducted. If you
own rental property overseas, you are subject to entirely different depreciation rules and
regulations than you have back home in the states.
• Can I pay my taxes in a foreign currency?
Sorry, my friends – check or credit card, only – the U.S. government does not accept foreign
currencies – and you might have difficulties, as well, with foreign cashiers checks. – if you
are that Hong Kong teacher, recently moved from the U.S. – do not close your U.S. bank
account – it will come in handy, in the long run!
- What happens when I move back to the U.S. to reside with my non-resident, foreign
spouse, who has all of the family business and investments in her/his name?
Don’t walk – run – to a specialist before you decide you want to live back in the States. There
are some serious tax problems you are going to be confronted with in an all too familiar
scenario that has become a nightmare for many who did not plan…….!!! This is planning you
need – you are going to have to pay more – a heck of a lot more – for this planning than the
cost of this book!
One of the most useful parts of the book in my view, is the section that carefully parses through what looks like all of the US tax forms that the overseas US tax filer needs to know about. Larry has included URLs for each form and gives you the skinny on what you need to know.
There’s even a section on what you need to know if you are planning on returning to the United States – it is full of practical and important tips.
If you are interested in learning more about Larry or his newest tax book, here’s how —
While Larry’s Guides are published in ebook form, one does not have to have an ebook reader to get a copy! If you order directly from the publisher at the following URL, you can choose from several ebook formats, including a pdf copy for computers, tablets and smart phones.
All ebook sellers now have Larry’s 2016 Tax Guide. The direct link to Amazon is here.
Follow me on Twitter: @VLJeker