September 29, 2022

Tax 101: U.S. Tax Compliance For Dual Citizen Young Adults

September 29, 2022/ Ruchelman P.L.L.C.

It is not uncommon for a young adult who was born in the U.S. to noncitizen parents living temporarily in the U.S. to live abroad. Although he or she may never have returned to the U.S., the young individual is a U.S. citizen, and that status brings with it U.S. tax obligations. In their article, Nina Krauthamer, Wooyoung Lee, and Stanley C. Ruchelman address the tax obligations in the context of Ms. A, a typical young adult, born in the U.S., but living abroad. She may have a bank account in a foreign county, but ordinarily will not have her own source of income. At some point, Ms. A may receive gifts and bequests from her foreign parents or grandparents. At this point in her life, Ms. A’s U.S. tax compliance obligations become complex. Just how complex is explained by the authors.

January 24, 2021

Brace Yourself, Pilots: Your Tax Home Does Not Fly With You

January 24, 2021/ Ruchelman P.L.L.C.

The concept of a “tax home” is somewhat difficult to explain to persons resident outside the U.S. It has its origin in case law involving taxpayers who work at a temporary location for a finite, but long, period of time. Could the taxpayer deduct living costs incurred in the temporary location when the assignment bears a resemblance to a business trip, albeit for a much longer period of time. From there, it morphed into a requirement for U.S. expats wishing to claim the benefit of the foreign earned income exclusion and its companion provision, the housing deduction. In the case of a pilot who flies between a rotation of airports, and in many instances, between a rotation of countries, what test is used to determine the pilot’s tax home? Is it where the pilot happens to be at any time as is the rule for an itinerant worker? Is it where the pilot lives with his family? Is it the starting place for an outbound journey? Is it another place? Gianluca Mazzoni, who holds an S.J.D. ‘20 and L.L.M. ’16 from the University of Michigan Law School, analyzes Cutting v. Commr., a case involving a pilot. The article address the terms “bona fide resident” and “place of abode,” each of which has a meaning for expats claiming the benefits mentioned above.

January 28, 2019

Insights Vol. 6 No. 1: Updates & Other Tidbits

January 28, 2019/ Ruchelman P.L.L.C.

This month, Rusudan Shervashidze and Stanley C. Ruchelman look at several interesting items, including (i) the publication of draft legislation by the Crown Dependencies of Guernsey, Jersey, and Isle of Man calling for the existence of economic substance for resident companies engaged in certain businesses and defining what that means, (ii) the denial of benefits incident to foreign earned income for a military contractor in Afghanistan who maintained a place of abode in the U.S., (iii) an increase in fees charged by the I.R.S. to issue residency certificates, (iv) the establishment of a working group to combat transnational tax crime through increased enforcement collaboration among tax authorities in several countries, and (v) changes to China’s residency rules and the sharing of taxpayer financial information under C.R.S.

April 28, 2017

Tax Home v. Abode – Are They the Same for Code §911 Purposes?

April 28, 2017/ Ruchelman P.L.L.C.

Section 911 of U.S. tax law provides certain tax benefits to persons who report foreign earned income. To be entitled to the benefits, an individual must have a “tax home” abroad, provided that he or she does not have an “abode” in the U.S. A recent summary opinion by the Tax Court illustrates the difference between those two terms. Rusudan Shervashidze and Philip R. Hirschfeld explain.