I hadn't realized how global I have become until the last few days. I have had clients that have immigrated to the United States from around the world, but generally the same tax rules apply once you are considered a resident of the U.S. for tax purposes.
But yesterday and today, I had discussions with clients that have international ties still that make consider the situations and ponder what affect their situation might have for other folks.
Today I spoke with someone that moved to the US in the past 10 years or so. He had a parent pass away in the last year or two and the siblings had purchased the old home from the parents. Recently the siblings sold the home that they all owned and paid tax on the sale in that country. Now I find myself attempting to explain that you have to report the sale on the United States tax return but because tax was paid on the sale, that tax that was paid will be allowed as a credit against the US taxes on that same sale amount.
Yesterday I had a phone conference with an advisor located in Canada to discuss a client that is overseas. This is truly exciting since the client is working overseas and qualifies for the Foreign Earned Income Exclusion. This exclusion allows wage earners as well as self-employed individuals to exclude a good amount of their income from tax in the United States, legally. There are certain requirements that you should discuss with your tax advisor if this might be applicable, to see how to qualify for exclusion of the income you earn overseas. This could shelter as much as $87,600 for 2008 (and the amount is adjusted for inflation).
As I review the issues I deal with the background of the clients affected, it reminds me that our world is getting smaller all the time. Do you know how international issues might affect you?