Common tax and financial planning challenges 2010
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![Common Tax & Financial Planning Challengesin the US Expat Life,[object Object],Christine Elsea Mandojana, CPA,[object Object],October 28, 2010,[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-1-2048.jpg?cb=1670481682)
![Agenda,[object Object],[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-2-2048.jpg?cb=1670481682)
![Foreign Bank Accounts,[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-5-2048.jpg?cb=1670481682)
![Owning & Renting Real Estate,[object Object],Unrelated Party?,[object Object],YES,[object Object],NO,[object Object],Fair Market Rent?,[object Object],Schedule E,[object Object],YES,[object Object],NO,[object Object],Schedule A,[object Object],Note: This example assumes a primary residence converted into rental status. Other rules apply to vacation homes rented less than 15 days and residences rented > 15 days but used for personal purposes for more than the greater of 14 days or 10% of total days rented.,[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-6-2048.jpg?cb=1670481682)
![Owning & Renting Real EstateSchedule E,[object Object],Deductible Expenses,[object Object],Capital Expenses,[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-7-2048.jpg?cb=1670481682)
![Deductible versus Capital Expenses,[object Object],What is a Deductible Expense?,[object Object],Ordinary and necessary business expenses such as incidental repairs and maintenance,[object Object],Owning & Renting Real EstateSchedule E,[object Object],Examples,[object Object],[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-8-2048.jpg?cb=1670481682)
![Tax Preparation Fees for Schedule E only,[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-14-2048.jpg?cb=1670481682)
![Adapt the Property to a New or Different UseExamples,[object Object],1§263(a)(1),[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-16-2048.jpg?cb=1670481682)
![Owning & Renting Real EstateSchedule E,[object Object],Deductible Expenses,[object Object],Capital Expenses,[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-17-2048.jpg?cb=1670481682)
![Line 20: Depreciation Expense,[object Object],What is Depreciation Expense?,[object Object],Recapturing the cost of a capital asset over it’s useful life (or recovery period as defined by IRS tables!),[object Object],Owning & Renting Real EstateSchedule E,[object Object],How Do You Calculate It?,[object Object],Depreciable Basis,[object Object],divided by,[object Object],Recovery Period,[object Object],(apply convention &,[object Object],in some cases pro-rate),[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-18-2048.jpg?cb=1670481682)
![Line 20: Depreciation Expense,[object Object],What is the Recovery Period?,[object Object],Owning & Renting Real EstateSchedule E,[object Object],IRS Publication 527,[object Object],US,[object Object],Outside,[object Object],US,[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-19-2048.jpg?cb=1670481682)
![Line 20: Depreciation Expense,[object Object],What is the Depreciable Basis?,[object Object],Owning & Renting Real EstateSchedule E,[object Object],Example: Residential Rental,[object Object],Assume Adjusted Basis > FMV at rental conversion date,[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-20-2048.jpg?cb=1670481682)
![Line 22: What Happens to a Rental Loss?,[object Object],Owning & Renting Real EstateSchedule E,[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-21-2048.jpg?cb=1670481682)
![Line 22: What Happens to a Rental Loss?,[object Object],Owning & Renting Real EstateSchedule E,[object Object],[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-22-2048.jpg?cb=1670481682)
![If MAGI > $150k, losses are suspended,[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-24-2048.jpg?cb=1670481682)
![Eligible for the Section 121 gain exclusion rules (including 10 year suspension for eligible EEs)Owning & Renting Real EstateSchedule E,[object Object],Section 1250 Unrecaptured Gain,[object Object],[object Object]](https://image.slidesharecdn.com/commontaxandfinancialplanningchallenges2010-110304142140-phpapp02/75/common-tax-and-financial-planning-challenges-2010-25-2048.jpg?cb=1670481682)
Common tax and financial planning challenges 2010
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Common tax and financial planning challenges 2010
- 3. The Dependent Care Credit & Foreign Providers
- 10. Repairs
- 11. Management Fees
- 12. Commissions
- 13. Insurance
- 15. Prolong the Life of the Property
- 23. If MAGI is between $100k and $150k, pro-rate the $25k
- 26. Must recapture on the tax return in year of sale up to the capital gain realized (even if no capital gain tax due to Section 121)
- 29. Household employee or daycare; not Kinder+
- 31. Multiply the total eligible expenses by the applicable % based on income…usually 20%
- 33. School fees for Kindergarten and higher do not qualify; but after-school care does qualify
- 36. Physical Presence Test (outside the US for at least 330 full days in a rolling 365 day period—prorate if 365 days cuts between tax years)
- 38. Must prorate if qualifying period cuts tax years
- 39. Can take two exclusions if married filing jointly and both taxpayers have qualifying income and meet exclusion test
- 46. Any foreign financial account (in aggregate) with balance $10k or more at ANY time during the year