US Citizens

Are you a US citizen? Are you married to an American citizen?

As of 2013 significant issues arise which will need your attention should you wish to remain compliant with the US Department of Treasury.

You may already be aware of the need to provide an annual US income tax return, regardless of your domicile or residence.  Be warned, the United States Treasury is actively documenting and pursuing US citizens or US alien-residents residing abroad for any outstanding tax liabilities.  Agreements with foreign governments are being struck and the choice, even for long term ex-pats, to ignore US requirements is no longer an option.  

The highlights of recent legislation changes:

  • From 2013 - US citizens will be required to file annual bank account details for all accounts held outside the US where the total funds combined together exceeds $10,000.
  • US estate and gift tax rates and thresholds have changed.

On your death you may lose a significant portion your assets to U.S. Federal Estate Tax unless those assets are adequatley protected

  Threshold Rate
2012 $US5.12m  35%
2013

$US5.12m indexed for inlation to $US5.25

40%

US Citizens and SMSFs - the complexities of income tax and superannuation reporting

  • US citizens are required to file annual tax returns regardless of domicile.  The IRS is increasingly aggressive in enforcing its requirements.
  • Superannuation income is treated differently in the US than it is in Australia.  It is non-reportable in Australia while it is reportable in the US.
  • The US and Australian governments are cooperatively making inroads into the mutual sharing of citizen's private data such as bank accounts and representations are being made that will require Australian banks to divulge the identification and account details of US citizens to the IRS.
  • The US government is likely to already have your details on a database.

Estate Planning

Probate proceedings in the US for surviving partners and/or family who live outside of the US is time-consuming and difficult, but may be avoided with competent prior planning .  

Virtually no estate tax exemption for non-US citizen surviving spouse

With careful planning a US citizen may transfer at death an unlimited amount to his/her spouse free of estate tax liability.  However, this exemption is only allowed where the surviving spouse is also a US citizen.  If the surviving spouse is not a US citizen, only $US60,000 may be transferred to the surviving spouse tax free.  Amounts above US$60,000 will be taxed at 40%.

Save the heartache, costs and loss that improper planning now may result in.

The questions you may have

  • What are the estate tax consequences for US citizens who transfer assets to non-US citizen spouses and how can such outcomes be avoided?
  • What are the gift tax consequences for US citizens and US-based Australians who transfer assets to US or non-US citizens during lifetime?
  • How can establishing a lifetime trust help avoid estate taxes?
  • Is an Australian will valid to transfer assets in the US?
  • Will assets located in Australia be subject to US estate tax in estates of US residents?
  • Will assets located in the US be subject to US estate tax if a US-based Australian citizen returns to live in Australia?

Contact Back9 Capital Management Pty Ltd for reliable and comprehensive US asset management and estate  planning advice.

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