Video instructions and help with filling out and completing Can Form 8815 Taxable

Instructions and Help about Can Form 8815 Taxable

Hello Anthony we are here today to talk about non-us persons that are looking to become US persons or perhaps looking to live or invest here in the United States right there are some pretty significant tax code traps right there's a lot of opportunities in the United States but the IRS sets a lot of traps up and so here we thought it'd be a good idea to talk about the four biggest ones that we see people run into all the time if they don't get the proper advice be cut before investing in the US or becoming US person yep okay trap number one capital gains trap right this is a little bit hard to explain I'll try to slow it down and this is sort of the situation that we see a lot a lot of our clients do pretty well in life and there might have been a time in their life where they didn't have all that money but they did have a lot of company stock that might not have been worth all that money now those years go on 10 20 years they have stock that is worth a substantial amount of money and they become a US person now this is what happens the I the the tax code you know will attach you on your capital gain so we'll look to what you sold it for and what you acquired it for mm-hmm the way it is now is that will go to your date of acquisition before you are even subject to the US tax code so way back 10 20 years so if you don't get the proper tax advice basically what you're selling it for when you have a when you have an asset that appreciates substantially basically everything you're selling it for is going to be subject to a long term capital gain rate of about 23.8% Wow in addition typically if you are going to be in a state like California or New York there's also going to be a state tax do the California's top rate is 13.3% so you really want to get some good advice before you become a US person and the advice in this case would be before you become a US person sell all of your sell all your things become a u.s. person now buy them back perfect all right now let's talk about foreign life insurance and when we say foreign we mean not us right insurance yes to the to the person that's going to be coming here it's not foreign to them right and that's that's sort of the the code is consistent in that they're always it's always saying everything else is foreign there's even though it's not foreign to you so by foreign they mean not us okay now 99% of the time foreign life insurance is not considered life insurance by the US tax code right because there there are significant advantages to life insurance u.s. life insurance that you don't have to pay taxes on the proceeds and all whatever that life insurance policy is generating an income is all tax-free so you could take loans against the death benefit all tax-free so it's fantastic and you don't have any income to report year after year after year but the US favors us life insurance policies that's right so when you have a foreign life insurance policy they'll say oh that doesn't count as a life insurance policy for tax purposes basically what you have is an investment so you're gonna have to pay taxes on it every year and then you're not to get the death benefit tax-free as you would with a u.s. prop policy so there are some things you can do though to minimize those risks when you have a foreign life insurance policy and also you might want to look into if you're going to get a bigger policy to get a US tax policy and that's true even if you're not going to be a u.s. person a u.s. person has significant advantages to getting a u.s. life insurance policy one more thing to add this is the foreign life insurance policy the IRS puts an excise tax on it a sales tax mm-hmm 1% of the premium a year they charge and most people don't know this there's a form in the form isn't filed yearly the form 724 your excise tax is filed quarterly Wow and this is one of the as we review cases we see people not doing it and the IRS is knows these are things like there's penalties they can assess enlarge taxes they can assess because you don't file one they can go back to the date of inception from where you became a US person to go after those excise taxes well it's good to know there is a way around it that's right all right now what about ownership of u.s. property by a non-us person we say first if you're going to buy property in the US it shouldn't be in your name for tax and liability purposes right the u.s. is this is very common even for people with substantial assets they buy US property even their own home they put it in their name not a good idea because now if it's in your name all of your assets are subject to the pooled of the what somebody could potentially sue you for in law school this is true in law school in my Civil Procedure class it gets talked about who should you sue and I got the answer right who has the deepest pockets that's what everyone is taught so you want to make sure you're limiting your exposure don't have it in your name that's really really reckless mm-hmm now when it comes to buying the very common facts that we see is a lot of us people investing