A Repatriation Tax Update for American Expat Entrepreneurs

American Expat Entrepreneurs and the Repatriation Tax

If you’re an American expat entrepreneur, you may be aware of how the Tax Cuts and Jobs Act is affecting US owners of foreign businesses; specifically, the repatriation tax. The IRS just announced that more information will soon be on the way, and will include proposed guidance on how to calculate and report under section 965 (the repatriation tax)!

How the Tax Cuts and Jobs Affects American Expat Entrepreneurs

Expats, in general, were not greatly affected by the recent tax reform, but American expat entrepreneurs in specific situations could experience a multitude of effects. And recently, the National Taxpayer Advocate (a taxpayer’s rights’ organization that operates independently from but as a part of the IRS) released the mid-year report, and it mentioned that taxpayers need a lot more information in order to comply with the tax reform. Whether the new proposed regulations are a result of that or not, the IRS has stated that the proposed regulations that have been issued will affect shareholders subject to the repatriation tax. In addition to specifics on calculating and reporting under the new section 965, information will be issued on making elections available to taxpayers.

The Repatriation Tax and US Owners of Foreign Businesses

The repatriation tax is a one-time tax that occurs as income is repatriated; previously untaxed earnings will now be included when calculating the taxes of specific US owners of foreign businesses. Those who are affected by this tax are US shareholders who have at least 10% ownership in a specified foreign company. The IRS also announced in early June that they would be waiving some of the late-payment penalties that were associated with the repatriation tax.

The proposed regulations have been published in the Federal Register, and we’re working on updates to share with you on how this is expected to affect American expat entrepreneurs. So, stay tuned!

Questions About Your Expat Taxes?

Greenback accountants are always up to date on the latest expat tax changes. Contact us today, and we’ll answer any questions you have.

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