US Tax Reform - Private Client Series
COVID-19 Reliefs for US non-residents and Americans seeking Foreign Earned Income Exclusion
On April 21 the IRS released two Revenue Procedures that seek to provide relief to certain individuals who remain in the US and the COVID-19 emergency has been the cause of travel disruption.
Revenue Procedure 2020-20 looks to the situation where a non-resident has a regular pattern of time in the US and manages their presence such that they do not become substantially present and as a consequence resident for US tax purposes. This Rev Proc offers relief by claiming a medical condition exception in order for an individual to exclude a period of up to 60 consecutive days spent in the US beginning with a specific date chosen by the individual to start within the time period of February 1 to April 1, 2020.
Revenue Procedure 2020-27 also provides relief to US residents overseas who would have the expectation of qualifying for the foreign earned income exclusion but had left the foreign country during the period covered by the revenue procedure and would otherwise fail to satisfy the test because of the COVID-19 emergency.
These steps will be welcomed by international taxpayers and their businesses during this challenging time.
View IRS guidance
We are coming to terms with US tax reform in the shape of the Tax Cuts and Jobs Act, the most substantive change in US tax legislation since 1986. The broad intent was to reduce taxes for both individuals and corporations, yet the American abroad may not necessarily achieve this.
In a series of articles by our London-based Private Client US Tax Advisory team, we consider the recent US Tax reform through the eyes of the American abroad, in different scenarios.
The message quite simply is where there is a US aspect to an individual’s business or family interests – seek specialist advice. Our Private Client US Tax Advisory team comprises dual qualified US UK tax professionals experienced in the international taxation for ‘US-connected’ clients:
- US citizens living abroad
- Foreign nationals moving to US or with investments in the US
- Businesses looking to expand into or out of the US
Please contact Mark Walters or Helen Griffiths if you would like to discuss any of these points or any of the articles from our Private Clients series.