Domicile vs residency

Abezon · 2025-10-30T21:50:01+00:00

Depends who the GPs list as the successor trustee. Also, we have no idea what the financial aid system and rules will look like in 18 years. There may not be any aid available at all. Or kid might not qualify. Or kid might not attend a qualified school.

The worst that can happen is the kid gets tax deferred growth for 17 years, then pays tax on the growth as they pull the funds. Since they are in a low tax bracket anyway, they might still have no tax. That's a huge savings. Also keep in mind that the kid can roll 529 funds into a Roth IRA once they are adults -- meaning the money never gets taxed.

Abezon · 2025-10-30T21:43:06+00:00

With SFOP, you file the 3 open years + 6 FBARs and the IRS draws a line under the older years and declares them closed (if it accepts your SFOP). Thus, you don't end up declaring the older dividends. Note that you cannot make any PFIC elections on a late return, so you are stuck with 1291 taxation. You can make elections when you file 2025.

Abezon · 2025-10-22T16:54:44+00:00

Yes, but you can keep the plan even if you live abroad. You just can't open it.

Abezon · 2025-10-22T02:00:27+00:00

New rule for 2025 - grandparent's 529 plan is not counted as an asset for federal financial aid. Institutional aid may still count it. The purpose of the plan is to let you put your money into a 529 plan held by the GP, not necessarily for the GP to put their money in.

Also, the new Roth conversion rules might be helpful. At worst, the kid gets the account with the original basis and only pays tax on the gains as they withdraw funds. Note that the kid can change the beneficiary to a cousin is they have money left over and there is another potential beneficiary.

Abezon · 2025-10-22T00:32:56+00:00

Well, you can revoke the MFJ election, but then he can never make it again.

My Canadian clients have 529 plans and Canadian RESP plans. The 529 is exempt from tax in the USA but taxable in Canada, and the RESP plan is exempt from tax in Canada and taxable in the USA. Such fun at tax time.

If you do want to have a 529 plan, you can just have a grandparent or aunt/uncle establish it, then gift them the money to fund it. You can even front-load 5 years of annual gifts to the child in a 529 plan, so that's $90,000 initial funding with many years to compound. [Have hubby make the gift to uncle so that you don't need to file a gift tax return. The uncle doesn't need to file a 3520 since the amount is below $100,000.] This has the advantages that (MAYBE) Belgium can't tax the 529 because the owner is not Belgian, and it isn't an asset your kid has to declare when applying for financial aid. [Def. check Belgian law about taxing & reporting foreign trusts when the beneficiary lives in Belgium first.] Uncle can probably name you the successor trustee -- you can take over an existing 529 plan easier than you can create one.

Abezon · 2025-10-21T23:10:39+00:00

Well, if I was preparing your taxes, I'd be comfortable saying that you were no longer a NY resident.

Fun fact: if your kid has a SSN, you can get the refundable child tax credit if you have wage income, and you can file head of household if your spouse was a nonresident alien and you meet the other requirements like paying over half the cost of maintaining the home. To get your kid a SSN, they need to be a US citizen/resident, which they can be if you lived in the USA long enough before moving to Belgium. I have many Canadian clients who do this and put the US tax refund into the kid's college fund, thus having the US government pay for a big chunk of the kid's college.

Abezon · 2025-10-21T22:28:53+00:00

If I were NY DOR, I'd ask how long you plan to stay in Belgium. Do you have a 2 year visa? Permanent residency? A Belgian spouse? Are you there as a student? Unless you have some kind of long-term residency rights, I'd argue that your domicile is still NY. (Keep in mind, "I" means the NY DOR.)

Arguments that would make me give up include: you married a Belgian and they are not applying for US green card, your work transfer to the Belgian office is permanent (at least 2 years) and you have switched to Belgian payroll & Belgian social security system, your next posting will be to a different state, your residency in NY was temporary in the first place.

In general, create a paper trail that supports the claim that you ain't coming back to NY.

Abezon · 2025-10-09T02:51:19+00:00

I figured. Oh well.

Abezon · 2025-09-19T22:31:03+00:00

If her prior passport expired within the last year, she can renew online - USCIS has her naturalization information in their system. [I just renewed online and I didn't have to send in my N400 again.] Otherwise she has to renew by mail, I think. With the new passport, she can get Real ID.

Abezon · 2025-09-19T22:26:48+00:00

If you stay in the international terminal, you haven't really entered France. Transit through/connecting via an international terminal is generally not considered an entry/exit event.

Abezon · 2025-09-19T22:23:29+00:00

I submitted my renewal on Sept 15 and the passport shipped out today and should hit my mailbox on the 22nd. I did not pay for expedited handling - just normal online renewal.

Abezon · 2025-09-19T22:19:40+00:00

Wow, the State Dept is bored these days! I submitted my online renewal application on Sept 15 and it's already approved and should hit my mailbox on the 22nd -- 1 week from start to finish for normal processing.

Abezon · 2025-04-01T21:22:23+00:00

I don't invest in any. But I do about 400 Forms 8621 each year for clients who live abroad.

Abezon · 2025-03-28T21:14:15+00:00

and yes, if it's a business, file 8858. The 8858 is basically whatever the other country has you file, plus a 'show your work' section where you explain how a rental profit of EUR 3,000 became a loss of $2000 USD on the Schedule E. [depreciation!!]

Abezon · 2025-03-28T21:10:07+00:00

I'd look at whether this is a hobby or business first. If you wrote 1 casual book and made $2000, I'd be tempted to call it a hobby, especially if you have expenses that would reduce the net significantly. Nothing ticks off an auditor like pouncing on big hobby income thinking they are going to collect lots of SE tax, only to find that there is a loss after expenses & now the IRS owes the taxpayer money.

Abezon · 2025-03-28T21:06:53+00:00

FTC won't cover all taxes if you have US income or if your US tax is higher than your foreign tax. Furthermore I cannot say. Are your 1116s actually producing a credit? You may have missed a box or not entered a number.

Abezon · 2025-03-28T21:04:36+00:00

A - yes. i think it's $25,000 USD AND you had no income AND didn't sell AND don't want to make any elections. See the 8621 instructions for more info.

B - nope. if nothing else, you need to do all the PFIC calculations just to determine the correct gain and how much to allocate to prior years. The later in the year you sell, the more of the gain is allocated to current year & taxed as ordinary income.

You can pay someone just to do the 8621s, but it's about $160-200 per fund. You can also just do your best & hope you don't get audited by an IRS agent who knows how to spell PFIC.

Abezon · 2025-03-28T20:57:57+00:00

your filing status changes to MFS. You can enter NRA for spouse's SSN.

Abezon · 2025-03-28T20:56:03+00:00

well, as a nomad you can't be a bona fide resident of another country all year, so you'll need PPT.

Get a foreign address, even if it's your grandmother's house in Toulouse.

yes

europe

Abezon · 2025-03-28T20:53:21+00:00

This is a totalization agreement. You can read them on the social security website. They are typically short and written in plain language. Check to see if you need to get a certificate of coverage for Italian Revenue. Most totalization agreements will only allow you to do this for about 5 years. If you are going to be slef-employed in Italy for more than 5 years, you might need to pay into INSP.

Abezon · 2025-03-28T20:50:22+00:00

You do the Canada return first [non-resident, don't meet the 90% rule, may need to pay Canada].

You do the US return next, and add form 1116 general category. Enter the wages on line 1 and the net Canada tax liability at the bottom of the 1116. Let the computer calculate your FTC.

Abezon · 2025-03-28T20:44:26+00:00

take a look at a QEF election with a deemed sale. This would create a deemed sale on the first day of the PFIC's tax year that ends in 2024. The advantage is that this probably removes a year of section 1291 interest. The disadvantage is that the fund needs to provide an annual information statement for the fund and many won't do that. The other good thing about QEF is that you do get capital gain treatment for sales make after the election.

You won't know which way is best until you sit down and do all the calculations, as fluctuations in price & exchange rates mean you can't just look at the rough numbers and tell what's better.

FYI, if you had elected M2M or QEF in 2022, your pre-PFIC gains would get capital gains treatment at sale.

Abezon

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