Tax Reform Will Force U.S. Citizens pay more taxes
Trump Tax Reform Will Force U.S. Citizens with Businesses Offshore Pay More Taxes.
U.S. citizens and U.S. Expats who own a business with over 10% ownership are in for a big surprise and a higher tax rate. After President Trump’s tax reform signed into law in December Protected content , two new taxes were created for companies holding profit in subsidiaries offshore: the tax on accumulated profits or repatriation tax and the tax on foreign profits or GILTI.
This tax applies to the accumulated profits from offshore and foreign companies owed by U.S. citizens with at least 10% stock holdings. If the profits remain with the foreign company, the U.S. owner must pay a 15.5% one-time tax that should be divided up to 8 yearly installments:
•8% of the tax liability in current year, second, third, fourth and fifth years
•15% of the current tax liability in the sixth year
•20% of the current tax liability in the seventh year
•25% of the current tax liability in the eight year
The tax first installment was due on April 15, Protected content , it was delay until next year FOR U.S. EXPATS only. There is hope the law will be amended to exclude U.S. Expats who own small businesses.
The deemed repatriation tax was designed supposedly to persuade the huge multinational companies like Apple and Google to bring their profits back to the US from other countries where they had earned them. Unfortunately, many small business owners living as Expats overseas will also be required to pay, if the law is not changed. Read more Protected content