Tax-free earnings in the world’s top 10 most expensive cities!

Did you know that as an American living and working abroad, the IRS offers certain foreign housing exclusions/deductions that can help defray some of your housing expenses?

We will use the following hypothetical case, to explain how the foreign housing exclusion/deduction works and why it is important to hire a tax professional specialized in international taxation.

An American, let’s call him Mark, was transferred to London by his employer.  Thrilled at the prospect, Mark and his family make the move and settle into a pricy London suburb.

The time comes for Mark to file his first U.S. tax return as an American living abroad. Mark compares expat tax services online, figures they are all the same, and chooses the lowest cost service.  He is pleased to find out from the tax service that in addition to his foreign earned income exclusion (FEIE), as a salaried employee of his company, he also qualifies for the foreign housing exclusion.

The IRS allows you to claim an exclusion from your gross income for your housing amount if your tax home is in a foreign country. In order to qualify you must meet a few criteria, including passing the bona fide residence test or the physical presence test. There is also a foreign housing deduction for self-employed individuals, that essentially accomplishes the same thing for self-employed individuals as the foreign housing exclusion does for employees.

Housing expenses include rent, fair rental value of housing provided in kind by your employer, repairs, utilities (other than telephone), insurance, parking, as well as various other items.  It does not include, interest and property taxes, cost of buying property, household help, or furniture.

The standard foreign housing exclusion is essentially 30% of the foreign earned income exclusion. The foreign earned income exclusion for 2016 is $101,300, which equals a foreign housing exclusion of $30,390. This amount is then reduced by the base housing amount, which is 16% of the foreign earned income exclusion, or $16,208 for 2016. This calculation results in a foreign housing exclusion of $14,182 for 2016.

Mark’s satisfaction with his tax preparer came to an end a few weeks later at a company function while talking to another American living abroad. Mark discovered that that the IRS considers London a high-cost location to live and, therefore, offers a higher foreign housing exclusion than the standard, which his tax preparer failed to take advantage of.

How does this amendment affect Mark’s return?

The higher exclusion could have saved Mark thousands of dollars! Because Mark lives in London, his maximum exclusion rate for 2016 is $82,000 not $30,390! By not doing his homework when securing a qualified tax preparer, Mark overpaid substantially on his 2016 taxes.

Don’t make the mistake Mark did. Find a tax preparer with the international expertise to accurately calculate your taxes or you may end up handing the IRS a large chunk of your hard earned money.

According to the IRS the 10 most expensive places to live outside the U.S. are:

Location                                                          Limitation on Housing Expenses

Hong Kong                                                      $114,306

Moscow                                                           108,000

Geneva                                                              93,300

Osaka-Kobe                                                      90,664

Bermuda                                                           90,000

Angola                                                               84,000

London                                                              82,000

Tokyo                                                                 81,300

Komaki and Gifu                                             74,300

Beijing                                                               71,200

Article from esquiregroup.com

Prepare For “Manias, Panics And Crashes”: An Ominous Warning From Bank Of America

Bank of America’s Michael Hartnett is back with another controversial note overnight, reminding readers that “it ain’t a normal cycle” for one overarching reason: central banks.

As Hartnett explains, the catalyst for bull in equity and credit markets since 2009 was the “revolutionary monetary policy of central banks” who, since Lehman, “have cut rates 679 times and bought $14.2tn of financial assets.” And, once again, he warns that this central bank “liquidity supernova” is coming to an end, as is “the period of excess returns in equities and corporate bonds, as is the period of suppressed volatility.”…

His best trade recommendation?

“Buy gold.”

Article from zerohedge.com

Russia Readies Back-Up System For Potential “Split With International Banking System”

The grand order of things could be undergoing some major overhauls.

To put it more bluntly, a war to reset the global financial order is about to be unleashed.

Preparations inside Russia are being made in case the ultimate banking sanctions are placed on them, cutting off commerce inside the all-encompassing Worldwide Interbank Financial Telecomm SWIFT system – which runs credit, debt, and banking card transactions across a real time global network.

As it would be doled out by the banking elites, the price for misbehavior at the Kremlin could be ostracization from this global commerce vehicle.

But that isn’t the end of the story… Putin is readying his people to divorce from the international banking system altogether, and start over with a nationalistic platform, backed by thousands of tons of gold, and growing alliances with Europe, China and the BRICS nations, the Middle East and several emerging powers.

A major attempt to bring Russia under heel could result in the greatest schism the global system of finance has ever seen. Then what?

For full article go to:

http://www.zerohedge.com/news/2017-03-25/russia-readies-back-system-potentially-explosive-split-international-banking-system

Singapore and Hong Kong Top World’s Most Expensive Cities

Tokyo returned to the ranks of the world’s 10 costliest cities in 2017 as Asia’s representation expanded, reflecting the region’s rising clout in the global economy.

Japan’s capital, the world’s costliest city until 2012, jumped seven places to No. 4 this year and Osaka climbed nine notches to No. 5, both bolstered by a resurgent yen, the Economist Intelligence Unit’s Worldwide Cost of Living Survey showed Tuesday. Singapore and Hong Kong retained the top two spots and Seoul came in sixth. Zurich, the third most expensive, was the only impediment to Asia holding all top five slots.

Asia accounts for 40 percent of the global economy and in the four years to 2020 is predicted by the International Monetary Fund to contribute two-thirds of worldwide growth. At the same time, cities in China, the region’s economic powerhouse, slipped by between five and 16 places due to weakening consumption and a depreciation in the renminbi, the report showed.

Europe had four cities in the top 10, with Geneva, Paris and Copenhagen joining Zurich. The French capital was the only euro zone city among the top 10, remaining “structurally extremely expensive to live in, with only alcohol and tobacco offering value for money compared with other European cities,” the EIU said.

New York was the only representative from North America, slipping to ninth from seventh due to a slight weakening of the dollar.

Excerpts of article from bloomberg.com

 

 

Nearly $2 billion has been wiped off Bitcoin’s value in three days all because of a fork

Just under $2 billion has been wiped off the value of bitcoin in under three days as a fight over the future of the technology underpinning the cryptocurrency wages on…

What’s happened?

To understand the issue, it’s key to look at how bitcoin transactions are processed. Transactions by users are gathered into “blocks” which is turned into a complex math solution. So-called miners, using high-powered computers work these solutions out to determine if the transaction is possible. Once other miners also check the puzzle is correct, the transactions are approved and the miners are rewarded in bitcoin.

But there’s a massive backlog of transactions in bitcoin that are waiting to happen. The number of outstanding transactions is up more than four times from just six months ago, according to data from bitcoin wallet Blockchain. This is bad for a system that has promised fast and cheaper transactions than the traditional financial system.

Because of this, a group called Bitcoin Unlimited has emerged. This faction is suggesting increasing the size of the block which would allow more transactions to be bunched together and processed. Major bitcoin industry players including Roger Ver have backed the plan. But some developers in the community suggest that increasing the block size could be unsafe.

What’s this about a fork?

The real concern is if Bitcoin Unlimited gains major support, it could have an impact on the underlying blockchain technology that supports bitcoin. Bitcoin Unlimited has about an 11 percent market share of all the “nodes” in existence. Nodes are the backbone of bitcoin’s infrastructure and refer to those mining the transactions as well as those tracking the movement of bitcoin to make sure it is all working correctly.

Nodes can run Blockchain Unlimited software which would signal their support for increasing the block size. If 50 percent of bitcoin miners adopted Bitcoin Unlimited, there would then be two major blockchains and a “fork” would be created made of Bitcoin Core, the current main software behind the infrastructure, and Bitcoin Unlimited.

Both blockchains would continue to run as long as there are nodes running them. But there would then be essentially two different coins – Bitcoin and Bitcoin Unlimited.

And this is why bitcoin has seen sharp declines in price, while other cryptocurrencies like ether have gained support.

Excerpts of article from CNBC.com