International Tax for US Citizens, US Residents and US Investors


This podcast channel is about you, successful international entrepreneurs, successful expats, successful investors, sponsored by HTJ.tax. 


Welcome to HTJ.tax. Now it’s tax season, and this is kind of tricky, but we do try to do a live stream every week. Typically, we’ll have an interview where we interview various subject matter experts. We’ve been doing a lot of spin in Portugal recently because there have been so many questions from people who want to move or who have made that move to Southern Europe. But today, I thought that given we are in the tax season, we would just talk about US international tax. So, I got a bunch of questions. If you had sent me a question, I would’ve gotten it. 

Otherwise, feel free to type it in the box below, and we can also get to that. So, the first question was really about deadlines. Tax deadlines can get confusing, so let’s talk about it. If it is that you are US exposed, and what do I mean by US exposed? 

  1. You have a US passport. 
  2. You’re a US citizen 
  3. You are a lawful permanent resident, or; 
  4. You’ve triggered substantial presence under section 770 1. 

Regardless of what it is, you are a US taxpayer. Even if it’s temporary, you are a US taxpayer and must file taxes for 2022. So, the question is, when is the deadline? Some people say it is April. But is it when you were physically in the US, or is it a special deadline? The answer is yes and no. The tax rules are never really quite clear-cut sometimes. You do get an automatic two-month extension. So, the filing deadline is mid-June. 

However, the deadline for payment is still mid-April. I know it seems counterintuitive and weird, but that’s just how it is. So, payment must be made by mid-April, even though the actual default date for filing a return (i.e., the standard 1040 personal tax return) is mid-June. However, if you are not ready by mid-June, you’d want to file an extension with form 4868 too, and you get until mid-October. Suppose you need that extra time to pull things together and to leverage foreign and income exclusion or other extenuating circumstances. In that case, you can file a form 2350, and you get until mid-December. 

But these are all filing deadlines. If taxes are due, taxes have to be paid by mid-April. So, what we always advise clients to do is, start the journey early and not wait until the last minute. You should really not be approaching a tax team at the end of March to hit a mid-April deadline. That’s not going to happen. We’re filing for an extension. When we’ve filed for an extension, we will try to get some calculations done so that at least you can make a payment by mid-April. Otherwise, you will be hit with underpayment penalties for failure to do so. The IRS does not like to wait to get paid. 

They want to get their money on time. So, whichever tax team you’ve been working with should have been helping you calculate what the estimated payments would be. We will get into estimated payments a little further in this conversation, but you should be making those payments, and we’ll help you as best as we can. So, try to make a payment by mid-April or get an extension. If you didn’t do anything, you could have an extension until mid-June if you filed for an extension or until mid-October to get the paperwork done. 

So, this is for personal tax returns, but many of our clients aren’t just doing personal returns. They are also business investors or they’re business owners. That means that there are entity filing requirements as well. Generally speaking, you can Google what these specific forms would be and what the deadlines are. But generally speaking, if you have a flow-through, and by flow-through, I mean like an S-corp or a partnership, you need to file a 1065, or you need to file an 1120 for S-corp. Generally-speaking, the deadline for that is mid-March. 

If you have an entity-like corporation, like a C-Corp or a foreign corporation that does business in the US, you need 1120F for foreign. Many of our clients do that. The deadline would be mid-April. Entity deadlines tend to be mid-April. But again, you could probably just speak to your tax advisor, or just Google, everything is completely available online. So, you got to get going. 


The next question that people were asking in the emails that we got was about stimulus payments.

So, there has been a bit of controversy online because there’s been a lot of publicity on PPP payments and other covid relief payments at the federal level. You may have received some sort of covid -19 related payment in 2022. If that’s a state payment, will it be taxable at the federal level? And this has been going back and forth, but essentially the IRS is determined. They did a press release; if you are looking for it online, you’d want to look for IR-2023. Generally speaking, those payments are tax-free at the federal level, so that they won’t be attracting payments at a federal level. I know it sounds a bit contradictory because there was a sentiment that it would be taxable at the federal level, but no, it’s not going to be taxed. 

So, that could be of interest to those who did receive those payments. Your tax team should have gotten updates in their software. So, if it was taxed before, it should be reversed. That should be crystal clear by now. 


Another question would be about the IRS online account. I know there are other tax teams out there, including some that I call my friends who are skeptical about IRS online accounts.

So, if you’re not aware, you can go online. You can go to irs.gov and click on the menu item that will access your account. 

For those of us who reside outside the US, like in Singapore or parts of Europe, or other parts of Asia, it has been customary that when it comes to governmental affairs or interacting with the government, and you are a resident of that jurisdiction, you will get a login key to get into the government portal to seek correspondence. You don’t need to wait for stuff to come in the mail. That’s old school. Any correspondence from the tax office or whatever will be there for you to see, like your tax bills, history, payments, etc. It’s easy to deal with.

So, the IRS started doing that three years ago. Generally, despite the skepticism I get, especially about privacy concerns, it has been such a lifesaver, not just for my clients but also for me personally. I have an IRS account as a tax professional, but also as a personal, as a US taxpayer myself. So, I’ve been using it myself, and I know that I’ve been pushing back those privacy concerns. 

So as some sort of concession, I think it was last month, or sometime in February, the IRS did agree to remove the facial recognition requirement. As you know, you have to produce some sort of ID, and many people had to go through extra verification steps where they had to be visually identified as to who they are, and there was a bit of pushback on that. As a result of the hesitation, it’s no longer a requirement. 

My point is, please register and get yourself logged into the IRS account when you live outside. For example, if you live in a place like Singapore, mail usually takes a long time to get from the US to Singapore. As a result, many times, IRS notices are late, and people get into trouble because the mail service delivery is late, or if you have moved addresses and the IRS only has your last known address, or if you live in Dubai, where the address system is completely bizarre. 

The whole postal system takes some getting used to, and it’s not always easy for mail to get to. But if you log into your IRS account, you can keep up-to-date with your tax payments and make sure your tax payments have gone through, you’re getting the latest correspondences, and you can make sure they’re aware of your latest address, etc. 


Regarding the first question somebody asked about payment deadlines, is there a whole idea about estimated payments? Obviously, when you work in the US or even if you work outside of the US and you have lots of clients working for American firms, or you’re working remotely or working with units outside of the US, they still get paid on W2. If you get paid on a W2, I assume you filled out the W2 correctly. So the withholding should be accurate. 

The payroll team at your company takes responsibility for getting the correct amount to the IRS at the right time. However, for those who may not work for a US company, like an independent contractor working for a foreign corporation. How do you manually make sure that your estimated taxes are done? We work with our clients, and I’m sure it’s a norm with tax teams accustomed to dealing with US-exposed persons outside us. That part of doing your 2021 returns, they should have produced for you vouchers or some payment schedule for your 2022 estimated tax payments. 

Failure to make those payments on time with the correct amount may lead to when you look at form 2210 or them talking about underpayment penalties. 

Thus, you will be subject to underpayment penalties. I think the minimum is at least a thousand dollars to the IRS. You should be thinking about having that conversation with your tax team, “What are my estimated tax payments going to be? I don’t want any trouble; I don’t want any underpayment penalties. And for some of our bigger taxpayers, those underpayment penalties could be in the five and six figures. 

So, the point is, you don’t want to mess with the IRS. Make sure you get your estimated tax payments done. If you’re working with a tax team for the first time, and they don’t know you, or they don’t know international tax rules like some tax teams which are very domestic-focused, you probably need to coach them and say, “Hey, I’ve looked online, and I need to make sure that my estimated tax payments for 2023 are done. I know you’ve done my 2022 return. Thank you for that, but can you make sure that I have a payment schedule for my 2023 returns for my 2023 taxes, please? Because I know it could cost me at least a thousand dollars, could you please help me and ensure that those calculations are done?”

The payments are due at least quarterly. So, the first payment will be due mid-April, and the next estimated tax payment for 2023 will be in June, then September. And the fourth quarterly payment will be due in January 2024. So again, make sure your international tax team gets your scheduled payment for your estimated tax done. So, you will have no problems. 


Next question. We get inquiries like this every day, which is a bit of a morbid topic. I say that in advance. It’s about form 706NA. So, when someone passes away, I know that at the US state level, there’s a whole myriad of rules, but there may also be at the federal level, so I’m just speaking right now about the federal level. A federal tax return may be due immediately when a loved one dies. So, I know it’s a hassle. 

You have so much to deal with and many other priorities to consider, including filing tax returns. Several years ago, a few clients had questions about this. Essentially, we specialize in assisting mixed-nationality couples, where one partner is exposed to the US and the other is not. What happens when the US-exposed partner dies, and the non-US partner is left to handle everything? Of course, we advocate for proper estate planning. Unfortunately, this is not always done, making the process of succession and asset transfer from one generation to the next or to a partner whose name may not be on the account more complicated. This often involves going through probate and may result in estate taxes being owed, among other things. Additionally, there are situations where someone may have worked in the US at some point, made investments, and then left the country. They may have even surrendered their passport, green card, residency, or other documents.

 You have an asset, a USCIS real estate normally, or stock shares because you think the US stock market is the most active, vibrant, and attractive in the world. We have so many people from outside of the US investing in shares in Apple, Microsoft, Tesla, or whatever the case may be, not being aware of the fact that in the event of their untimely death, there would be US tax filing requirements. This is important to assume.

As a result of the number of cases that started coming in our door, we wrote a pretty comprehensive article, which, thanks to our SEO team, is ranking in the top three in google searches. When you Google form 706-NA or form 5173, we’re up there. We receive these inquiries almost every day. The key point is that if you are not a US person or if the person who has passed away has assets in the US, US tax filing may be required regardless of your status as a US person. When you approach a brokerage firm or financial institution, they may express condolences for your loss of a partner, parent, grandparent, or other family members. Still, in order to transfer these financial assets to your name, you would need to get an IRS clearance certificate. The IRS clearance certificate is otherwise known as form 5173. And in order to get the clearance certificate, you would first need to file a tax return and pay any taxes that are due. Typically, the tax return that is due would be form 706-NA for a non-resident or non-American, basically. And it is perhaps one of the lengthiest and most frustrating processes. 

We have seen clients go through so much hassle when they try to do US tax filing on their own. Even if you have a professional working with you, no matter what they tell you or whoever is pitching you to do it, it will take at least a year. Comfortably, it takes a year. Hopefully, the processing time will be faster now that the IRS has received additional funding. However, during COVID, it got worse due to extenuating circumstances. Before COVID, it took around a year from the time the return was submitted to paying any taxes due. After you submit the return, you have to pay any tax that is due.

This is another point of contention. The assets will not be released to you until the taxes are paid. There are assets in the US and estate taxes due that need to be settled. As a beneficiary or administrator of the estate, you cannot use the funds in the account to pay the taxes due on the account. You need to source funding on your own to settle the estate tax bill. Afterward, only when the funds are released to your custody can you be made whole again.

But it creates a huge cashflow issue. We’ve seen so many clients, they start the process, and when they realize how much the tax liability is, so many have to walk away and leave the funds unclaimed in their account because they cannot afford the money. They cannot afford to pay the tax bill. Other than that, if you have access to credit, you can take out a loan to pay off the tax bill, knowing that you can repay the loan once you gain access to the account. But it can be an emotionally draining experience because you have to find the funds to pay the taxes before you can get the funds, and it will try your patience because it takes a long time. 

The IRS takes a long time to get this done. This question is being asked because the person has used another tax team to handle the process, but the tax team abandoned it midway, leaving the person with unfinished work. I am not saying that you necessarily need to use us, but if you plan to use another tax team, it’s important to understand that any work done by the previous team in 2019 is no longer valid. You will likely have to start the process all over again. This is especially true if you never received any correspondence from the IRS acknowledging receipt of your documents or issuing a tax ID for yourself or the estate.

Unfortunately, starting the process all over again is necessary in this situation, and it’s important for the tax team to follow up with the IRS to ensure that the process is moving forward. This is because the process is manual and time-intensive, requiring human intervention and communication via phone or email. If there is no record of taxes being paid or if you cannot prove that the taxes have been paid, you may need to pay them again. So please keep in mind that starting the process over again will be time-intensive and labor-intensive, and it’s important to work with a tax team that will follow up and ensure that the process is moving forward.

But then that’s part of reaching out to the IRS and trying to figure out what’s going on, even if it’s already an emotionally draining time. So, I know people have asked these questions, and they’re not on the live stream today but don’t worry, this will be published online. So, whenever you can, go to our website, our YouTube, LinkedIn, or Facebook channel, or wherever you get your favorite podcast, and you will have access to these recordings. So, if you or your friend or colleague can’t make it, just let the person know. 


This is another one that more than one person asked about, and we get this all the time. I entitle this question; “her BB comes to Dubai. I’m not revealing who asked this question, obviously. I was talking to another client last week about it. I mean, super smart guy, you know, fund manager, Ivy League educated, and he’s saying, Darren, what’s going on? Everywhere I look online, there’s somebody on YouTube screaming about leaving the US to go to Dubai so that he can save all this money on taxes. But he’s saying, I’m hearing it, but intuitively this doesn’t make sense. Are they mis-selling? Are they misrepresenting or misleading people, or am I missing the trick? My response to this person is the same response I will give you right now: you’re not missing anything. You’re just using your head.

 The rule of thumb is if something sounds too good to be true, it is too good to be true. I don’t mean to sound cynical; I don’t mean to come across that way, but that’s the truth. I mean, by just jumping on a plane and going to another jurisdiction, all these benefits could already be yours? Of course not. That’s not how it works. Life is more complicated to be like that, especially when it comes to law and taxation. It just doesn’t make any sense. If it’s too good to be true, then it’s not true, right? So, it’s not as easy as jumping on a plane, going to Dubai, and saving all this money on taxes. First of all, you will be subject to the US tax system. You know, the US doesn’t care whether you live in Denver or Dubai or whether you live in Seattle or Saja. It doesn’t matter. You will still be subject to taxes on your worldwide income, and you will not be relieved of that responsibility simply by jumping on a plane and going to another jurisdiction.  

I get that everybody’s trying to earn a living. So, if you think that person on YouTube screaming about Dubai is doing it all out of the goodness of his heart, it just makes no sense. They’re doing it because they’re financially incentivized to do it. Unfortunately, they may be a little bit strong on the selling part and a little bit light on the truth part. So, by simply going to Dubai, you’re not going to be suddenly relieved of the obligation to file and pay taxes. That’s not going to go away. 

Dubai is just one of the seven Emirates, and to establish a free zone company, you can form a company in one of the approximately 45 free zones across the Emirates. It’s important to choose a zone that makes sense for your needs and goals, that’s a process that you shouldn’t be driven by whoever’s trying to sell you the hardest. Given their commission level, it must be something that makes sense to what you’re trying to do. But, most people, at least most of our clients, set up a company, and the company gets their residency card or Emirati ID for them. By virtue of having that company known through a bank account, that company is also reportable on your US returns. So, on your form 5471, you need to declare that company’s existence. 

The point is that you do not only have to pay taxes when you leave the US, but you also need to report your investment activity outside of the US, including the formation of companies. So, if you have additional reporting requirements, your compliance burden increases. I’m not saying don’t go, of course, you should go, it’s a beautiful place. We are even doing an in-person event there at the capital club in the DIFC, the most popular, or at least considered as the most attractive free zone for those in financial services and legal profession, on the 11th of April. At least 77 people have registered.

I’m a big fan of Dubai. I love it. I have an Emirati ID as well, but it’s not about saving money on taxes, it’s for other purposes. You still have a tax obligation. The only way to relieve yourself of that tax obligation is to surrender your US passport or green card. That’s the only way. Or if you want to move but don’t want to give it up, you can move to Puerto Rico. Under certain circumstances, you can pay very close to zero. We did a whole live stream with a Puerto Rican tax expert in January 2023. 

So please have a look, it’s over an hour of Q and A from all these people asking these different scenarios, and he’s answered them. But then again, it’s not just about moving there and saving money. Of course, when it comes to law and taxes, it’s always very nuanced, but you still have the opportunity to pay next to nothing while retaining your US passport or green card. 

If you move to the Emirates, you need to surrender it in order to get that zero-tax benefit that they talk about. However, if you have a relatively low-income, and your earned income is less than the foreign-earned income exclusion, which depends on inflation each year (right now, it is around 112,000) then you can, in fact, pay zero-tax depending on how your income is structured because of section 911, foreign earned income exclusion. So, it is possible for those on the lower end of the income ladder, to move to Dubai. But it really depends on your situation. Understand even if you’re below the foreign earned income exclusion, the responsibility for filing a return remains. And in fact, the compliance burden may be increased because you have to report your US and non-US your foreign investments, like in foreign companies or foreign bank accounts under the form 114 or your foreign bank account report (FBAR). 

I’m not ambushing Dubai and bashing anybody for trying to make a living. But if it sounds too good to be true, it is probably too good to be true. Meaning it’s not true. Yes, you can move to Dubai, and there are certain circumstances where you’re going to save some money potentially, but it’s not automatic, and it doesn’t work for everyone in every financial situation when it comes to law. When it comes to taxes, everything is nuanced. I hope that helps answer that question and clear up any misunderstanding. This one is a bit sensitive and I kind of did a double take. 


Someone sent a really long email. I’m not going to read it, but essentially there are online operators, YouTubers or influencers, who are not qualified in tax or immigration but are selling tax and immigration advice, which is fine, depending on the jurisdiction. There’s no legal requirement for you to be qualified or licensed to do it, but unfortunately, it has consequences. 

So, this person paid what they consider to be a fair bit of money for a tax and migration plan. And basically, it didn’t work. So, it didn’t confer the benefits they thought it would and were promised. I had to look at it, and they sent me the plan. I’m not supposed to comment on this, but maybe this is the exception rather than the rule, but remember that because there’s no license requirement, there’s no skin in the game. 

 It is different when someone is exercising their profession knowing that they’re incentivized because if they get anything wrong, they’re going to get into trouble. So, there’s a built-in incentive for them to at least try to do things the right way and to double check what they’re saying to, exercise some sort of fiduciary responsibility to their clients. If you don’t have a license, no such responsibility exists. So, the way the taxes actually do work is in conflict with what they were told. 

And so, the tax savings that they thought they’ll have by moving to… I’m not even going to say the jurisdiction because it’s not the fault of the jurisdiction. It’s a misunderstanding between the person who sought out the service and the person who delivered the service. So, you know, these things happen all the time. We had misunderstandings with our clients. Nobody is perfect. But it didn’t work out just like how they said it would. So, at this stage, there’s not much you can do. But what you can do is to look for someone with skin in the game, either with ourselves or with another team that is licensed. 

They’re probably going to be a bit more expensive and take a longer time because the report they’re going to do is tailor-made to your situation. It’s not just a template where they are just going to change key information; hit send on the email, and that’s it. It’s not a production line, So, they’re going to spend a lot of time interviewing you, a lot of time getting the nuances of your situation, and bearing in mind their license, they’re going to tailor make a plan for you which is going to be signed off. 

The person who drafted it is going to be overseen by someone else, and they’re going to have to take another look at it and make sure they agree with the conclusions or whatever, and then they send that to you. 

So it’s probably going to take a bit longer, and it may be more expensive, but the point is, while there’s no guarantee in life, there’s a greater probability that it would work. So again, I’m sorry about your situation. It was a lengthy email. It’s like two pages. I get you, I am sensitive to your situation, but there’s nothing that could be done except retain another team to look at your situation again. 

And I would suggest that this time, the team be licensed. I’m sorry, but I hope that helps.


Alright, and last question, if you receive an end-of-service benefit in Saudi Arabia, can you roll it into a retirement account without penalty or tax obligations? Well, if it is that you are receiving it in Saudi Arabia, there are US companies operating in Saudi Arabia, of course, but let’s assume that your employer or your former employer is a non-US company, then you’re probably looking to take that payment, onboard it, and apply it to your own existing retirement account. 

A US-qualified retirement account is either a traditional IRA or a Roth. Obviously, if it’s a Roth, that’ll be easy to the extent that it’s an after-tax one. So, the benefit really with a Roth, as you would know, is upon distribution when you retire, you’ll be able to pull out everything tax-free. So, depending on your individual situation, your contribution limits, and your given financial situation, you may be able to invest it into a Roth.

On the other hand, if you already have a self-administered IRA, you may be able to invest it as well. But then that’s a qualified product. You just need to ensure that your income level, etc., is within the terms because you don’t want to have any excess contributions. After all, excess contributions create a lot of headaches in retirement. We had to amend returns and pay penalties and interest, and it just got messy. 

So, check with your preferred financial advisor or tax advisor who knows your situation or has seen your returns. Because nobody here has seen your return, we have to take a look and make sure that this is your situation, or this is the retirement account you want to put it into, and it’s in compliance with the contribution limits. So, it really depends. That’s going to be the easy part. And to be fair, you could probably do that on your own with just five minutes in Google. But here’s the challenging part that we found for our clients. The challenging part is the fact that many platforms or brokerage firms don’t feel comfortable dealing with US persons residing outside of the US, and they would couch it in to say it’s illegal or it’s against SEC rules. 

Last February 2023, we did an in-person panel discussion in Singapore. Two of our resource people were bankers, one a former private banker and one an existing private banker. So we had experts in the panel, and it was unanimous. It is not illegal, and it is not against SEC rules; it’s just the bank’s own policy. And sometimes, the frontline staff you’re speaking to at the brokerage or from the financial institution may not know why. It’s just that they look on their intranet and see it’s not allowed and assume there’s some legal reason for it. 

However, it’s just because of a policy reason. Many financial institutions just don’t want to deal with the additional compliance burden that’s imposed when you try to onboard someone who resides outside of the US. So, they want people with a US address who also live in the US. So, speak to the platform, speak to the financial institution in question or that you’re thinking of or already using, and make sure that they’re comfortable with it because we’ve seen accounts frozen. We’ve seen aggressively worded letters where they tell the account holder. We are freezing your account; you need to withdraw everything and put it on another platform. So yeah, just have a conversation if you are still struggling. We are not financial advisors, but we do work with independent financial advisors who are US-qualified and who do have SEC licenses, and we can point you in that direction. They do their thing, and we do ours. We are simply tax guys. 

So, the answer is yes; if you are working outside of the US or working in Saudi or anywhere in the Gulf, you can contribute to a US-qualified retirement plan. You just need to find the right platform. That’s going to be the challenge. Figuring out what your contribution limits would be and the timing is easy. Just look online or speak to your advisors or anyone who can help you, but where it becomes really tricky is finding a platform that will take you. 

So, we’ve gone through the questions that have popped up on the screen today, and I think that’s it. So, thank you very much. Have a look at HTJ.tax, and you can see where our next event is. Our next event is on the 11th of April in the DI FC in Dubai. 

Other than that, we have other scheduled events that will be online events. Then the next in-person event will be in Singapore. We return to Singapore in September for an in-person event at the American Chamber of Commerce. 

Thank you for joining us. I appreciate your time again, Please have a look at our website. We have over 2000 articles that seek to demystify this sometimes-confusing world of international tax and cross-border compliance. We have over a thousand videos on YouTube and a thousand podcasts on various podcast platforms.

Talking about the sometimes-confusing world, of course, nothing we say should be considered as advice. We are just having a general conversation about general principles. For someone to advise you, they need to know your situation inside out. So, you need to retain an advisor who’s licensed and qualified in the jurisdictions in which you’re exposed, points you in the right direction, and keeps you out of trouble. 

Again, my name is Darren Joseph, and I hope that we’ve been helpful to you today. We’ll see you next time. Thank you. Bye-bye. 


So if you’re a six, seven, or eight-figure investor, entrepreneur, or business owner who needs a tailor-made solution from a qualified team of professionals, we can help you achieve the international lifestyle, the freedom, and even the tax savings you’re looking for. Visit us at htj.tax and live that international life. 


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