US Expat Tax Planning and Compliance

The assignment content discusses various tax-related topics such as superannuation funds, car expenses, properties given on rent to relatives, and dry cleaning of work suits. The content highlights that superannuation funds are not taxable until withdrawn by the employee, and foreign earned income exclusion does not apply to superannuation income. It also emphasizes the importance of keeping mileage records for business travel and notes that giving property to relatives without a proper contract can be taxed. Additionally, it states that dry cleaning of work suits is considered personal expenditure and cannot be claimed as deduction. The content also covers reimbursement of phone bills by companies, which are not taxable in the hands of clients.

1. Super annauation Fund
Superannuation fund is a type of savings fund in which company deposits certain amount
of its employees. It will not be taxable until and unless, employee withdraws the amount
from the fund. Thus, it will also not be taxable in the hands of client.
Superannuation is not qualifying income for the Foreign Earned Income Exclusion so you
will not be eligible to use the exclusion for superannuation income. You can instead use
Foreign Tax Credits to offset the US taxes on this income.
Passive Foreign Investment Company (PFIC) investments held within an employee
benefits trust do not need to be reported separately on Form 8621 on an annual basis.
The contributions or growth taxed on the US expatriate tax return becomes your US basis
in the fund. At distribution, this basis is not taxable on the US return.
2. Car Expenses
Client owned car, which he was saying that 75% is used for business purposes. However,
as per IRS (Internal Revenue Services), a person cannot claim any car expenses as
deduction whether he is maintaining records or not.
You must keep mileage records for any business travel you do. In fact, the IRS
specifically asks you on your tax return whether you have written evidence of your auto
expenses and is likely to deny your deduction if you don't have them.
At a minimum, you should keep a notebook in the car and jot down your odometer
reading at the beginning and end of the year. In between, you should jot down your
starting and stopping odometer reading for each business trip you take, as well as the
reason for the trip.

If you commute to a regular place of business, you'll also need to know the distance from
your home to your workplace and the number of commuting trips you made during the
year, because the IRS specifically asks for this information.
3. Propertes given on rent to relatives
As per section 280A of IRS, if a person gives any property to its relative having a proper
contract then that income will be liable to tax.
 A rental property is rented during the year and used by the owner for personal
purposes less than the greater of 14 days or 10% of the number of days during the
tax year that the unit was rented at fair rental value.
 If a home qualifies as a rental property, expenses including mortgage interest, real
estate taxes, homeowner association dues, utilities, and maintenance expenses can
be used to offset rental income. If total expenses exceed rental income, the
expenses may even generate a net loss.
4. Dry cleaning of Work Suits
As per IRS, dry cleaning of work suits relates to the personal expenditure, which cannot
be claimed as deduction.
5. Payment of phone bill by Company:
Payment of phone bill by company is reimbursement only. It will not be taxable in the
hands of client