The days when American expats could count on an "out of sight, out of mind" approach by the Internal Revenue Service are long gone.
The US taxman has signalled in no uncertain terms that he intends to scrutinise returns from overseas to ensure that all income is reported. So as the traditional April 15 deadline approaches, there are a few key items Americans in the Emirates should keep in mind.
First of all, some newcomers may not realise that expats are eligible for an automatic two-month extension, making the true filing deadline June 15. However, any tax due must be paid by April 15, so those who will owe taxes should consider filing early to avoid paying interest.
To determine if you owe or not, the most important figure to note is the latest threshold for the amount of foreign income that can be earned tax-free: US$91,400 per qualifying person, for the 2009 tax year (a couple filing jointly could claim up to $182,800.)
For US citizens to qualify for the exclusion, they must either be a "bona fide resident" of a foreign country "for a period that includes a full calendar year", or have been "physically present" in a foreign country for at least 330 full days during the previous 12-month period (for further nuances to the rule, search IRS.gov for the terms "foreign earned income exclusion requirements").
Income earned above the exclusion, up to $171,550 ($208,850 for couples), would be taxed at 28 per cent. There are progressive brackets above that, up to a maximum rate of 35 per cent.
It's important to remember that you must file a return even if you earn less than the exclusion. For married couples filing jointly, everyone who makes more than $11,400 must file. Singles must file if their income tops $5,750.
Not filing a return, or even filing after the deadline, could be an expensive mistake.
Virginia La Torre Jeker, a tax attorney working with Far East Management Consultants in Dubai, says the IRS is increasingly exercising its right to deny taxpayers the foreign earned income and housing exclusions if they file late.
Next, don't forget to file the necessary disclosure forms for all foreign accounts that exceed $10,000 at any point during the tax year. These forms, called Foreign Bank Account Reports, or FBAR, have been required for years but they are a new point of emphasis for the IRS. Not surprisingly, the number of FBARs filed last year skyrocketed as a result - more than 550,000 were filed in 2009, a 60 per cent increase over the previous year.
"Most Americans did not even know of the FBAR until recently," said Vince Truong, a financial adviser with Holborn Assets, a firm based in Dubai.
The forms are required for any foreign account in which an American maintains a financial interest, whether the funds are located in a checking account, brokerage account or cash-value insurance policy.
As the rules governing FBAR forms are part of money laundering statutes, those who fail to file could be subject to civil and even criminal penalties.
A small plus: FBAR forms are not due until June 30, so there is a little bit of extra time available.
In addition to the income exclusion, American expats are also allowed to reduce their tax liability by subtracting housing costs paid or reimbursed by their employers. The maximum exclusion generally is $14,624, but the IRS raises that limit for residents in locales where housing is significantly more expensive.
The UAE obviously qualifies, although it seems the IRS has not yet caught up to the changing rental rates in the Emirates.
For 2009, the law allows a higher housing exclusion for residents of Dubai compared to Abu Dhabi. The maximum is $42,550 for Dubai residents and only $35,063 for those living in Abu Dhabi, says Ms Jeker.
Of course, tax rules are endlessly complicated and every expat is burdened with his or her own special circumstances.
In many cases, it is wise to rely on a professional to determine which rules apply. Those who operate a foreign business, own property or establish an overseas trust should almost certainly consult a tax professional before filing.
There is not an overabundance of experts in the UAE conversant in US tax law. Ms Jeker is one of the only - if not the only - tax attorney in the region who specialises in advising US individuals. Her advice: be careful when choosing a tax return preparer. While there are many qualified firms and accountants based in the US and elsewhere that concentrate on tax return preparation, she says she has seen many errors in returns for American expats.
"Those who specialise in overseas issues are much more skilled in this area than those who primarily do domestic returns," she said.
breagan@thenational.ae
ACL Elite (West) - fixtures
Monday, Sept 30
Al Sadd v Esteghlal (8pm)
Persepolis v Pakhtakor (8pm)
Al Wasl v Al Ahli (8pm)
Al Nassr v Al Rayyan (10pm)
Tuesday, Oct 1
Al Hilal v Al Shorta (10pm)
Al Gharafa v Al Ain (10pm)
Zakat definitions
Zakat: an Arabic word meaning ‘to cleanse’ or ‘purification’.
Nisab: the minimum amount that a Muslim must have before being obliged to pay zakat. Traditionally, the nisab threshold was 87.48 grams of gold, or 612.36 grams of silver. The monetary value of the nisab therefore varies by current prices and currencies.
Zakat Al Mal: the ‘cleansing’ of wealth, as one of the five pillars of Islam; a spiritual duty for all Muslims meeting the ‘nisab’ wealth criteria in a lunar year, to pay 2.5 per cent of their wealth in alms to the deserving and needy.
Zakat Al Fitr: a donation to charity given during Ramadan, before Eid Al Fitr, in the form of food. Every adult Muslim who possesses food in excess of the needs of themselves and their family must pay two qadahs (an old measure just over 2 kilograms) of flour, wheat, barley or rice from each person in a household, as a minimum.
What are the GCSE grade equivalents?
- Grade 9 = above an A*
- Grade 8 = between grades A* and A
- Grade 7 = grade A
- Grade 6 = just above a grade B
- Grade 5 = between grades B and C
- Grade 4 = grade C
- Grade 3 = between grades D and E
- Grade 2 = between grades E and F
- Grade 1 = between grades F and G
The specs
Engine: 77.4kW all-wheel-drive dual motor
Power: 320bhp
Torque: 605Nm
Transmission: Single-speed automatic
Price: From Dh219,000
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Company%20Profile
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
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The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now
Joker: Folie a Deux
Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson
Director: Todd Phillips
Rating: 2/5
Company%20Profile
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Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
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'My Son'
Director: Christian Carion
Starring: James McAvoy, Claire Foy, Tom Cullen, Gary Lewis
Rating: 2/5
Common OCD symptoms and how they manifest
Checking: the obsession or thoughts focus on some harm coming from things not being as they should, which usually centre around the theme of safety. For example, the obsession is “the building will burn down”, therefore the compulsion is checking that the oven is switched off.
Contamination: the obsession is focused on the presence of germs, dirt or harmful bacteria and how this will impact the person and/or their loved ones. For example, the obsession is “the floor is dirty; me and my family will get sick and die”, the compulsion is repetitive cleaning.
Orderliness: the obsession is a fear of sitting with uncomfortable feelings, or to prevent harm coming to oneself or others. Objectively there appears to be no logical link between the obsession and compulsion. For example,” I won’t feel right if the jars aren’t lined up” or “harm will come to my family if I don’t line up all the jars”, so the compulsion is therefore lining up the jars.
Intrusive thoughts: the intrusive thought is usually highly distressing and repetitive. Common examples may include thoughts of perpetrating violence towards others, harming others, or questions over one’s character or deeds, usually in conflict with the person’s true values. An example would be: “I think I might hurt my family”, which in turn leads to the compulsion of avoiding social gatherings.
Hoarding: the intrusive thought is the overvaluing of objects or possessions, while the compulsion is stashing or hoarding these items and refusing to let them go. For example, “this newspaper may come in useful one day”, therefore, the compulsion is hoarding newspapers instead of discarding them the next day.
Source: Dr Robert Chandler, clinical psychologist at Lighthouse Arabia
Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
Veil (Object Lessons)
Rafia Zakaria
Bloomsbury Academic
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
The biog
Favourite car: Ferrari
Likes the colour: Black
Best movie: Avatar
Academic qualifications: Bachelor’s degree in media production from the Higher Colleges of Technology and diploma in production from the New York Film Academy
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
UAE rugby in numbers
5 - Year sponsorship deal between Hesco and Jebel Ali Dragons
700 - Dubai Hurricanes had more than 700 playing members last season between their mini and youth, men's and women's teams
Dh600,000 - Dubai Exiles' budget for pitch and court hire next season, for their rugby, netball and cricket teams
Dh1.8m - Dubai Hurricanes' overall budget for next season
Dh2.8m - Dubai Exiles’ overall budget for next season
The years Ramadan fell in May
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Company profile: buybackbazaar.com
Name: buybackbazaar.com
Started: January 2018
Founder(s): Pishu Ganglani and Ricky Husaini
Based: Dubai
Sector: FinTech, micro finance
Initial investment: $1 million
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers