Based on information provided to KeatsConnelly from Thomson Reuter Checkpoint (formerly the Research Institute of America), the anticipated 2014 US numbers for foreign tax and reporting items are below. All amounts apply to US taxes and are stated in US dollars.
Unified estate and gift tax exclusion amount. For gifts made and estates of decedents dying in 2014, the exclusion amount will be $5,340,000 (up from $5,250,000 for gifts made and estates of decedents dying in 2013). Remember that per the Treaty, Canadian residents and US nonresidents receive an exclusion equal to the ratio of their US assets to their worldwide assets. Also, if the Canadian resident is married at the time of death, the exclusion is doubled.
Gift tax annual exclusion. For gifts made in 2014, the gift tax annual exclusion will be $14,000 (same as for gifts made in 2013). This rule only applies to US residents or US citizens.
Increased annual exclusion for gifts to noncitizen spouses. For gifts made to a non-US citizen in 2014, the annual exclusion will be $145,000 (up from $143,000 for 2013). Gifts to spouses can happen quite easily if you are not careful.
Reporting foreign gifts. If the value of the aggregate “foreign gifts” received by a US person (other than a non-profit organization exempt under IRS Code Sec. 501(c) organization) exceeds a threshold amount, the US person must report each “foreign gift” to IRS. Different reporting thresholds apply for gifts received from (a) nonresident alien individuals or foreign estates, and (b) foreign partnerships or foreign corporations. For gifts from a nonresident alien individual or foreign estate, reporting is required only if the aggregate amount of gifts from that person exceeds $100,000 during the tax year. For gifts from foreign corporations and foreign partnerships, the reporting threshold amount will be $15,358 in 2014 (up from $15,102 for 2013).
Expatriation. For 2014, an individual with “average annual net income tax” of more than $157,000 for the five tax years ending before the date of the loss of US citizenship will be a covered expatriate (up from $155,000 for 2013). Under a mark-to-market deemed sale rule, all property of a covered expatriate is treated as sold on the day before the expatriation date for its fair market value. However, for 2014, the amount that would otherwise be includible in the gross income of any individual under these mark-to-market rules will be reduced by $680,000 (up from $668,000 for 2013).
Foreign earned income exclusion. The foreign earned income exclusion amount increases to $99,200 in 2014 (up from $97,600 in 2013).
For more information go to Cross Border Tax & Accounting at www.cbta.net