U.S. Tax Experts Bring Some Clarity To The U.S. Taxation System

Josh Maxwell

Jared Garfield​

Josh Maxwell and Jared Garfield of Hone Maxwell LLP highlight two key aspects of the U.S. taxation system, namely transfer tax and income tax

The Estate Planning and Wealth Succession Asia Forum 2023, held in Precepts Group’s Singapore office in April as well as on Zoom, featured U.S. tax experts Josh Maxwell and Jared Garfield from Hone Maxwell LLP, which is a U.S.-based law firm with offices in San Diego and San Francisco. This event focused on the intricate workings of the U.S. tax system, which can be categorised into two distinct sections:

  • Taxation of U.S. persons
  • Taxation of non-U.S. persons

Understanding these rules is vital for individuals with U.S. immigration status or business ties, as they face complex reporting requirements and taxation considerations. The forum also shed light on planning strategies for U.S. assets held by foreigners or U.S. beneficiaries of foreign trusts, gifts, and estates.

Key focus areas

During the seminar, Maxwell and Garfield provided a comprehensive overview of inbound and outbound taxation for both income and transfer tax purposes. They also delved into the criteria for determining U.S. personhood in relation to income tax and estate/gift tax, as the rules differ for each.

In addition, the forum offered valuable insights into international enforcement under the Foreign Account Tax Compliance Act (FATCA) framework, amnesty programmes, and practical tips for navigating U.S. taxes effectively.

The speakers highlighted two significant aspects of U.S. taxation: Transfer tax (estate and gift) and income tax. In relation to these areas, they provided in-depth explanations on the following key topics:

  1. Who is a U.S. Person?
    Attendees gained a clear understanding of the criteria used to determine U.S. personhood for income and transfer tax purposes. The speakers emphasised the importance of recognising the impact of U.S. status on income tax and transfer tax planning, as the rules governing each can present unique planning opportunities.
  2. Tax Basics
    The forum covered essential aspects of U.S. taxation, including transfer tax (estate and gift) and income tax. Attendees gained insights into how transfer tax affects inheritances and gifts, with a focus on the differences between U.S. situs assets and non-U.S. situs assets.

    Importantly, the speakers clarified that there are no special family exemptions for transfer tax, except for spouses. Attendees were guided through the requirements, shared strategies, common structures, and planning considerations for U.S. assets owned through foreign trusts or businesses.
  3. American vs Non-American Tax
    Maxwell and Garfield provided a comprehensive analysis of U.S. income tax for Americans, encompassing businesses formed in the U.S., U.S. citizens, U.S. resident aliens (green card holders), and individuals meeting substantial presence criteria. They explored the impact of worldwide income on U.S. persons, regardless of their time spent outside the country. The speakers also addressed how double tax avoidance affects key aspects such as foreign earned income exclusion, foreign tax credits, and tax treaties.

Overall, the Estate Planning and Wealth Succession Asia Forum 2023 provided valuable insights into the complexities of U.S. taxation, offering attendees a deeper understanding of the rules and considerations relating to income tax and transfer tax. With the guidance of tax experts like Maxwell and Garfield, individuals can navigate the U.S. tax system more effectively, ensuring compliance and making informed decisions for their financial future.

This article was first published in our newsletter, The Custodian Issue 26. Click here to access our latest newsletter.


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