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5/2/2025
Hello and welcome to this edition of our newsletter! We're excited to share valuable insights on how US expats can navigate the complexities of foreign income exclusions and estate taxes. Have you ever wondered how you can maximize your tax benefits while living abroad? Let's explore the strategies that can help you store more cash in your pocket!
Hey tax savers! Here's the scoop:
US Expats Take Note: Foreign Earned Income Exclusion (FEIE) strategies could help you keep up to $125,000 out of Uncle Sam's hands.
Why this matters: Learn how US expats can optimize their FEIE and reduce tax stress by making guaranteed payments from partnerships or carefully allocating foreign source income to maximize exclusions.
Dive deeper: Foreign Earned Income Exclusion for Partnerships: An Expat Tax Guide
Estate Tax Insights: As of 2025, the estate tax applies to estates valued above approximately $13.99 million for individuals, with a federal estate tax rate of 40%.
What's changing: The proposed Death Tax Repeal Act of 2025 aims to eliminate estate taxes, which could significantly alter estate planning and charitable giving strategies for families with substantial assets.
Why this matters: Understanding these changes is critical for effective estate planning and ensuring your legacy is preserved without unnecessary tax burdens.
Dive deeper: The Death Tax Repeal Act of 2025: What It Could Mean For You And Your ...
Stay informed and make the most of your tax strategies!
Heads up, wealth protectors!
Current Climate: As of 2025, the federal estate tax applies to fortunes exceeding $13.61 million, with a 40% tax rate on the value above this exemption. For individuals, the threshold currently sits at approximately $13.99 million, and for married couples, it's around $27.98 million.
Future Changes: Watch out for 2026! If Congress does not act, exemption levels are expected to significantly drop to just $6-7 million per person. This could mean halving the current exclusion amount, leading to increased tax burdens for many families.
Why Act Now: With the potential repeal of the estate tax via the Death Tax Repeal Act of 2025 (DTRA), estate planning strategies are likely to shift from minimizing estate tax exposure to focusing on income tax planning. Now is the time to consider tweaking your plans to minimize future tax burdens and ensure your legacy is preserved without unnecessary strain (The Death Tax Repeal Act of 2025: What It Could Mean For You And Your ...).
Learn more: Dive deeper into the details of the estate tax and the implications of proposed changes to estate planning strategies. Check out the full insights here.
Eager to save more? Try this:
Partner Payment Hack: If you're a US expat, ensure that your partnership payments are structured as 'earned' income. This allows you to optimize your Foreign Earned Income Exclusion (FEIE) and potentially exclude up to $125,000 of foreign earned income annually (Foreign Earned Income Exclusion for Partnerships: An Expat Tax Guide).
Allocate Wisely: Document your foreign source income meticulously. Proper allocation and classification can significantly enhance your tax savings while maintaining compliance—remember, clarity in documentation is key.
Expert Advice: Sometimes, bringing in a professional for valuations is crucial, especially when determining the source of income and distinguishing between services and capital assets. This can support your claims and simplify your tax filings.
Estate Tax Planning: With the looming changes from the proposed Death Tax Repeal Act of 2025, now is the time to revisit your estate planning strategies. Understanding the impact of potential estate tax elimination on your financial future is essential. Consider adjusting your approach and legacy planning to reflect the new landscape (The Death Tax Repeal Act of 2025: What It Could Mean For You And Your ...).
Ready to make these moves pay off?
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