A Primer on How to Be Tax-Smart with Your Foreign Income
Do you own stocks, bonds, or mutual funds? If so, you may well have some foreign holdings such as BMW (German), or BP (British), or Nestle (Swiss). This means you have paid foreign taxes on the income you earned. Would you like to avoid being taxed on that income a second time? You may be able to accomplish this goal if you claim a credit or deduction on your U.S. tax return. Don’t count on your tax preparer or preparation software doing this optimally for you.
The information below applies to almost all U.S. investors since most hold foreign stocks in their U.S. mutual funds. Read on to learn how to be more tax-efficient with your foreign income.
IN THIS EDITION OF OUR QUARTERLY MARKET REVIEW WE PROVIDE DATA AND ANALYSIS ACROSS MARKETS AND INVESTMENTS.
This quarterly market review features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets.
Refinancing Right Now Might Make Sense. Here’s Why.
Refinance before the new fee hits on October 1st and have the Federal Reserve help pay your mortgage for you. The Federal Housing Finance Agency (FHFA) is imposing a 0.5% fee for all mortgage refinancing on October 1, 2020, so on a $400,000 loan, you will pay an extra $2,000 in closing costs. When you take this into account, rates may never be this low again.
You may have heard that, as one of the few upsides of the COVID-19 pandemic, conforming mortgages are at all-time lows; so low that even though my family refinanced less than a year ago, it is worth us refinancing again – and that may well be the case for you, too. (Note: We have a conforming loan. Jumbo rates are not necessarily so competitive.) Our current 15-year loan was only charging 3.125% but we are refinancing to a 30-year loan and still getting a lower rate. We wanted to pay off our mortgage more quickly, but it was too hard to pass up 2.375% on a 30- year mortgage. At this rate, the government will likely be helping to pay off our mortgage for us. I’ll explain how this works later.
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It’s Possible to Work for Yourself While Still Building a Sound Financial Future
The current shut down is another reminder of how tough it is to plan for your financial future and retirement in the entertainment industry and self-employed freelancer world in general. However, it also gives you a perfect opportunity to put strategies in place to maximize your future when things start up again. Most Oscar winners think of themselves as artists, but they are also highly successful business owners. And the same goes for the legions of other successful, but less renowned, self-employed freelancers. If you work freelance and are self-employed, it is critical that you maximize the unique financial planning strategies available to you and your fellow self-employed business owners.
This is even more important in creative fields because of the unpredictability and volatility of the career trajectory. Even in normal times, we all know those who thought their phenomenal youthful success would last forever, and sadly it did not. Meanwhile, too often they paid far more in taxes in their high earning years than they should have done and did not use the planning vehicles available, then had nothing left when their careers got cut short. Do not let that happen to you.
Below we will discuss four strategies high-income, self-employed freelancers can use to prepare for their financial futures while also minimizing their tax burdens. We are going to start at the top of the income ladder and work our way down. So, don’t get dispirited if you are not earning the kinds of numbers we are talking about. Keep on reading and hopefully, there will be something for you:
