Author: Bree

College Planning for U.S. Expats

College Planning for U.S. Expats

You’ve got kids. They may be small now, but before you know it, they’re off to college. Unfortunately, the cost of a university degree in the United States has become incredibly daunting. Therefore, planning for college expenses is imperative, and getting an early start provides an absolute advantage.

According to the College Board, the average cost of tuition and fees for a private university in the United States is slightly over $30,000 per year (excluding room and board). Public schools are more affordable, but still clock in at over $22,000 per year (out-of-state tuition). Furthermore, every year the cost of tuition increases at a rate much higher than inflation.

In this article, we discuss 529 plans for U.S. expats. A 529 plan is basically a savings account established for the purpose of funding a college education. There are two types of 529 plans; however, the main ones are sponsored by individual States.

Why are 529 plans great? From a tax advantage, there are clear advantages. Account balances grow tax deferred. And when the proceeds are used to pay for qualified college expenses, there are no tax consequences. So if you can afford to save for college, a 529 plan is a fantastic vehicle for doing so.

529 Plan – Basics You Should Know
Purpose 
  • To fund a child’s college education
  • If the child beneficiary does not attend college, then the funds can be used to pay for another family member’s college expenses (e.g., a sibling)
Maximum Contribution 
  • Up to $14K per child (without triggering gift tax)
Tax Benefits 
  • No tax deductions on federal return; however, possible on State return
  • Earnings grow untaxed
  • No tax on distribution (for qualified college expenses)

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For U.S. citizens living abroad, setting up a 529 plan can be slightly tricky. That is because many expats do not have residency in a particular state. In these cases, we recommend establishing a 529 plan with Vanguard (one of the largest mutual fund companies in the world). Vanguard 529 College Savings Plans are sponsored by the State of Nevada, but is open to any investor. Vanguard is renowned for its low fee structure, so more of your money goes toward covering college expenses. For more information, go to: https://investor.vanguard.com/what-we-offer/college/overview.

 

This article was written by John Ohe (IRS Enrolled Agent and Chartered Financial Analyst). John is a partner at Hola Expat, which specializes in preparing tax returns for U.S. expats. If you would like to submit a tax-related question, email: info@holaexpat.com.

Disclaimer: The answers provided in this article are for general information, and should not be construed as personal tax advice. Tax laws and regulations change frequently, and their application can vary widely based on the specific facts and circumstances involved.

Categories: Blog

What you should know about FATCA

As of the publication of this article, roughly 110 countries either have FATCA  (Foreign Account Tax Compliance Act) agreements in-place with the United States or are in discussions. Thus far, Suriname has not yet signed an agreement. But it is probably just a matter of time before FATCA comes to Suriname.

The first clue is when local banks begin handing out W-9s to U.S. citizen account holders. This is an indication that local government has had significant internal discussions, and have briefed the banks to prepare for FATCA. The key information on a W-9 is the social security number. When banks in Suriname begin transmitting account information along with a SSN, the IRS will be able to easily pursue U.S. citizens and green card holders for not reporting foreign earned interest.

Technology is making the world a lot smaller. Computers will be able to instantly flag many delinquent taxpayers. Prior to FATCA, expat tax returns were largely based on an honor system. With FATCA, the IRS has the ability to electronically reconcile expat tax returns with foreign bank account information. It may take the IRS several years to actually pursue someone, but that is clearly not a desirable situation. Along with penalties for not reporting interest income, there may be penalties for not filing the FBAR or Form 8938 (if applicable).

Our best guess is that Suriname will become a FATCA-compliant country within the next 2 years. For U.S. expats in Suriname, it’s a good idea to get compliant before FATCA becomes effective.

 If you would   like to submit a tax-related question, please email us: info@holaexpat.com. Responses   are provided by John Ohe (IRS Enrolled Agent and Chartered Financial Analyst). Disclaimer: The answers provided in this article are   for general information, and should not be construed as personal tax advice.   Tax laws and regulations change frequently, and their application can vary   widely based on the specific facts and circumstances involved.

 

Categories: Blog

U.S. Expat Taxes

SamAmerican expats are subject to U.S. income taxes regardless of where they live and where they make their income. Furthermore, there are special requirements and issues to consider when it comes to tax return preparation. Over the next several months, we will be addressing some of the tax complexities faced by American expats living in Suriname.

Question: Do I really need to file U.S. taxes?

In general, individuals with income <$9,750, or married couples filing jointly with income <$19,500 do not need to file (for 2013). However, the filing requirement is completely different for self-employed people. The threshold is a meager $400 in earnings.

Child Tax Credit – Reason to file even if you are under the filing requirement

Many expat families with children <17 years of age should file a return in order to take advantage of the child tax credit. As long as earned income is at least $3,000, there is a good chance you will qualify. Each child is worth up to $1,000 money back from the IRS even if you don’t owe any taxes.

Foreign Earned Income Exclusion and Foreign Tax Credit

Without doubt, the IRS filing requirements cast a wide net. However, many U.S. expats end up not owing taxes because of certain exclusions and credits available to them. The most important of these are the foreign earned income exclusion (FEIE) and foreign tax credit. With the FEIE, up to $97,600 of foreign earned income while living abroad is excludable from federal tax. The $97,600 works in conjunction with other deductions. As a result, one can have more than $100,000 in income, and pay no taxes. For married couples, both of whom are working, the exclusion amount is doubled. In order to qualify for the FEIE, one must meet be either the bona fide residence or physical presence test.

With the foreign tax credit, taxes are paid to a foreign country offset U.S. tax liabilities. The foreign tax credit is normally utilized when one has paid income tax to a country with a higher tax rate than that of the U.S. For most expats in Suriname, the FEIE is a more applicable tool than the foreign tax credit.

 This article   was written by John Ohe (IRS Enrolled Agent and managing partner at Hola   Expat). For more information, visit us: HolaExpat.comDisclaimer: The answers provided in this article are   for general information, and should not be construed as personal tax advice.   Tax laws and regulations change frequently, and their application can vary   widely based on the specific facts and circumstances involved.

 

Categories: Blog

Watradagu at the Zoo

BB pic Feb 2014 112By: Cristian

There are many interesting animals at Paramaribo Zoo.  My favorite one was the otter.  He is called a watradagu in Surinamese.  BB pic Feb 2014 111The otter has a light brown coat of fur, tiny ears, huge black eyes, a long tail, and duck-like flippers.  His nose is little with long whiskers. I learned that these otters all have unique patterns on their white chests that are like fingerprints.  This otter looked very lonely and sad.  He doesn’t have a companion because the zoo people cannot take an otter from the wild.  They have to wait to get an otter from another zoo that has already been born into captivity.

Categories: Fun Facts

A Field Trip to Fort Nieuw Amsterdam

flowerBy fourth grader – C. Povoa.
Today I saw cool things at Fort Nieuw Amsterdam. I saw a big pond with large lilly pads as long as me, and it had pink flowers in between them. I also learned about green turtles. I learned that the green turtle lays a lot of eggs because most of them get eaten by crabs, birds, sharks, and other big fish.turtle

I also learned about slavery and plantations.  I learned that the slaves would go through a process to make sugar from sugar cane. I saw little jails for really bad slaves and bigger jails for the other slaves. I think churnslavery was sad. It was not fair. It should have been fair for everybody.

 

 

 

Fort Nieuw Amsterdam – Suriname
By: Suriname Insider
Did you know that Suriname was home to many sugar plantations during the 17th-19th centuries? Well, the old plantation houses (now restored) and museum artifacts are just a few of the many things you can learn about at Fort Nieuw Amsterdam. This historical site and open-air museum is also fun for kids; playgrounds, learning stations, an old ship, a tank, gardens, and cannons are scattered throughout the winding pathways. A morning walk can take you back a few centuries and charm your eyes to Mother Nature’s wondrous creations. Don’t leave Suriname before checking this place out!

war tank

light house ship

Categories: Blog, Travel Tips

Navigating Paramaribo 101

“A hospital bed is just like a still standing taxi whose meter keeps running.”
-translated from the traffic tips on the back of the Surinamese International Driver’s License

Warning: Driving in Paramaribo may cause high blood pressure.

To say that traffic in Paramaribo is chaotic is an understatement, but I’ve been told that driving in India and France is worse.  Picture yourself in a non-violent video game involving street traffic. Add in a handful of stray dogs and pedestrians trying to cross road; bikers in the narrow lane next to you; motorcycles zooming in and out of traffic; huge crater holes in the sand, brick, and asphalt roads; stopped buses and cars parked halfway in the street. You’ve now got a perfect picture of Suriname traffic. It used to work okay, but as the demand for vehicles and the metropolitan population grew, the streets did not.  Many intersections that should have traffic lights do not. But as always, the underlining flow of contradictions that surrounds everything in this paradise also applies itself to transportation. Of the few traffic signals that do exist, some are solar powered – an environmentally friendly and unique energy conservation arrangement.
Obviously, you have also noticed that Surinamese traffic is left-handed. The cars, mostly Asian imports, are built with the steering wheel on the right side. Some foreign cars have the steering on the left-hand side which makes navigating the left-handed traffic very dangerous.
For the American or Dutch visitors, getting used to handling the gear box and emergency brake with the left hand is quite an adventure. You can almost always recognize a foreign driver in traffic; they turn on the windshield wipers to signal a turn and aren’t sure whether they have the right of way at an intersection. The right of way indication is a white, triangular shaped, red trimmed sign with arrow pointing forward and a cross stripe through the middle. Like the stop sign, it is usually found somewhere 10 to 20 feet before the actual intersection, on the left side of the street, of course.
Always slow down before an intersection, no matter how small it may be. Although the legal city speed limit is 40 kilometer per hour (24 mph), no one, except the leerling (student) vehicles ( marked with a white letter “L” against a blue background) really obliges. Since the most immediate impact threat to you as a driver in a right-steering vehicle is coming from the right-hand side of a road perpendicular to you, always look right and then left before crossing an intersection.
Getting a driver’s license in Suriname is a costly and timely investment. The legal driving age is 18. Foreign driver license holders need to obtain an international driver’s license prior to driving legally in Suriname. There is no guarantee that a person will be issued an international driver’s license in Suriname, so it is a good idea to request an international license from your country of citizenship. If you manage to obtain a Surinamese international license, it must be accompanied by the foreign license at all times. The Surinamese license is laminated and twice the size of a normal license; it probably won’t fit in your wallet.
Surinamers also have a “secret” street language. Friendly driver’s honk to let bikers, buses, and motorcycles know they are passing. A honk or two can also mean, “Don’t back out!” or “MOVE” (to dogs)! Flashing of bright-lights can mean a number of different things; it is either a signal to give another driver the chance to go; saying that your headlights are blinding; or signaling that there is a road block up ahead. If someone screams or mouths, “U mang pang pang” (foul language) at you, they are very upset with what you’ve done.
Expect to spend a lot of time in traffic, especially downtown. The worst times to be on the road are during morning rush hour, when schools get out (around noon), and evening rush hour (between 4-6pm). Downtown is always crowded and a labyrinth of one way streets and halted public buses make navigation problematic.
It is illegal to use a phone while driving, even at a dead stop. Although speed traps are rare, road blocks are not. Police will often set up road blocks and signal you to stop in a parking lot or at the side of the road. They will ask to see your driver’s license, auto keuring (inspection report), and proof of insurance (sticker on your windshield and/or in paper form). None of them can be expired. The best thing to do is always have the vehicle paperwork in order and fully cooperate with the law officers. Most police officers speak English or at least understand it.
If you plan to buy a car in Suriname, make sure the paperwork is in order and that everything is signed over properly into your name. Most cars are sold for American dollars or Euros, and because of import taxes they may cost a lot more than they do outside the country. The vehicle registration process is timely and complicated and may involve several visits to the vehicle registration department. Consultants can also be hired to help with these occasions.
If your insurance is not up to date or you cannot prove that the car belongs to you, your car will be towed, you will have to pay a very hefty fine to release it from police custody, and you will have to take a taxi home.
Unfortunately, car insurance policies in Suriname do not cover vehicle theft if the vehicle is older than 10 years. New cars are often stolen or bereft of their accessories. That is why they are locked in garages or kept behind iron bars. Before buying any insurance policy, make sure you understand it.
Always lock your car, even while you are in it. There is no guarantee that someone won’t reach in an open window or open a door to get to a handbag. It is best to keep valuables and cell phones in the back seat so as not to be tempted to use them while driving.

Let us first review the main streets you should know. Many of them have changed names over the last few years (AKA column) or change name as they progress through the city (Extension street column). Trying to pronounce them correctly can be a fun family game. Familiarizing yourself with them shouldn’t take longer than a year (if you’re driving). My map is a poor excuse for a map; however, it should give you enough of an idea to get your bearings. Please buy a real map! I’ve divided Paramaribo up by color. Remember that talking on the phone or texting while driving is prohibited. Safe travels!

North Paramaribo = yellow
South Paramaribo = red
Downtown Paramaribo = green
Kwatta = gray

 

MAP   NUM FORMAL   STREET NAME AKA   (FORMER NAME) EXTENSION   STREET LANDMARK
1 Anton   Dragtenweg Courtyard   Marriott Hotel
2 Dr.   Sophie Redmondstraat U.S.   Embassy
3 Gemenelandsweg Kasabaholoweg Sarinah’s   Restaurant
4 Henck   Arronstraat Gravenstraat DSB   Bank
5 J.   Lachmonstraat Coppenamestraat Roopraam   Roti Shop
6 Johannes   Mungrastraat Choi   (South)
7 Johan   Adolf Pengelstraat Wanicastraat Water tower (poelepantje)
8 Kernkampweg RBC   Bank
9 Kwattaweg Henck   Arronstraat
10 Ringweg Copernicusstraat
11 Tweede   Rijweg Lallarookweg Hermitage   Mall
12 Tourtonnelaan Tulip
13 Zonnebloemstraat Telesur
14 Zwartenhovenbrugstraat (1)     Van’t Hogerhuysstraat(2)     Martin Luther    King Weg (aka -Highway)

 

Categories: Blog, Travel Tips

Stay Safe. Stay Alert.

While Suriname’s crime statistics don’t even skim those of big American cities, Paramaribo is still an urban center that has its share of criminality. In fact, many residents are feeling uncomfortable with the recent crime waves, a rarity to Suriname. It is always best to take precautions; they may prevent you or your loved ones from becoming easy victims.

Many of the following tips are common sense, but there may be some new ones that you could add to your own list of safety habits. These tips are also not meant to bring you paranoia, but rather remind you that being alert and prepared may possibly prevent you from becoming a victim. Instinct tells us to defend ourselves and our loved ones, but if the crook has a weapon and you do not, play it safe and cooperate. Your life is far more valuable than your wallet!

Street Smarts
– Never walk around with wads of cash or flaunt your cash when making purchases.
– Try to keep cash and valuables in the bank or, if you must, well-hidden in your home.
– Avoid walking with a purse or exposing your cell phone when walking in the downtown area.
– Try to avoid using ATM’s at night or when it’s dark out.
– Stay in groups, have someone escort you to your car if possible.
– Do not frequent the same cambios.

Home Safety
– Always keep your front gate(s) and your doors locked.
– Purchase a home alarm with motion detectors and glass breaking sensors, and make sure it is functioning as it should. Does the alarm monitoring company have all the correct phone numbers to reach you on?
– Always use your home alarm; at night, when you leave, when you are home alone, and when you are gone for long periods of time (make sure that a trusted person can check on your home or has a key).
– Do not open the gate for strangers.
– Keep a cell phone/home phone near your bed.
– Before exiting your vehicle, upon arrival at your home, check that everything appears normal. Did your dogs greet you? Are the lights on? Are there any open doors or windows?
– If you have pets/dogs that assist in alerting you, protect them too. Burglars are known to poison pets. Train your pets not to take food from strangers. At night, keep your pets in your home, inside the iron bars, or on the leash (out of site to passer-byers) so that your pets do not go near the front gate and risk being poisoned.
– Keep good relationships with your neighbors. Try to keep an eye on each other’s homes and remain alert for screams or uncommon noises.

Car Safety
– Lock your car doors and keep your car windows closed while in traffic.
– Never leave purses, laptops, or valuable items in your parked car.
– Ladies, do not leave your purse in the car seat next to you while driving. Make a habit of placing your purse on the floor, in the back seat.
– If you are robbed in or near your car, do as you are told so as not to escalate the situation or cause injury to yourself.
– If you suspect you are being followed, pull over into the nearest public commercial area and call the police (115). Note the license plate, make, model, and color of the car, if you can.

And while we’re on the topic of safety, here are a few other tips to keep in mind.

Most houses in Suriname have windows and doors that are enclosed with iron bars (dievenijzer). Dief means burglar in Dutch, so it’s safe to assume that these decorative attachments were built to serve two purposes: to look nice, and to keep robbers out. Iron bars are a common sight within the Caribbean. But as with most things, there are also drawbacks to having iron bars in and outside of your home. The same bars that keep unwanted guest out can also hold you prisoner in your own home.
The more doors a house has, the more keys are needed to open the locks. Your Surinamese key chain probably weighs more than a pound because you have so many of them. But, can you easily identify the keys? Do you have copies near the exits of your home? Where do you keep your keys at night?
– Begin by purchasing color key rings or products that can help you differentiate the keys so you know exactly which belong to each lock.
– Keep only the important keys on your key ring and place the rest on hooks or nails near the exits of your home. For example, place a small hook with a spare key near windows with locks that open to create fire exits. Make sure the keys are placed in strategic places, easily accessible to you, but not to thieves who may try to access them from the outside.
– Also keep a basket of spare keys that only you and members of your household know the location of. Keep your key chain(s) near you at night. In case of a fire, you do not have time to go searching for keys.
– Make sure your household has a fire escape plan.
Purchase fire extinguishers and smoke alarms for your home. If you have a gas stove, do not place the gas tanks inside your kitchen, in your garage, or in places where they are vulnerable to damage. Even gas tanks get stolen, so be sure to also enclose them in iron cages, as well as outside air-conditioning units, and the copper plumbing that runs outside of your home. The number for the fire department is 110.

Categories: Blog