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About Straightpoop

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  • Nationality USA
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  • Year of birth 1949

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  1. ETF Dividends within a 401k and Roth IRA

    1. still exempt 2. Portion of a distribution that represents  income is taxable as "investment income" (i.e. max 26.375% Abgeltungsteuer); portion that represents return of contributions is tax free - unless contributions resulted in tax deferral under German tax law when made or (the Finanzamt position - currently being litigated with the FA the likely loser): the contributions "coulda woulda shoulda" have resulted in deferral of German taxes when made even if they did not). or: If liquidated and annuitized in their entirety (a really dumb thing to do in this environment) taxable as a Leibrente with taxable portion dependent on a number of highly complex qualifying factors.  
  2. Tax return after leaving Germany

      A possible reason it is "not supported" may be that the forms have simply not yet been made available.   You will use Form WA-ESt 2020 to report the day your German tax residency ended.  Until that date, your worldwide income will be subject to German income taxes.  (worldwide = unbeschränkt = unlimited)   After that date, you will be directly taxed by Germany as a non-resident only on income from German sources (e.g. wages earned while on German soil, rent from German real estate, dividends from German corporations, etc.), (beschränkt = "limited" to German source income only)   Although your income from non-German sources earned after 7 July cannot be taxed directly by Germany you must nevertheless declare all of it so that the tax rate on the worldwide (unbeschränkt = unlimited) income you earned up until 7 July can be correctly determined.   Assuming you do not reestablish German tax residence, then in 2021 and thereafter you will file a Non-resident tax return to report only income from German sources (if any) and pay taxes on that "limited" income at the rates applicable to non-residents.   Alles klar?
  3. ETF Dividends within a 401k and Roth IRA

    No. No. No.   Article 18A 1) DBA-USA
  4. Trade Republic - not happy, they are slow

    For beginners:
  5. Filing a tax return - help on how to file

      Yes.   The reason is so that the proper rate of tax can be applied to the income she earned as a German tax resident in the year she moved here. This is known as "Progressionsvorbehalt".  
  6. Child capital gains, ETF, PFIC regulations

      Nope.  Schwab (and now almost all US retail brokers of my acquaintance) will no longer allow non-residents - US citizens or otherwise - to purchase US ETFs (and some, e.g. E*trade) won't even allow you to buy REITs due to lack of a KIID (Key Investor Information Document) for most US-based ETFs.   Maybe a blessing in disguise considering the admin effort required to accurately report German tax income from these investments.
  7. 401k & Roth Liquidation Assessments

    @Osrt   What PandaMunich said.   Once you have filed an Einspruch and preserved the issue, your next task will be producing evidence of your contributions to both your Roth and 401(k).   All contributions to a Roth are from previously taxed income.  Thus, the taxable portion of a (complete?) liquidating distribution will be relatively simple:  Total - contributions = taxable Kapitalerträge.   The 401(k) is a bit more complicated and the jury is still out on some aspects of German taxation.   Contributions by you and employer made prior to 2008 should be regarded in Germany as contributions for which you did not receive (and prior to 2008: could not receive) any German tax (deferral) benefit and should thus not be included in your German taxable income when distributed to you on liquidation.   Post-2008 contributions are another matter.  However, if these were made after 2008 but before you became a German tax resident these contributions also provided you with no German tax (deferral) benefit and should also be regarded as the functional equivalent of a non-taxable "return of capital" when included in your liquidating distribution.   Besides the necessity of substantiating your contributions you may also have to reckon with the intransigence of the FA on an issue that it lost on in a recent court case but which it is currently appealing, to wit:   The FA is arguing that even contributions that produced no German tax deferral should nevertheless be considered taxable upon distribution on the theory that if the taxpayer had been a German taxpayer they could have obtained deferral if they had so chosen.  In my view (and in the view of the German tax court in the first instance) this is preposterous. But  . . .the FA is still going to argue its "woulda, coulda, shoulda" theory on appeal.   The case details (in case your Steuerberater/Anwalt is unaware of it are:   Finanzgericht Köln, 11 K 2738/14 Datum: 09.08.2018 Spruchkörper: 11. Senat Entscheidungsart: Urteil Aktenzeichen: 11 K 2738/14 ECLI: ECLI:DE:FGK:2018:0809.11K2738.14.00   Nachinstanz: Bundesfinanzhof, X R 29/18     Don't worry about that now, though.  Get your Einspruch filed ASAP and then start gathering your contribution evidence.    
  8. US expat tax filing and German pension funds

      No FBAR filing requirement unless the "account" - like some life insurance policies and annuity contracts - has a cash value that you can tap on demand.
  9. Child capital gains, ETF, PFIC regulations

      A gift of a PFIC is regarded as a sale/disposition and is reported as such.   Assuming your child wishes to make a gift of his/her shares to Mom, the administrative headache of effecting the gift through the bank may not be worth the cost of simply selling them.   Mom would take child's (German) tax basis but that info would not necessarily accompany the gift so records would have to be kept, etc. etc.   Charles Schwab appears to be actively encouraging GFs (Godless Furriners) and US expats to open an "International Schwab One" brokerage account.  They don't allow TOD arrangements with such accounts but I was able to add my NRA spouse to such an account in JTWROS without muss or fuss.  Schwab definitely offers custodial accounts for minors but I did not check to see if that applied to the international version; possibly not if the custodial arrangement is reliant on US state law (UTMA, etc.).  Still might be worth looking into.    
  10. Child capital gains, ETF, PFIC regulations

      Exactly.   Technically, you can make the M2M election in any year but you can do so effectively (i.e. avoid the harmful tax effects) only by doing so on the tax return for the year of purchase.  Here is the warning from the IRS on p.7 of the instructions to Form 8621:   [W]hen a shareholder makes a mark‐to‐market election for PFIC stock in a year other than the first year in which the shareholder holds stock in the PFIC and no QEF election is in effect, the PFIC stock is treated as sold at fair market value on the last day of the tax year for which the election is made, and the gain is treated as an excess distribution subject to section 1291. In addition, any distributions made during the year with respect to the PFIC stock are subject to section 1291.   NB:  Technically, each separate block of PFIC stock constitutes a separate PFIC for reporting purposes; with a separate USD cost and separate "vintage", i.e. purchase date.   Technically, a separate Form 8621 will be required for each such separate block of stock. The reason is because each will have a different cost basis (however minute) for purpose of computing gain or loss when marked to market or sold.  Technically, losses from one block cannot offset gain from the other.  (Losses are a sticky wicket. They can only be claimed to the extent of previously "unreversed inclusions", i.e. mark to market gains reported previously.)  Practically, you will be doing no violence to the spirit of the PFIC rules if, for such minuscule amounts involved to date, you simply tote up the total shares of the same fund and total USD price paid for them in 2020 and report them as a single "vintage" block on your 2020 Form 8621.  Assuming you do make the timely election the exact date of purchase will be irrelevant for PFICs marked to market since the "holding period" will not have any influence on the tax consequences.   If you want to be shed of these things properly and for the least amount of annoyance I would suggest the following:   1.  File a group or "vintage" 8621 for all of the shares of each different fund acquired in 2020 and check the box to mark them to market. 2.  Don't buy any more of these things in 2021 3.  Sell the whole kit and kaboodle at an opportune time in 2021 but not later than 31.12.2021. 4. File a "vintage" 8621 in 2022 reporting the proceeds of the 2021 sale.  Since, by definition, there will be no "excess distribution" on 2020 vintage (because they were M2M) and on the 2021 (because they were sold in the same year of acquisition), there will likely be only a smidgeon of income/loss to report.   Then, go and sin no more.    
  11. Child capital gains, ETF, PFIC regulations

      Right.   Foreign stocks and bonds:  OK PFICs:  nasty  
  12. Jahressteuerbescheinigung - Student

      No.   Evidently, your account with DB (AKA: the "Donald's Bank") generated a small amount of interest, i.e. the "some cents" you mentioned.   The Jahresbescheinigung is nothing more than a certification by the bank of the amount of interest the account earned for the relevant calendar year and the amount of tax it withheld and paid over to the German tax authorities on that interest.   DB is obligated to withhold a flat 25% + a 5.5% surcharge (total: 26.375%) on the amount of interest earned on the account that exceeds the exemption amount that you assigned to the account when you opened it. If, as is frequently the case, you did not provide the bank with a "Freistellungsauftrag" assigning all or a portion of your allotted €801 annual exemption amount, then the bank was obligated to withhold taxes on the total amount generated on the account.   If your investment income did not in fact exceed €801 in the calendar year, then the document you have can be used by you to substantiate a claim for a refund of the excess withholding on a duly filed German tax return. But if you have no other reason to file a return and the stamp to mail it would cost more than the refund claim, I wouldn't bother. Instead, just keep the document as a souvenir.
  13. Child tax credit vs foreign tax credit

      Nope. You got it.   Just add:   5) And if there is any unused CTC check to see if qualified for refundable ACTC   For (FEI) "qualified salary" consult the instructions to Form 2555 or see Pub 54.  
  14. Child tax credit vs foreign tax credit

      Not sure what "it" refers to but the following assumes "it" in your first sentence refers to "tax" as opposed to "income".   Claiming the FEI will have no effect on your child tax credit since the income limitation depends on MAGI (Modified Adjusted Gross Income) which essentially adds back to your AGI whatever you excluded as FEI.   The foreign tax credit and the child credit are independent.  If, however, your US tax liability is eliminated by the foreign tax credit you will get no benefit from the REGULAR child tax credit which will kick in only if there is still some residual US tax liability after the FTC has worked its magic or you qualify for the refundable ADDITIONAL Child Tax Credit (ACTC).   The availability to you of the ADDITIONAL (and refundable) Child Tax Credit will depend in the first instance upon whether you have at least $2,500 of qualifying income.  For a person claiming the FEI that will be earned income in excess of the FEI exclusion limit because any income excluded as FEI will not "qualify" towards the $2,500 minimum income threshold.   The refundable ACTC has the same phase-out/income limitation amounts as the REGULAR child credit.   For 2020 the maximum of the $2,000 ACTC that can be refunded is $1,400 per qualifying child.   Do check the box for qualifying child if the child qualifies.  (You won't necessarily get the credit because that will depend upon having qualifying income as well as a qualifying child.)