1. US/UK Tax Talk Roland A. Sabates Director of Operations 0

2. Agenda Brief Overview of H&R Block Expat Tax Services Importance of U.S. tax compliance from both the expat and HR professional US / UK Tax Talk 1Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

3. Largest Tax Preparer in the World  680+ million returns worldwide since 1955…24.2 million in 2015  ~12,000 offices globally, with over 80,000 tax professionals and associates worldwide 1  Well-established operations in the U.S., Canada and Australia Start-up operations in India and Brazil  Files approximately 1 in every 7 U.S. tax returns 96% brand awareness Capable of serving clients anywhere, anyway and anytime they choose (Assisted and DIY)  Offers complementary “Tax Plus” products to clients Emerald Card is the 3 rd largest general purpose reloadable debit card in the U.S. 1 Excludes tax professionals and associates at franchise locations 2

4. Established & Growing International Presence One of our fastest growing businesses is International Emerging Markets India US Expat Tax Services Brazil Offices on/near 25 U.S. Military Bases Evaluating other opportunities Completed 51 st Tax Season 10% Segment Share Canada Australia Completed 44 th Tax Season 7% Segment Share 3

5. H&R Block Expat Tax Services 4Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

6. H&R Block Expat Tax Services Retail expat services available in Canada, Australia, and India Expat Tax Services launched in May 2013 Served thousands of clients in over 160 countries U.S. tax return preparation and filing, FBAR, consulting Highly specialized. Most advisors are CPA’s, tax attorneys, or enrolled agents (EA’s) Virtual service using Skype, email, or phone with secure document sharing and storage 5Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited 1. Register @ hrblock.com/expats 2. Provide Tax Information 3. We Prepare Tax Return 4. Review & E-file

7. Why is this important? 3,415 2015 American Taxpayer – Penalties Costly Compliance Fees Avoidable U.S. Tax Exposure HR Professional – Associate Engagement and Retention Popularity of International Assignments 6Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

8. Meet Irene… Irene is high potential digital marketing manager with your organization and accepts a two-year assignment working in London. She meets a British national, gets married, and requests to be localized to the London office. Irene contacts the accounting firm she had been working with through her employer and is given a quote of several thousand dollars. She decides to look for another option but misses the filing deadline. By the time the next year’s filing deadline rolls around, her first child is on the way and U.S. taxes falls down the priority list. She enrolled in the group personal pension offered through her employment and begins making a monthly contribution to an Individual Savings Account with a UK-based financial institution. 7Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

9. U.S. Tax Filing Deadlines April 18, 2016 – Deadline to pay 2015 U.S. tax June 15, 2016 – Deadline to file for U.S. taxpayers overseas (automatic extensions can be requested to October 15 th ) June 30, 2016 – FBAR filing deadline (no extension) October 15, 2016 – Extended filing deadline December 15, 2016 – Additional extension for U.S. taxpayers overseas 8Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

10. Benefits to Reduce U.S. Taxation Foreign Earned Income Exclusion $100,800 excluded from taxable income Qualifications Physical Presence Test Bona Fide Residence Test Additional housing exclusion amount - $85,300 (London) Foreign Tax Credit Dollar for dollar credit for tax paid Income Tax Carryover of unused credits for up to 10 Years Different limitations for passive and active income Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited 9

11. Comparative US / UK Tax Rates Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited 10 U.S. Tax RatesU.K. Tax Rates RateSingle Married Separate Head of Household RateAll Taxpayers 10%$0 to $9,225 $0 to $13,15020%Basic Rate£0 - £31,785 15%$9,225 to $37,450$9,226 to $37,450 $13,150 to $50,200 40%Higher Rate £31,786 - £150,000 25% $37,450 to $90,750 $37,451 to $75,600 $50,200 to $129,600 45% Additional Rate £150,000 + 28% $90,750 to $189,300 $75,601 to $115,225 $129,600 to $209,850 33% $189,300 to $411,500 $115,226 to $250,750 $209,850 to $411,500 Personal Allowance£10,600 35% $411,500 to $413,200 $205,751 to $232,425 $411,500 to $439,000 39.60%$413,200 +$232,426 +$439,000 + Standard Deduction $6,300 Personal Exemption $4,000

12. British Pension Schemes Favorable Treatment Under U.S.-U.K. Income Tax Treaty Elective deferrals and tax-deferred earnings available for most American participants Employer v. Personal Pension Schemes Strategy and Grey Area Watch Outs QROPS – early access Contribution limitation differences 11Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

13. British Investments Individual Savings Accounts (ISAs) Cash ISAs Stock and Shares ISAs Passive Foreign Investment Company No capital gains rates Losses do not offset gains Punitive tax and interest charges Costly compliance Net Investment Income Tax (NIIT) 3.8% tax on investment income −$125,000, $250,000 Problems with foreign tax credit 12Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

14. Foreign Account and Entity Information Reporting Foreign Accounts FBAR – Foreign accounts valued in excess of $10,000 −Ownership or Signature Authority −Penalties – > Non-Willful - $10,000 > Willful – Greater of $100,000 or 50% of the highest balance of the account Form 8938 – FATCA – Foreign accounts and assets valued in excess of $200,000/$300,000 Foreign Trusts Non-employer pensions Flat Penalties - $10,000 Foreign Limited Companies Forms 5471, 8865, 8858, 926 Flat Penalties - $10,000 13Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

15. International Family Issues Nonresident Spouse Filing Status Election to file jointly with foreign spouse Transfers of assets between spouses Divorce Children born overseas U.S. citizenship for children born overseas Child tax credit Dependent care credit Affordable Care Act - Health insurance coverage Constructive ownership rules for foreign businesses Signature authority over accounts maintained for relatives 14Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

16. UK Home Ownership Mortgage Interest Deduction Offset Mortgages Sale of Home Exclusion $250,000 ($500,000 – MFJ) Foreign Currency Fluctuations Rental Activities 15Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

17. Additional Child Tax Credit $1,000 per U.S. citizen child claimed as a dependent Under age 17 Claimed as a dependent No foreign earned income exclusion Social security number required by filing deadline 16Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited FILING STATUSPHASEOUT Single, HOH$75,000 $20,000/child MFS$55,000 MFJ$110,000

18. Miscellaneous Issues State Taxes Continued state residency status Equity Compensation Source of Income from RSUs and stock options Social Security Taxes Business Ownership Sole Trader v. Limited Entity Changes to UK dividend taxation – U.S. implications 17Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

19. Options Available to Non-Filers Delinquent Information Reports For taxpayers who have filed all income tax returns and paid all tax but neglected to file certain information reports. Streamlined Compliance Program Nonwillful filers – definition of “nonwillful” not entirely clear 3 years of delinquent tax returns and 6 years of delinquent Offshore Voluntary Disclosure Program Structured penalty exposure 18Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

20. Tax Savings Strategies Foreign Earned Income Exclusion and cash ISAs Child Tax Credit for certain taxpayers Excess UK taxes paid 10-Year Carryover Subsequent move to low tax country Pension planning 19Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited

21. Let’s Check in With Irene 20Contents are material, nonpublic, confidential and proprietary. Unauthorized distribution or dissemination is prohibited Irene receives a letter in the mail from her financial advisor requesting that she provide them with a Form W-9 and sign a waiver allowing them to disclose her information to the U.S. Department of Treasury. They explain that signing the documents is a condition of maintaining an investment account. In addition, the notification that her financial advisor sends her includes a three-page letter describing in detail her obligations to report non-U.S. accounts. She immediately contacts an accountant in the United States. Filing status – MFS or Head of Household Likely phased out of child tax credit Individual Savings Account reporting UK pension plan likely exempt from U.S. tax Streamlined Foreign Offshore Procedures −Exposure to penalties?