by Catherine | Jan 2, 2016 | IRS |
Expats: 10 tax tips for 2016 Expats here’s a list of 10 facts you need to know when filing your 2015 US tax return. Filing season opens January 19. Do you really need to file US taxes? If you’re an American with income in excess of your filing threshold (converted to USD), the answer is YES! What about the Earned Income Exclusion you ask? You must file to claim it. Tax Identification Number. Did you get married in 2015? Even if your spouse is not an American, you can still claim their personal exemption on your Married Filing Separate tax return – but you need to apply for an Individual Tax Identification Number (ITIN) for your spouse. New Baby ? Depending on your circumstances, a child born abroad may be eligible for a social security number – or not. Either way, you’ll need a Tax ID Number (TIN) to claim your dependent on your US tax return. Filing Status – consider your options: Married to Non-Resident Alien (NRA) Spouse? Could file Married Filing Separate or Married Filing Jointly, and report worldwide income, consider your personal goals. Married to NRA spouse with child(ren) – could be Head of Household or Married Filing Separate. Personal exemption has been increased to $4,000 up from $3950. Physical Presence Test or Bona Fide Residence to qualify for Foreign Earned Income Exclusion (FEIE). For 2015, FEIE has reached 6 figures – $100,800 (up from $99,200 in 2014) Foreign Tax Credit (FTC) – apply tax paid to foreign country to your IRS tax Extension – Expats have an automatic extension to June 15, 2016 to file...
by Catherine | Dec 30, 2015 | IRS |
Taxpayer Bill of Rights The tax code includes numerous taxpayer rights, but they are scattered throughout the code, making it difficult for people to track and understand. Similar to the U.S. Constitution’s Bill of Rights, the Taxpayer Bill of Rights contains 10 provisions. They are: The Right to Be Informed The Right to Quality Service The Right to Pay No More than the Correct Amount of Tax The Right to Challenge the IRS’s Position and Be Heard The Right to Appeal an IRS Decision in an Independent Forum The Right to Finality The Right to Privacy The Right to Confidentiality The Right to Retain Representation The Right to a Fair and Just Tax System The rights have been incorporated into a redesigned version of Publication 1, a document that is routinely included in IRS correspondence with taxpayers. Millions of these mailings go out each year. The new version has been added to IRS.gov, and print copies will start being included in IRS correspondence in the near future. PATH Act The PATH Act, passed recently includes provision for the Tax Commissioner to ensure that IRS employees are familiar with and act in accordance with the Taxpayer Bill of Rights. In addition, taxpayers who have been victimized by the IRS, for example through the unauthorized disclosure of private tax information, to find out basic facts, such as whether the case is being investigated or whether the case has been referred to the Justice Department for prosecution. Taxpayer Advocate Service The IRS released the Taxpayer Bill of Rights following extensive discussions with the Taxpayer Advocate Service, an independent office inside the...
by Catherine | Dec 22, 2015 | IRS |
Extender 2015 Passed Tis the season for Congress to pass an extender bill – to continue many favorite tax credits and deductions. The PATH Act (Protecting Americans from Tax Hikes Act) was passed by the House and Senate then signed by President Obama last week. NRA and PATH For NonResident Aliens, PATH had a couple of surprises: Requirements for the issuance of ITINs – Individuals issued ITINs prior to 2013 are required to renew their ITINs on a staggered schedule between 2017 and 2020. Further ITINs will expire if an individual fails to file a tax return for 3 consecutive years. Treasury Department and IRS are required to study how ITINs are issued to create a system whereby all applicants can apply in person by 2020. FIRPTA – The sale of Real Property in the US by a foreign person often results in a withholding of 10% of the Sales Price, unless exceptions are met or a withholding certificate is provided by the IRS. PATH increases FIRPTA withholding from 10% to 15%. The increased withholding does not apply where the amount realized is less than $1 million. Extender Ender Instead of the regular problem of items being extended for another 12 months, some key provision have been made Permanent: Enhance Child Tax Credit – Refundable credit for individuals equal to 15% of earned income in excess of $3,000 – This $3,000 threshold was made permanent. Enhanced American Opportunity Tax Credit – $2500 credit was planned to be reduced to $1800 in 2017. PATH Act made the credit permanent @ $2500. Enhanced Earned Income Tax Credit the enhanced credit for...
by Catherine | Oct 18, 2015 | IRS, News |
$8 Billion USD Collected Amnesty This headline was so compelling, I had to share the IRS press release verbatim. Dated October 16, 2015 IR-2015-116 WASHINGTON — With more than 54,000 taxpayers coming in to participate in amnesty offshore disclosure programs since 2009, the Internal Revenue Service today reminded U.S. taxpayers with undisclosed offshore accounts that they should strongly consider existing paths established to come into full compliance with their federal tax obligations. Both the Offshore Voluntary Disclosure Program (OVDP) and the streamlined procedures enable taxpayers to correct prior omissions and meet their federal tax obligations while mitigating the potential penalties of continued non-compliance. There are also separate procedures for those who have paid their income taxes but omitted certain other information returns. “The groundbreaking effort around automatic reporting of foreign accounts has given us a much stronger hand in fighting tax evasion,” said IRS Commissioner John Koskinen. “People with undisclosed foreign accounts should carefully consider their options and use available avenues, including the offshore program and streamlined procedures, to come back into full compliance with their tax obligations.” Under the Foreign Account Tax Compliance Act (FATCA) and the network of intergovernmental agreements (IGAs)between the U.S. and partner jurisdictions, automatic third-party account reporting began this year, making it less likely that offshore financial accounts will go unnoticed by the IRS. In addition to FATCA and reporting through IGAs, the Department of Justice’s Swiss Bank Program continues to reach non-prosecution agreements with Swiss financial institutions that facilitated past non-compliance. As part of these agreements, banks provide information on potential non-compliance by U.S. taxpayers. Potential civil penalties increase substantially if U.S. taxpayers associated with participating banks wait to apply to OVDP to resolve their tax obligations. OVDP offers...
by Catherine | Jun 24, 2015 | News |
Last Minute: File FBAR by Tuesday June 30 This is a last minute reminder to get your FBAR electronically filed. Filing deadline is next Tuesday, June 30. US Citizens living abroad may have an obligation to electronically file a Foreign Bank and Financial Accounts (FBAR) form to the US Treasury – depending on the balance in your LOCAL BANK and BROKERAGE accounts (including Super). In general, the FBAR filing requirement applies to anyone who had an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 USD at any time during 2014. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. FBAR refers to Form 114, Report of Foreign Bank and Financial Accounts, which must be filed with the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department. It is not a tax form and cannot be filed with the IRS. The form must be filed electronically and is only available online through the BSA E-Filing System website. FBAR filings have surged in recent years, topping the one-million mark for the first time during calendar-year 2014. The FBAR requirement is separate from the requirement to report specified foreign financial assets on a U.S. income tax return using Form 8938. For more on filing requirements for the FBAR, see Current FBAR Guidance on...
by Catherine | Jun 9, 2015 | IRS, News |
If you’re a US citizen living abroad, you receive an automatic filing extension of 15 June. If you’re not ready to file your US taxes by next week’s filing deadline, you can easily get a tax filing extension until 15 October by filing Form 4868. This form must be mailed or electronically submitted to the IRS prior to June 15 deadline. If you lodge your extension by post, be sure to keep proof of date of mailing. The easiest way to get your extension request in is to electronically file Form 4868 is using IRS Free File . Heads up: FBAR deadline is fast approaching. FBAR must be electronically filed by 30 June, no extensions available. If the aggregate total of ALL your Non-US accounts (Bank, Brokerage and Super) totals $10k USD or more, you are required to electronically file FBAR with the US Treasury on ALL your accounts. Contact me if you would like to discuss your US income tax filing requirements or FBAR filing...
by Catherine | Apr 12, 2015 | IRS |
US Income Tax Payment Deadline April 15 is just a few days away and you haven’t filed your US Federal Tax return. No worries, US Expats receive an automatic filing extension to June 15. However, extension to File is NOT extension to Pay. April 15 is still the tax payment deadline. If you haven’t filed your 2014 US Federal Tax return, and you believe you may owe the IRS, here are some options to make your payment. Easy Ways for IRS Tax Payment Taxpayers who owe taxes can now chose between several quick and easy e-pay options, including the newest, IRS Direct-Pay. This free tool allows taxpayers to pay directly from US saving or checking accounts to the IRS without pre-registration and no fees. Payment can be scheduled up to 30 days in advance (great for estimated payments) and the tool is available any time. Anyone who uses Direct-Pay receives instant confirmation of their payment. Electronic Federal Tax Payment System (EFTPS) is provided free from the US Treasury to pay any tax due to the IRS using this system. EFTPS is a safe and convenient way to make payments to the IRS, however pre-registration is required. Electronic Funds withdrawal (EFW) is an integrated E-File/E-Pay option offered when filing your US federal tax return through your tax professional. The IRS doesn’t charge a fee to use this system, however your US financial institution may charge a fee. In addition to your year-end tax, up to 4 quarterly payment may be scheduled using EFW. Taxpayers who chose to pay their US federal tax via Debit or Credit card using a...
by Catherine | Apr 3, 2015 | IRS, News |
Slain Officer Family Support Act of 2015 A new law just passed April 1, 2015 allows for a tax deduction on 2014 tax returns for contributions made between January 1 and April 15, 2015 for the families of slain New York City Police Officers. Taxpayers who make cash contributions on or before April 15 to charities providing relief for families of 2 New York City Police Officers may take an immediate tax benefit by choosing to claim a charitable contribution deduction to their 2014 federal income tax return, according to the IRS. Extraordinary Exception Under special legislation enacted this week, taxpayers can choose to treat certain contributions as if made on Dec. 31, 2014. This special provision only applies to cash contributions to charities to provide assistance to the families of New York Police Department Detectives Wenjian Liu and Rafael Ramos. The police officers were killed on December 20, 2014 in line of duty. Ismaaiyl Abdullah Brinsley, 28, approached the passenger window of the NYPD patrol car then shot the two officers several times in the head and upper body with a semi-automatic handgun. Detectives Wenjian Liu, 32 and Rafael Ramos, 40 died instantly at the scene. Ordinarily, charitable contribution deductions may only be claimed in the year in which the contribution is made. Under the special provision, deductions for contributions to assist the police officers’ families made on or after Jan. 1, 2015 and on or before April 15, 2015 may be claimed on either a 2014 or 2015 return, but not both. 2015 Contribution 2014 Deduction The Slain Officer Family Support Act of 2015, enacted...
by Catherine | Mar 18, 2015 | IRS |
Earned Income Free from U.S. Income Tax The Foreign Earned Income Exclusion (FEIE), allows you, the Expat U.S. Citizen (or Green Card holder) to exempt $99,200 (Tax year 2014) from U.S. Income tax. How good is that! You must file a U.S. Tax Return to Claim this Exclusion. It does not automatically apply. Depending on your circumstances, you may be able to exclude additional income by using the Foreign Housing Deduction or Exclusion. Qualify for Foreign Earned Income Exclusion You, the U.S. Expat qualifies if you meet both of the following tests 1. Tax Home is in a Foreign Country or Countries The IRS considers your tax home to be where your Principal Place of Business is located. If, due to the nature of your business, you do not have a regular or principal place of business, then your regular place of abode becomes your Tax Home. Tax home. For purposes of paragraph (a)(i) of this section, the term “tax home” has the same meaning which it has for purposes of section 162(a)(2) (relating to travel expenses away from home). Thus, under section 911, an individual’s tax home is considered to be located at his regular or principal (if more than one regular) place of business or, if the individual has no regular or principal place of business because of the nature of the business, then at his regular place of abode in a real and substantial sense. An individual shall not, however, be considered to have a tax home in a foreign country for any period for which the individual’s abode is in the United States. Temporary...
by Catherine | Mar 3, 2015 | IRS, News |
Sharing Name, Address and TIN of each U.S. Person The IRS announced the International Data Exchange Service (IDES) Gateway is now open. Financial institutions and host country tax authorities may use the Gateway to securely send Foreign Account Tax Compliance Act (FATCA) information reports on financial accounts held by U.S. persons. Financial institutions and host country tax authorities are encouraged to complete the enrollment process and initiate transmission before the Form 8966 reporting deadline. Per Form 8966 Instructions, Form 8966 is required to be filed for the 2014 calendar year on or before March 31, 2015. The information that will be provided via the IDES Gateway is spelled out in the US-Australia Agreement paragraph 2 of Article 2: a) In the case of Australia with respect to each U.S. Reportable Account of each Reporting Australian Financial Institution: (1) the name, address, and U.S. TIN of each Specified U.S. Person that is an Account Holder of such account and, in the case of a Non-U.S. Entity that, after application of the due diligence procedures set forth in Annex I, is identified as having one or more Controlling Persons that is a Specified U.S. Person, the name, address, and U.S. TIN (if any) of such entity and each such Specified U.S. Person;10 (2) the account number (or functional equivalent in the absence of an account number); (3) the name and identifying number of the Reporting Australian Financial Institution; (4) the account balance or value (including, in the case of a Cash Value Insurance Contract or Annuity Contract, the Cash Value or surrender value) as of the end of the relevant calendar year or other...
