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Expats Beware of These 3 International Tax Traps When Filing a Tax Return

Expats Beware of These 3 International Tax Traps When Filing a Tax Return

In recent years, it seems that the trend is for the tax obligations of expatriates to become increasingly complex each tax year. In the late 2000s, the Report of Foreign Bank Account (FBAR) obligation was enforced for the first time in the modern era. However, this new reporting obligation was only the tip of the proverbial iceberg. In 2010, the additional and sometimes duplicative obligation to report foreign accounts and assets under FATCA was enacted into law. When viewed in the context of the already existing problem of double taxation due to the United States’ citizenship-based taxation, one can begin to see the mess that expatriate taxpayers must sort out each and every year. US tax accountant Ted Kleinman focuses his accounting practice on international tax laws and can help expatriates navigate these laws. At U.S. Tax Help, Ted will take the time to address your questions and concerns point-by-point. He can help you avoid common tax mistakes and minimize the potential impacts of double taxation. International Tax Trap #1:  You Forgot to Assess Your Obligation to File FBAR, FATCA, or Other Informational Reports Generally, taxpayers holding or controlling foreign assets in excess of $10,000 are required to file an FBAR. The FBAR obligation is satisfied by filing FinCEN Form 114 on the Bank Secrecy Act Portal. Individuals with foreign assets may also hold an obligation to make FATCA disclosures. FATCA disclosures are made by filing  IRS Form 8938 with the IRS. Of note for the 2017 filing season, is the fact that the FBAR deadline has been moved up from is traditional June 30 deadline. The new deadline aligns...
The IRS Requires Taxpayers to Provide Drivers’ License Information When E-filing Taxes

The IRS Requires Taxpayers to Provide Drivers’ License Information When E-filing Taxes

The IRS requires that taxpayers supply an array of information regarding their identity, finances, offshore accounts, life circumstances and many other factors that can influence a person’s tax obligations and liabilities. However, to many tax filers, the IRS’s requests for information can seem overboard and far more detailed than the agency needs to ensure the sound administration of the U.S. Tax Code.  In particular, at least some taxpayers are wary about handing over their drivers’ license number, issue date, and expiration date. By and large, concerns regarding releasing this information are concentrated on security and identity theft issues. Some people fear that submitting this information to yet another government database may make identity theft more likely rather than less likely. Unfortunately, the IRS has taken something of a “take it or leave it to approach” when it comes to e-filing one’s taxes. Why Does the IRS Require This Information When E-filing? The IRS states that it does not require taxpayers to provide drivers’ license information to file their federal taxes. However, the agency indicates that some states have elected to implement this requirement in an effort to crack down on stolen identity income tax return fraud. The agencies reason that while thieves may have obtained your Social Security number and other information, they may not have obtained your drivers’ license number and related information. Thus, the driver license requirement in place in a few states is largely intended to serve as an extra layer of verification to protect against fraud. While the IRS’s website states many times that, “You do not need a driver’s license number to file a...
IRS Announces 2017 Tax Filing Season Starts January 23rd, But Your Tax Refund May Be Late

IRS Announces 2017 Tax Filing Season Starts January 23rd, But Your Tax Refund May Be Late

As the winter holidays and New Year approach, taxes are likely the furthest item from your mind. However, regardless of whether you live in the United States or abroad as an expat, it is important to begin thinking about taxes and engaging in tax planning. Compared to taxpayers who engage in a last-minute tax compliance scramble, U.S. citizens and tax residents who familiarize themselves with tax obligations and deadlines and then seek professional tax guidance, frequently achieve superior tax outcomes.   CPA Ted Kleinman and U.S. Tax Help is committed to assisting taxpayers in satisfying all tax and disclosure obligations. Ted has helped expatriates and others handle their income tax return filings, minimize or eliminate double-taxation, handle FBAR and FATCA obligations, and an array of other tax obligations. To schedule a confidential consultation with Ted, call U.S. Tax Help at 1-800-810-9312 or contact him online. Taxpayers Living in the U.S. Have Until April 18, 2017 to File Taxes While it is true that taxes return filings and payments are traditionally due on April 15, Tax Day fell on April 18th in 2016 and will once again fall on April 18th in 2017. This is due to the fact that, in 2017, April 15 falls on a Saturday. Generally, when  Tax Day falls on a weekend or on a holiday,  it is shifted to the following Monday. However, the following Monday, April 17, 2017, is Emancipation Day in Washington D.C. Since Emancipation Day is a federal holiday in Washington D.C., the tax filing deadline is shifted to Tuesday, April 18, 2017. For taxpayers living abroad in nations like China, Brazil, the...
With Which Foreign Countries Does the United States Share Tax Information?

With Which Foreign Countries Does the United States Share Tax Information?

For American expatriates, tax residents, and other taxpayers with ties to foreign nations holding assets in foreign accounts can be particularly useful and convenient. However, in relatively recent years, the process and procedures one must follow to maintain compliance with the law have become significantly more complex. That is, the enactment of FBAR penalties for noncompliance in 2008 and the passage of FATCA in 2010 presaged an IRS and DOJ that would aggressively pursue taxpayers who failed to comply with foreign disclosure laws – even accidentally.   IRS and DOJ investigations into offshore tax fraud are aided by the data obtained through international tax treaties. While these treaties can reduce double-taxation and an array or issues that exist when the tax systems of two nations collide, they also contain information sharing provision. While some tax treaties allow for the exchange of information only upon request, other treaties allow for the automatic exchange of taxpayer data. Sections 3 and 4 of IRS Revenue Procedure 2014-64 set forth the nations with which the United States holds information-sharing tax treaties. Taxpayers holding accounts in any tax treaty nation should proceed cautiously and only stake out conservative tax positions. If you have accounts and assets in a nation with which the United States has a tax treaty and have failed to make a voluntary disclosure or amend your taxes, contact a tax professional immediately. For more than 20 years, CPA Ted Kleinman of U.S. Tax Help has assisted expats and U.S. taxpayers with their international tax obligations. With Which Nations Will the United States Automatically Exchange Tax Data? As part of the IRS and DOJ’s...
IRS Interest in Bitcoin and Coinbase May Mean Big Tax Trouble for U.S. Expats and Others

IRS Interest in Bitcoin and Coinbase May Mean Big Tax Trouble for U.S. Expats and Others

In recent years virtual, electronic currency has exploded onto the scene. Many people have been captivated by the technology for a number of reasons including the fact that Bitcoin and similar virtual currencies are the first modern currency to operate outside of the control of a government or central bank. In fact, Bitcoin functions primarily through the contributions of people who take an interest in the platform and provide computing resources to maintain the currency’s public ledger.   While Bitcoin is interesting from both a theoretical and a practical standpoint, many people who have invested in Bitcoin and similar virtual currencies may have failed to contemplate that “mining,” buying, holding, or selling Bitcoin can trigger tax filing and payment obligations. For expatriates and other individuals who failed to consider the tax implications of Bitcoin, the IRS has recently taken initial steps that may lead to a crackdown on those  or pay taxes on income. The first of these steps is a “John Doe” lawsuit filed by the IRS to obtain the identity of all Coinbase.com account holders from 2013 through 2015.  Do you have tax concerns as a US expat? Contact experienced CPA Ted Kleinman for IRS tax help. What Is Bitcoin and Why Do People Use it? Bitcoin is a type of digital currency that can allow people to send or accept money over the Internet. Bitcoin and its competitors do not work like traditional credit cards or other digital forms of payment. Rather, all Bitcoin transactions are conducted and recorded in the public blockchain. This means that all transactions are theoretically available for all to view. However, Bitcoin...
Even Grossly Negligent Taxpayers May Qualify for Streamlined Voluntary Disclosure but Time to File May be Running Out

Even Grossly Negligent Taxpayers May Qualify for Streamlined Voluntary Disclosure but Time to File May be Running Out

U.S. taxpayers with foreign assets face an array of disclosure and informational reporting obligations. Whether they live at home or are living abroad as an expatriate the failure to comply with various offshore tax and account reporting obligations can result in serious consequences. Even when the noncompliance is merely accidental, an initial violation of Report of Foreign Bank Account (FBAR) obligations can result in a penalty of up to $10,000 for each year where a foreign account went undisclosed. Penalties for violations of one’s duty to disclose under the Foreign Account Tax Compliance Act (FATCA) are similarly harsh.   Recent guidance from the IRS suggests that more taxpayers than initially believed can benefit from the reduced paperwork requirements and penalties of the Streamlined Disclosure Program. However, this guidance came prior to the election and there will soon be a new team in place at the Department of the U.S. Treasury. Taxpayers who suspect noncompliance with all or some offshore reporting obligations are therefore urged to leverage this program due to the potential for it to be wound down or for a rules change that makes the program significantly less favorable. CPA Ted Kleinman of U.S. Tax Help can assist U.S. taxpayers living at home or abroad comply with all tax obligations. Call 1-800-810-9312 today to schedule a “no-cost” review of your tax situation. Taxpayers Who Were Non-Willful Can Qualify for Streamlined Disclosure Even if They Were Grossly Negligent The key determination in figuring out if a taxpayer can enter into Streamlined Disclosure or whether he or she must proceed through standard Offshore Voluntary Disclosure (OVDP) turns on whether it appears...
Expatriates Who Claim the Foreign Earned Income Exclusion on the Basis of Foreign Residence Alone Can Face Tax Penalties

Expatriates Who Claim the Foreign Earned Income Exclusion on the Basis of Foreign Residence Alone Can Face Tax Penalties

One of the most common complaints regarding U.S. taxes that is leveled by expats and others with a U.S. tax obligation is the potential for double taxation. The United States is the only developed nation in the world that taxes on the basis of citizenship. All other developed nations tax on the basis of physical presence and economic nexuses. When these different methods of taxation intersect, U.S. taxpayers can face additional, double taxation on the income they earn abroad.   Thankfully, many U.S. taxpayers living abroad are often able to leverage certain tax treaties and tax agreements the United States has with foreign nations. These agreements frequently allow the taxpayer to eliminate all or a significant portion of the double-taxation he or she would otherwise face. However, taxpayers should ensure that they qualify for tax exclusions and tax credits before claiming them. Taxpayers who improperly claim tax exclusions like the Foreign Earned Income Tax Exclusion (FEIE) can face fines, penalties, and interest on any unpaid tax. Ted Kleinman of U.S. Tax Help has helped expats minimize double-taxation while maintaining all aspects of tax compliance for more than 20 years. Whether you are living at home or abroad in China, Brazil, India, Israel, or any other nation call U.S. Tax Help today to work with a trusted CPA. When Can a Taxpayer Claim FEIE on His or Her Tax Return? Minimizing the effects of double-taxation is often one of the foremost concerns in an expatriate taxpayer’s mind. Unfortunately, in some instance, these concerns can overwhelm a taxpayer’s better judgment and he or she may make claims for tax credits and exclusions...
IRS Expands Eligibility Criteria for Tax Installment Agreement Payment Plans

IRS Expands Eligibility Criteria for Tax Installment Agreement Payment Plans

For many taxpayers who have accumulated significant tax debts, the ability to pay by installment agreement is extremely welcome. By setting up a monthly payment agreement with the IRS taxpayers can avoid some of the potential consequences of owing money to the IRS. For instance, taxpayers who set-up and follow payment plans will not have to worry about IRS attempts to garnish wages or bank accountants. Agreeing to pay via an installment agreement can also reduce the amount of penalties and interest a taxpayer will pay.  The ability to pay by installment agreement is government by certain rules, conditions, and requirements. Taxpayers and their debt must satisfy these conditions to be eligible to pay via an installment agreement. While the rules are generally rather expansive, certain taxpayers may not qualify. In the past, these taxpayers may have been forced to seek alternate forms of relief. However, a new IRS pilot program means that some individuals who would not have qualified for installment agreements in the past can now qualify. Accountant Ted Kleinman of U.S. Tax Help can help taxpayers assess as to whether an installment agreement is likely to provide appropriate relief for the unique tax situation faced. If so, Ted can assess whether the taxpayer is likely to qualify and handle all aspects of the application. To schedule a private consultation with an experienced accountant, please call U.S. Tax Help at 1-800-810-9312 today. Who typically Qualifies for an IRS Installment Plan? The IRS recognizes that encouraging taxpayers to come forward and address unpaid balances voluntarily is frequently the most efficient and effective method of collecting tax debts. Drawing...
Filed for a Tax Extension? The Extended Tax Filing Deadline is Approaching

Filed for a Tax Extension? The Extended Tax Filing Deadline is Approaching

For many expatriates and other taxpayers, the ability to file for an automatic extension is extremely welcome. For many individuals, the annual April tax filing and payment deadline simply comes too soon. The taxpayer may not have time to get his or her documents in order. Alternatively, the taxpayer may have questions regarding income earned overseas, foreign accounts, or an array of other tax concerns and may need additional time to seek tax guidance from a professional. However, regardless of whether you live in the United States or in a foreign nation, the extended filing date is quickly approaching.  At U.S. Tax Help, CPA Ted Kleinman has provided careful tax guidance for U.S. taxpayers living at home and abroad for more than 20 years. Ted can help with an array of tax issues including filing income taxes, making foreign account disclosures, and fixing issues created by unfiled or unpaid taxes as a U.S. expat. To discuss how ted can assist with your tax concerns, call U.S. Tax Help at 1-800-810-9312 or contact the firm online. The Final Extended Tax Filing Deadline is October 17, 2016 Most expatriates are already aware that by virtue of living outside of the United States, expats are automatically granted a filing extension from the regular April 15th tax filing and payment deadline (the deadline was April 18, 2016, this year due to a federal holiday and weekend). Thus, all qualifying expats automatically have an additional two months – until June 15 – to file their taxes. However, taxpayers can request additional time to file their taxes by filing IRS Form 4868, Application for Automatic...
Tax Compliance Alert: IRS Issues Final Rule for Disguised Partnership Transfers

Tax Compliance Alert: IRS Issues Final Rule for Disguised Partnership Transfers

Many successful professionals and business owners have selected the partnership as the form of organization for their business. Compared to other entity forms, the partnership provides for certain tax advantages. Chiefly, the partnership is a pass-through entity that allows all profits and liabilities realized by the entity to pass through to a partner’s individual income tax. Essentially, the partnership acts as an extension of the general partner’s finances for tax purposes.   However, the pass-through nature and other aspects of the partnership entity means that it can be used by certain individuals to avoid paying tax that is legally owed. This may be accomplished by mischaracterizing income received from the partnership, misstating partnership income, mischaracterizing transactions, and a variety of other potentially fraudulent acts. In particular, the IRS is concerned about business owners who may mischaracterize certain transfers of property involving a partnership. IRS concerns include the potential for a business owner to mischaracterize a compensated transfer or sale of property as an uncompensated transfer. New final tax rules intended to detect and prosecute these types of transfers may require partners and partnerships to reassess their approach to certain transactions. CPA Ted Kleinman and U.S. Tax Help can help business partnerships assess their compliance with the new rule. How Will The Final Rule Impact Transactions Involving Partnerships? The final rule T.D. 9787, finalizes most of the proposed rules that were originally announced as part of REG-119305-11 in 2014. Essentially, the final rule makes changes to certain aspects of the tax code including changes to §707 and §752. In general, the changes to these sections went into effect on October 5,...

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