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February 17, 2017

Look out for these crooked Tax Scams

Here is a recap of this year's "Dirty Dozen" scams that are currently being used against honest taxpayers:

Phishing: Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information. (IR-2017-15)

Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. (IR-2017-19)

Identity Theft: Taxpayers need to watch out for identity theft especially around tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security number. Though the agency is making progress on this front, taxpayers still need to be extremely cautious and do everything they can to avoid being victimized. (IR-2017-22)

Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest high-quality service. There are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. (IR-2017-23)

Fake Charities: Be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (IR-2017-25)

Inflated Refund Claims: Taxpayers should be on the lookout for anyone promising inflated refunds. Be wary of anyone who asks taxpayers to sign a blank return, promises a big refund before looking at their records or charges fees based on a percentage of the refund. Fraudsters use flyers, advertisements, phony storefronts and word of mouth via community groups where trust is high to find victims. (IR-2017-26)

Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities and/or satisfy the requirements related to qualified research expenses. (IR-2017-27)

Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions such as charitable contributions and business expenses or improperly claiming credits such as the Earned Income Tax Credit or Child Tax Credit. (IR-2017-28)

Falsifying Income to Claim Credits: Don’t invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers are sometimes talked into doing this by con artists. Taxpayers should file the most accurate return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties. In some cases, they may even face criminal prosecution. (IR-2017-29)

Abusive Tax Shelters: Don’t use abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2017-31)

Frivolous Tax Arguments: Don’t use frivolous tax arguments to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims even though they have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000. (IR-2017-33)

Offshore Tax Avoidance: The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore. Taxpayers are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. The IRS offers the Offshore Voluntary Disclosure Program  to enable people to catch up on their filing and tax obligations. (IR-2017-35)

Need help or opinion. Email us at ddnelson@gmail.com

February 13, 2017

IF YOU OWN RENTAL PROPERTY IN ANYWHERE IN MEXICOYOU ARE REQUIRED TO PAY THESE MEXICAN TAXES

  • Mexico Income Tax
  • Mexico Value Added Taxes – IVA (16%)   if the unit is furnished*
          *IVA is paid by tenant but collected and declared by the owner.

Many nonresidents of Mexico have never paid any taxes on their rental income from properties owned in Mexico.  This is a violation of Mexican tax law.  The Mexico tax code clearly states that these Mexican taxes must be paid on rental income from apartments, houses, and commercial property. Failure to do so can result (and has resulted ) in substantial penalties and legal problems with the Mexican tax authorities.

It is now easy for you to pay these taxes and avoid problems if even if you do not have a Mexican tax identification number.   The Settlement Company® has developed a simple and easy procedure  which will allow you to be tax compliant on your rental income. You do not have to suffer the consequences of failing to pay. Email or phone us now to learn more and to get started.
The Good News:  The IVA you pay in Mexico is deductible on your US tax return and the income taxes you pay in Mexico can offset your US   taxes on the same income dollar for dollar.  You will not be double taxed.

Learn more about the rules on taxation of rental income in Mexico at www.RentalTaxMexico.com

Email us with questions at ddnelson@gmail.com 

NOTE:  These rules may vary by country but even though you are a nonresident of any country, you most like are required to pay taxes on rental income and sooner or later the taxing authorities will catch you and the penalties can be large.

February 3, 2017

IRS NEW AUDIT TARGEST FOR 2017 INCLUDE INTERNATIONAL AND EXPATRIATE TAX ISSUES

The 6 IRS International audit campaigns or areas the division plans to target for 2017 include:

  • declines and withdrawals from the offshore voluntary disclosure program;
  • related-party transactions;
  • repatriation of income from overseas locations;
  • foreign companies doing business in the United States that are not filing appropriately;
  • transfer pricing associated with inbound distribution of goods from related parties outside the United States;
  • losses claimed in excess of basis in S corporations.
If you need assistance with these items to make certain you are handling it correctly or wish to correct prior to audit, please ask us.  If you are audited we can represent you against the IRS.  Email us at ddnelson@gmail.com  or skype us at; dondnelson.