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October 30, 2012

List of IRS Tax Resources

The following IRS resources  listed on our website including  tax publications for US expatriates, US nonresidents,  US tax treaties, etc should answer most of your tax questions.  CLICK HERE TO GO TO RESOURCE PAGE.

If you have other questions, please email us at  Don D. Nelson, Attorney at Law, CPA.

October 29, 2012


New Zealand will negotiate a FATCA agreement with the US. This means bank, stock broker and other financial information on US Citizens and green card holders living in New Zealand or with accounts there will be sent to the US IRS.

There will be no way to avoid extreme penalties and possible criminal prosecution once this agreement becomes effective. Now is the time to file all past due US tax returns and foreign account reporting forms. The IRS will not be as lenient once they receive the information from New Zealand and discover you have not filed these forms.  Dual Citizens and Green Card holders must still file a US tax return on their worldwide income regardless of their status.  Let us know if you need help.  We offer the privacy and confidentiality of  Attorney client privilege to all clients. Write us a  Visit our website at  for more information on your US filing requirements.


Avoiding California State Income Taxes Moving Abroad

It is often difficult to give up your obligation to pay California taxes when starting to work abroad.  California is an "Intent State."  That California wants to continue to tax you until you show the intent of moving your tax domicile to another country or state.  They  look at all of the facts and circumstances in retrospect years later to determine if you actually had the "intent" to move your tax residency to another country.

There is a solution to the ambiguities involved with successfully giving up your California residency for tax purposes. That is the Safe Harbor Rule which can be used. Under that rule:
  • You must remain living and working outside of California for at least 546 days under a contract of employment;
  • You do not have more than $200,000 in investment income;
  • You do not return to California more than 45 days during any calendar year.
If you meet these criteria, you are automatically deemed to be a California nonresident for the period you work abroad even though you may still have a California drivers license, voter registration, etc.

It is important to successfully avoid California tax domicile status when living abroad since California does not allow the foreign earned income exclusion or foreign tax credits. If means if you remain a California tax resident a lot of taxes may be due.

Some states make it even tougher to give up the obligation to pay state taxes when working abroad. Virigina and New Mexico are just a few.

We can help you avoid continuing having to pay state taxes when you move abroad to work or retire. Contact us if you have questions or concerns at


  • The foreign earned income exclusion will go from $95,100 to $97,600 for 2013.  Remember if both spouses work they can each claim up to that amount on their separate foreign wages on form 2555.
  • The gift tax exclusion (threshold after which you must file a gift tax return) is increased from $13,000 to $14,000.  If a husband and wife both give the gift (and both are US taxpayers) they can claim a combined exclusion of $28,000 in 2013.  Gifts for education costs and health care are not subject to gift tax.
  • The maximum contribution limits by an employee to a 401K plan increases to $17,500 in 2013.
  • The social security ceiling for wages subject to that tax increases to $113,700 in 2013 from the current $110,100. Their is no ceiling on the 2.3 percent medicare tax.

October 3, 2012


If you sign your return and check "No" on schedule B indicating you have no foreign bank accounts that need to be reported (when you actually did have accounts) the Court has held that act alone shows willful failure to file the FBAR form. The taxpayer was fined $200,000 for failing to file the FBAR for tax year 2000.  READ MORE HERE           

Another issue we are often asked about if how far back will the IRS go to seek information from Foreign Banks on US holders of accounts. The IRS is now asking Liechtenstein Landesbanks for records going back to 2004. This is the first announcement that clearly indicates if you have not been filing FBAR forms for past years it is best to go back and file those forms now. The statute of limitations is six years on FBAR forms for the IRS to seek civil and criminal penalties.

We recommend if you are required to file the form all taxpayers immediately file their FBARs before the IRS gets lists from foreign banks.  They will be cross-checking the information on the banks lists with those who have filed FBARs.  Anyone who has not filed is subject to criminal penalties and monetary penalties up to 1/2 the highest balance in each account for each year that the FBAR is not filed.