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May 27, 2013

Will the IRS use the internet, linked in, facebook, etc. to locate expatriate and offshore tax cheaters?

Will the IRS copy the Swedish Tax Agency tactics to find US offshore tax cheaters? They found out about a Swedish taxpayers offshore activities on Linkedin and found  they owed $750,000 in back taxes on unreported income.  The IRS will certainly use this tactic soon, if they have not started already.  READ MORE HERE                             
Offshore Tax Fraud Criminal Captured

The IRS has a long standing policy that if a taxpayer comes forward first (prior to their discovery) and makes them self current with past unfiled returns and unreported income, they will almost always waive criminal prosecution (up to five years in jail). Therefore, based on the information out there on the internet, it is best to come forward before it is too late. We can help. We have advised or assisted hundreds of taxpayers catch up and correct past returns with great success.  Visit our website at or email  We offer "attorney-client" privilege for total confidentiality and privacy.

May 24, 2013

Expatriate Tax Return Due Dates- Nonresident Tax Return Due Dates

 U.S. citizens and resident aliens living overseas, or serving in the military outside the U.S. on the regular due date of their tax return, generally have an automatic two-month extension beyond the regular Apr. 15 deadline to file their returns. The June 15 deadline is extended this year to June 17 since the extended due date falls on a Saturday. To use this automatic two-month extension, taxpayers must attach a statement to their return explaining which of these two situations applies.

Nonresident aliens who received income from U.S. sources in 2012 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens can be Apr. 15 or June 17 depending on sources of income.

U.S. citizens and resident aliens are legally required to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to fill out and attach Schedule B, Interest and Ordinary Dividends, to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

Certain taxpayers may also have to fill out and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds certain thresholds.
Separately, taxpayers with foreign accounts whose aggregate value exceeded $10,000 at any time during 2012 must file Treasury Department Form TD F 90-22.1. This is not a tax form and is due to the Treasury Department by June 30, 2013. Treasury encourages taxpayers to file it electronically.

June 17 soon approaching. IRS reminded taxpayers that the filing deadline is Monday, June 17, 2013, for U.S. citizens and resident aliens living overseas, or serving in the military outside the U.S. on the regular due date of their tax return. Taxpayers are reminded to attach to their return the statement described above.

Need help with these filings?. Contact us at ddnelson@gmail.comm or 


May 20, 2013

Expatriates Must Substantiate Travel Expenses in Writing to Get a tax Deduction

Many expats deduct travel and entertainment expenses for their businesses on their tax returns. You can only succeed in the event of an IRS audit (which are now becoming common with  respect to US expatriates), if you can prove the amount deducted and the relationship to your business with written records. The rules are simple:

Under Code Sec. 274, heightened substantiation requirements apply to: (1) any traveling expense, including meals and lodging away from home; (2) any item with respect to an activity in the nature of entertainment, amusement, or recreation; (3) any expense for gifts; or (4) the use of “listed property,” such as a passenger automobiles.

When you wish to deduct travel and entertainment expenses, you r must substantiate those deductions by adequate  written records or by sufficient evidence corroborating the taxpayer's own statement: (1) the amount of the expense; (2) the time and place of the travel, use of the property, etc.; (3) the business purpose of the expense, and (4) the business relationship to the taxpayer of the deduction . To do this, a taxpayer must maintain records and documentary evidence that in combination are sufficient to establish each element of an expenditure or use. (Reg. § 1.274-5T(c)(1) and Reg. § 1.274-5T(c)(2) 

We can help if you are audited or planning so you can deduct all of your business expenses. Let us do your expatriate tax return preparation. We have been doing expat returns for over 31 years.   or email

May 9, 2013

IRS, Australia and United Kingdom Engaged in Cooperative Effort to Combat Offshore Tax Evasion

The tax administrations from the United States, Australia and the United Kingdom announced today a plan to share tax information involving a multitude of trusts and companies holding assets on behalf of residents in jurisdictions throughout the world. This trend is fast spreading around the world and in a few years will be the rule in a large number of other countries.

The three nations have each acquired a substantial amount of data revealing extensive use of such entities organized in a number of jurisdictions including Singapore, the British Virgin Islands, Cayman Islands and the Cook Islands.  The data contains both the identities of the individual owners of these entities, as well as the advisors who assisted in establishing the entity structure.

The IRS, Australian Tax Office and HM Revenue & Customs have been working together to analyze this data and have uncovered information that may be relevant to tax administrations of other jurisdictions. Thus, they have developed a plan for sharing the data, as well as their preliminary analysis, if requested by those other tax administrations.

“This is part of a wider effort by the IRS and other tax administrations to pursue international tax evasion,” said IRS Acting Commissioner Steven T. Miller. "Our cooperative work with the United Kingdom and Australia reflects a bigger goal of leaving no safe haven for people trying to illegally evade taxes.”

There is nothing illegal about holding assets through offshore entities; however, such offshore arrangements are often used to avoid or evade tax liabilities on income represented by the principal or on the income generated by the underlying assets. In addition, advisors may be subject to civil penalties or criminal prosecution for promoting such arrangements as a means to avoid or evade tax liability or circumvent information reporting requirements.
It is expected that this multilateral cooperation and coordinated effort will allow many countries to efficiently process this information and effectively enforce any laws that may have been broken.  Increasingly, tax administrations are working together in this way to assist one another in identifying non-compliance with the tax laws.

U.S. taxpayers holding assets through offshore entities are encouraged to review their tax obligations with respect to these holdings, seek professional advice if necessary, and to participate in the IRS Offshore Voluntary Disclosure Program where appropriate.  Failure to do so may result in significant penalties and possibly criminal prosecution.

If you have a problem and need help, please email us at .  We have helped hundreds of expat and domestic taxpayers come into compliance with the complex US tax reporting requirements.

May 7, 2013

IRS Announces 2013 Foreign Earned Income Exclusion Amount and Foreign Housing exclusion amounts

The maximum foreign earned income exclusion that can be claimed for 2013 is $97,600. Remember if both you and your spouse live abroad and both work each of you gets to claim this offset against your respective foreign wages and self employment income.

The IRS new guidelines for the housing exclusion  or deduction for 2013 have also been released. This includes  foreign rent, utilities and maintenance expense that can be claimed in addition to the foreign earned income exclusion  has also been released. There is a minium amount of housing expenses that are not deductible is $15,616.  The maximum amount varies by country ( the charts shows amount before deducting the $15,616). Tokyo in the IRS's  opinion is now the most expensive city in the world since it has the highest maximum. of $117,100.  To see the Maximum amount allowed for your home country CLICK HERE.

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