- If you give any individual (resident or nonresident) less than $14,000 US during a calendar year you do not have to file a Gift Tax Return form 709.
- If you give any individual more than $14,000 US (this includes cash and value of property, assets, intangibles, etc) you need to file a gift tax return with the IRS which is due 4/15 following end of Calendar year. This includes gifts of assets located outside of the USA.
- If your gift exceeds the $14,000, you may need to file the return but probably do not owe taxes since you have a combined lifetime gift/estate tax exclusion of $5.43 million. The excess value of the gift above the $14,000 will be offset by this lifetime exclusion. If you use up this exclusion on gifts while you are alive it will not be available for use by your estate after your death.
- Contributions to IRS recognized charities are not the type of gift subject to gift tax
- If you as a citizen or permanent resident receive $100,000 in fair market value of assets as a gift or inheritance in one calendar year (total for year from one individual or related individuals) you must file form 3520. If the gift is from a foreign corporation or LLC .you must file that form if the total gifts received during the year exceeds $15,601. If you receive any amount from a foreign trust you must file the form 3520. The form must be filed on 4/15 following the end of the calendar year. Failure to do so can subject you to a substantial monetary penalty.
- Nonresidents are subject to gift taxes for transfer of assets located in the USA. Therefore best to make gifts if you are a nonresident from assets located outside of the USA. A nonresident must pay gift tax on any gift of US located property of more than $14,000 to a single person per year. This figure is an aggregate of all gifts during the year.
- If you receive anything in return (including services, etc) it is not a gift. Also reciprocal gifts are also disallowed for US gift tax exemption purposes ( i.e. you give $14,000 to my kid and then I will give $14,000 in return to your kid).
December 28, 2015
7 Things You Need to Know About US Gift Tax While Living Abroad or as a Nonresident Owning US Assets
December 22, 2015
TO DOWNLOAD A COMPLETE PDF FILE WITH ALL CHANGES INCLUDING BRIEF EXPLANATIONS PLEASE CLICK HERE.
December 6, 2015
Read exemptions in link below:
December 5, 2015
The IRS can now cause your passport to be revoked if you owe $50,000 or more US taxes. Expats and Green Card holders in this situation need to resolve unpaid taxes before returning to US or they may not be able to leave later (without a passport).
Time to consider a payment plan, offer in compromise, or offshore disclosure and streamlined programs.
Read more in article below.
October 31, 2015
- Though most foreign assets are reportable on various specialized forms filed with your US tax return,. If you own foreign real estate and title is in your own name (or a Fideicomiso) and do not rent out the property, there is no reporting required on your US tax return or for that matter any other reporting due the US Government.
- Foreign mutual funds (and most foreign money market funds) require filing of another special form with your tax return. If you do not file this form and make elections to report the income each year, you are penalized with higher taxes and interest when you finally sell your foreign mutual fund. These rules were put in many years when Congress was convinced by US Mutual Fund companies that there business would be hurt unless investment in foreign mutual funds was made unfavorable for tax purposes.
- The 2015 the $100,800 US foreign earned income exclusion applies to earned income (wages or self employment) income earned abroad if you meed the physical presence test or bonafide resident test. You can see if you qualify in IRS Publication 54. It is not automatic and can only be claimed on your US tax return. The IRS can deny this exclusion if you file your return more than 18 months late. This exclusion does not apply to rental income, dividends, interest or capital gains or any income other than earned income.
- You must report your rental net income in from your Mexican real estate on your US return and you may also owe taxes on it in the country in which it is located even if you are not a resident. The Mexican income tax can be claimed as a credit directly offsetting any US income tax you owe on the rental income.
- If you own 10% or more of a foreign corporation you may have to file form 5471 with your US tax return if required by the rules governing that form. Failure to file that form in a timely manner may result in the IRS assessing a $10,000 US penalty for failure to file even if you owe no taxes.
- The US has a tax treaty with approximately 66 countries. It also has in the past year entered into an OECD agreements with over 36 countries who have agreed to exchange income tax information with the other. At some point in the future what you do offshore will not stay in offshore and visa versa due to these new OCED agreements.
- If as a US Citizen you have lived and worked in abroad for a while and not filed your US tax return, the IRS currently has a “streamlined program” that may allow you to catch up by filing only the past 3 years US tax returns and past six year FBAR (foreign bank account reports). They will not penalize you under that program for failing to file FBAR forms or other foreign reporting forms. They have stated they may discontinue this program at any time. Now is the time to surface with the IRS and avoid potentially huge penalties.
- FBAR (foreign bank account reporting forms) must be filed each year with US Treasury if at any time during the calendar year your combined highest balances in your foreign financial accounts exceeds $10,000 US. This form must be filed on line. Foreign accounts include foreign pension plans, cash surrender value in foreign insurance, foreign brokers accounts, and even gold if held for you in a foreign country a custodian. Failure to file this form or filing it late can result in penalties of $10,000 US or more.
October 26, 2015
October 18, 2015
The IRS has stressed that it remains committed to stopping offshore tax evasion wherever it occurs, and even though the agency has faced several years of budget reductions, the IRS continues to pursue cases throughout the world.
READ ARTICLE HERE
October 4, 2015
September 18, 2015
September 17, 2015
September 10, 2015
IRS Makes it More Difficult for Taxpayers - They will not accept Checks for $100 million US or more soon!
September 9, 2015
If the IRS discovers you have foreign accounts and are not filing form 114 (FBAR) form by June 30 following the end of each fiscal year they can assess civil penalties of $10,000 US or more for each year you failed to file that form. There is still time to file this form late but avoid penalties under certain circumstances. Contact us if you wish to know more or want help filing your forms late.
You must go back six years due to the statute of limitations governing that form. If you did not file a correct one in past years, best to amend also to avoid potential problems. Write us at email@example.com or visit our website at www.taxmeless.com
LINK TO CHECK OUT IF YOUR FOREIGN BANK OR FINANCIAL INSTITUTION IS REPORTING TO IRS FATCA Foreign Financial Institution (FFI) List Search and Download Tool
September 8, 2015
September 5, 2015
September 4, 2015
You can also learn more about your tax questions at our website at www.taxmeless.com
August 16, 2015
August 14, 2015
Arbitration Laws Are Great in Mexico and its Less Costly and Much Faster than the Mexican Court System
If you have an arbitration clause in your agreement you can usually get a decision within 6 months to a year and have that arbitration decision entered with the court as a judgment very quickly. It is also possible to remove legal disputes from the Mexican Courts and have them resolved with arbitration if both parties agree. The parties may agree just so they both get a quicker decision and possibly a more knowledgeable decision.
When parties arbitrate they can pick the arbitrator with experience in the particular area of law governing the dispute. Often when disputes are litigated in Court, the judge has little or no background in the governing law and therefore the final decision can be arbitrary and not predictable.
Arbitration decisions in most situations cannot be appealed. But if you have chose a knowledgeable arbitrator (1 or 3 arbitrators can be used ), and it saves you waiting 5,10 or more years for a decision, that disadvantage may be worth ignoring
In lieu of arbitration of disputes, consider mediation. When parties mediate a neutral mediator with experience in the applicable laws works with the two opposing parties to help them reach a mutually satisfactory resolution. Statistics show that mediation has a 30 to 50 percent chance of success and it is significantly less expensive than arbitration or litigation in Court.
Want to know more about Arbitration or Mediation in Mexico? Want the proper provisions included in your legal agreements and wish to know how to arbitrate your legal dispute in Mexico? To learn more email us at firstname.lastname@example.org. Don D. Nelson, Attorney at Law, CPA.
August 2, 2015
The due date of Form 1065 partnership returns is not March 15th for Calendar year partnerships
The due date of Corporate return form 1120 will not be April 15th for Calendar year corporations.
These changed due dates start after 2015.
Read more in this Forbes Article
July 21, 2015
- Business versus Hobby. A key feature of a business is that you do the activity to make a profit. This differs from a hobby that you may do for sport or recreation. There are nine factors to consider when you determine if you do the activity to make a profit. Make sure you base your decision on all the facts and circumstances of your situation. Refer to Publication 535, Business Expenses to learn more. You can also visit IRS.gov and type “not-for-profit” in the search box.
- Allowable Hobby Deductions. You may be able to deduct ordinary and necessary hobby expenses. An ordinary expense is one that is common and accepted for the activity. A necessary expense is one that is helpful or appropriate. See Publication 535 for more on these rules.
- Limits on Expenses. As a general rule, you can only deduct your hobby expenses up to the amount of your hobby income. If your expenses are more than your income, you have a loss from the activity. You can’t deduct that loss from your other income.
- How to Deduct Expenses. You must itemize deductions on your tax return in order to deduct hobby expenses. Your costs may fall into three types of expenses. Special rules apply to each type. SeePublication 535 for how you should report them on Schedule A, Itemized Deductions.
- Use IRS Free File. Hobby rules can be complex. IRS Free File can make filing your tax return easier. IRS Free File is available until . If you make $60,000 or less, you can use brand-name tax software. If you earn more, you can use Free File Fillable Forms, an electronic version of IRS paper forms. You can only access Free File through IRS.gov.
July 2, 2015
See Forbes article for list of Swiss Banks Included
June 26, 2015
FORM BE 10 DUE BY JUNE 30TH OR THERE MAY BE PENALTIES - THIS FORM MUST BE FILED IN MOST SITUATIONS WHEN YOU OWN A FOREIGN CORPORATION
June 25, 2015
June 13, 2015
Over 65 articles by experts on every aspect of purchasing, owning and selling real estate in Mexico. http://www.mlsinbajasur.com/real-estate-articles.html
June 1, 2015
If you need additional time to qualify for the bonafide residence foreign earned income exclusion (form 2555) you can file form 2350 to extend your return further out until a date you have qualified for a full calendar year living abroad.
Your Form 114 (FBAR) which reports your foreign financial accounts is due on 6/30/15 for 2014 and cannot be extended any further. Failure to timely file this reporting form can result in substantial penalties. You can only file this form on line at http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html
Though expats get these special extension rules, any taxes owed must be paid in by 4/15/15 to avoid penalty and interest charges if any taxes are later due with the return.
May 28, 2015
Form BE10 - Form Required by Bureau of Economic Analysis of Department of Commerce for those who own 10% or more of a foreign corporation
May 21, 2015
READ MORE ABOUT COLLEGE EDUCATION BENEFITS FOR EXPATS AND THEIR CHILDREN HERE
May 11, 2015
DIRECTIONS FOR FILING FBAR (FORM 114) FOREIGN FINANCIAL ACCOUNT REPORT ON LINE - THIS IS DUE 6/30/15 FOR 2014
- People who show more than $10 million in income or NO income at all!
- People who file International Tax returns and show International Activies on Their Return
Time Magazine Article on Taxpayers Most Likely to be Audited
May 8, 2015
Submission Processing Center Street Addresses for Private Delivery Service
|Austin - Internal Revenue Submission Processing Center|| 3651 S IH35,|
Austin TX 78741
|Cincinnati - Internal Revenue Submission Processing Center|| 201 West Rivercenter Blvd.,|
Covington, KY 41011
|Fresno - Internal Revenue Submission Processing Center|| 5045 East Butler Avenue,|
Fresno, CA 93727
|Kansas City - Internal Revenue Submission Processing Center|| 333 W. Pershing,|
Kansas City, MO 64108
|Ogden - Internal Revenue Submission Processing Center|| 1973 North Rulon White Blvd.|
Ogden, UT 84404
April 20, 2015
- Opened the foreign bank account
- Owner of, or a financial interest in, the foreign account
- Tax non-compliance
- Did not seek advice, or relied upon the advice of a promoter, foreign banker, or other unqualified tax professional.
- Violations persist after notification of FBAR reporting requirements
- Foreign account not disclosed to return preparer
- No business reason for the foreign account
- No family or business connection to the foreign country
- An offshore entity owns the account
- Previously-filed FBARs do not include all foreign accounts
- Illegal income in the foreign account
- Participated in an abusive tax avoidance scheme
- Inherited the foreign bank account
- Only signature authority over the foreign bank account
- Tax compliance
- Relied upon the advice of a tax return preparer, a CPA, an attorney, or another
qualified tax professional.
- Full compliance after notification of FBAR reporting requirements
- Foreign account disclosed to return preparer
- Business reason for the foreign account
- Family or business connection to the foreign country
- Person owns the account in his name
April 16, 2015
Identity Theft Fraud
Return Preparer Fraud ; Questionable Refund Fraud
International Tax Fraud
Fraud Referral Program
Organized Crime Drug Enforcement Task Force (OCDETF)
Bank Secrecy Act and Suspicious Activity Report (SAR) Review Teams
Voluntary Disclosure Program
Counterterrorism and Sovereign Citizens FY14 Business Results:
In 2014 there were only 4,297criminal investigations initiated by the IRS and out of this there were only 3,110 criminal convictions.. This is from a total US population of approx 330 million people. Therefore, you have to be a pretty bad person or a special target for the IRS to even bother with seeking criminal prosecution.
If you are one of those pretty bad persons, email us at email@example.com for help.
April 13, 2015
April 9, 2015
March 30, 2015
March 26, 2015
March 23, 2015
Additional IRS Resources:
- Taxation of U.S. Resident Aliens
- Publication 514, Foreign Tax Credit for Individuals
- International Taxpayers