When Must a US taxpayer or Expatriate File Forms 114 and 8938?

When is a US Taxpayer required to disclose offshore accounts on an FBAR and IRS Form 8938? While many US taxpayers and expatriates have come to understand the requirements of the FinCEN Form 114 or FBAR, a surprising number still need to understand the risk they are taking when they fail to disclose offshore financial accounts, assets, and income.

Read More in the article from JD Supra

We are attorney/CPAs experts on US International Taxation.  Visit our website at www.taxmeless.com or email ustax@hotmail.com.   Our whatsapp us number is 818-519-9219. Kauffman Nelson LLP.

US Expatriate Tax Rules for Those Living and Working Outside of the USA.

Tax rules for US expatriates living abroad can be complex and depend on various factors such as income sources, residency status, and specific tax treaties between the US and the country of residence. Here's an

overview:

1. Foreign Earned Income Exclusion (FEIE)**: One of the primary benefits for US expatriates is the FEIE, which allows qualifying individuals to exclude a certain amount of their foreign earned income from US taxation. For tax year 2023, the maximum exclusion amount is $112,000 per qualifying individual.

2. Foreign Tax Credit (FTC)**: If you pay foreign taxes on income that is also subject to US taxation, you may be eligible for a foreign tax credit. This credit can reduce your US tax liability on that income. 

3. Foreign Housing Exclusion or Deduction**: Expatriates may also qualify for a housing exclusion or deduction to help offset the cost of housing abroad. This can be claimed in addition to the FEIE.

4. Tax Treaties**: The US has tax treaties with many countries to avoid double taxation and provide certain exemptions. These treaties can affect how income is taxed and which country has the primary right to tax specific types of income.

5. Filing Requirements**: US citizens and green card holders living abroad are generally required to file US tax returns if their income exceeds certain thresholds, regardless of where the income was earned. There are specific forms, such as the Form 1040 and Form 2555 (for the FEIE), that may need to be filed.

6. Reporting Foreign Accounts**: US expatriates are required to report their foreign bank accounts and other financial assets if they exceed certain thresholds. This is done through the Foreign Bank Account Report (FBAR) and Form 8938.

7. Social Security and Medicare Taxes**: US citizens working abroad may still be subject to Social Security and Medicare taxes, depending on their employment situation and the country they're residing in.

8. State Taxes**: While living abroad, US expatriates may still be liable for state taxes, depending on the state's rules regarding residency and taxation.

It's essential for US expatriates to understand their tax obligations and take advantage of available benefits to minimize their tax liability while remaining compliant with US tax laws. Consulting with a tax professional who specializes in expatriate taxation is highly recommended to ensure compliance and maximize tax benefits.  Contact Kauffman Nelson CPAs and Attorney if you need assistance.  Email: ddnelson@gmail.com . We have been doing expatriate and international taxes for over 30 years for over 800 clients located abroad.   US Phone 949-480-1235.  Whatsapp 818-519-9219.

What happens if you don't do your taxes on time or never ?

Not filing your tax return or paying your taxes on time or at all can lead to serious consequences, including:

• Penalties for late filing: The IRS will issue a Failure to File Penalty of 5% of the unpaid taxes you owe for each month or partial month that your tax return is late, unless you are also issued a Failure to Pay Penalty in the same month. In that case, the Failure to File Penalty may be reduced by the amount of the Failure to Pay Penalty for that month. The penalty will not, however, exceed 25% of the taxes you owe. 
• Penalties for late payment: The IRS will issue a Failure to Pay Penalty of 0.5% of the amount of tax owed after the due date and for each month or partial month the tax remains unpaid. The penalty will not, however exceed 25% of the taxes you owe.
• Interest charges: Not paying your taxes on time can lead to penalties and interest charges on the amount owed. Interest may accrue on the unpaid tax owed up until the date of payment in full. The interest rate is based on the federal short-term rate plus 3% and is adjusted quarterly.
• Legal consequences: Continuing to ignore your tax responsibilities can lead to wage garnishments, tax liens and levies, and even imprisonment.

The good news is that the IRS actually does try to help those who come forward on their own and, in many cases, is willing to work something out. We are US CPAs and Attorney. Email us at ddnelson@gmail.com or whatsapp at 1818-519-9219.  

The 10 Cheapest Countries Where You Can Buy Citizenship or Residency For as Low as $19,000

 From entrepreneur Magazine:  

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Find the country you can live in and save taxes. We can help you save on your US taxes if you live  abroad either as retired person or business.  Email us at ddnelson@gmail.com for more. We have been assisting expats with their US taxes and moving abroad for over 30 years.  Kauffman Nelson LLP, CPAs and Attorney at Law.  Whatsapp  1818 519 9219.