IRS STREAMLINED PROGRAM- CATCH UP FILING YOUR RETURNS AND AVOID MOST PENALTIES

Purpose of the streamlined procedures

The streamlined filing compliance procedures describe below are available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part. The streamlined procedures are designed to provide to taxpayers in such situations with

• a streamlined procedure for fling amended or delinquent returns, and
• terms for resolving their tax and penalty procedure for filing amended or delinquent returns, and
• terms for resolving their tax and penalty obligations.

As reflected below, the streamlined filing procedures that were first offered on September 1, 2012 have been expanded and modified to accommodate a broader group of U.S. taxpayers. Major changes to the streamlined procedures include: 

• extension of eligibility to U.S. taxpayers residing in the United States
• Elimination of the $1,500 tax threshold, and 
• elimination of the risk assessment process associated with the streamlined filing compliance procedure announced in 2012.

Eligibility criteria for the streamlined procedures

The modified streamlined filing compliance procedures are designed only for individual taxpayers, including estates of individual taxpayers. The streamlined procedures are available to both U.S. individual taxpayers residing outside the United States and U.S. individual taxpayers residing in the United States. Descriptions of the specific eligibility requirements for the streamlined procedures for both non-U.S. residents (the "Streamlined Foreign Offshore Procedures") and U.S. residents ("Streamlined Domestic Offshore Procedures") are set forth below.

Taxpayers must certify that conduct was not willful. Taxpayers using either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures, will be required to certify, in accordance with the specific instructions set forth below, that the failure to report all income, pay all tax and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22,1) was due to non-willful conduct. Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.  READ MORE DETAILS OF THE STREAMLINED PROGRAM HERE

Our firm of CPAs and Attorney have represented and assisted hundreds of individuals enter the Streamlined Program. If you wish to learn more and want help entering the program EMAIL US to set up a consultation.

ROTH IRAs ARE GREAT FOR US EXPATRIATES THAT QUALIFY - SEE THE RULES BELOW.

• Roth IRAs (if you qualify based on your income) are ideal for US expatriates because due to the foreign earned income exclusion and credits for foreign income taxes paid, they often owe little or no tax on their US tax return. A regular IRA results in a deduction an expatriate may not need in that situation.
• You cannot make Roth  IRA contributions unless your earned income for the tax year exceeds the foreign earned income exclusion taken in that year.  If your earned income does does exceed your foreign earned income exclusion, you can make a Roth IRA contribution limited only by the maximum allowed and the amount your earned income exceeds your foreign earned income exclusion if less than the maximum contribution allowed.
• You also cannot make an Roth IRA contribution if your  modified adjusted gross income exceeds a certain amount.  That amount  (which is lower if you are covered by a US pension plan and is  much higher if you are not covered by a US pension plan) is set forth in Publication 590 (on pages 62 and 63 )  which can be downloaded below.  If your modified adjusted gross income exceeds this maximum you cannot contribute to an IRA.  To determine that phase out amount you must add back the  foreign earned income exclusion you took on your tax return and use formula set forth in Publication 590.
• If you over contribute to an Roth IRA (more than is allowed under the law), you will not be penalized if you withdraw that contribution on or before  the due date of your tax return.                                You can also in most situations  notify the IRA administration  company to have that contribution re-designated to your subsequent tax year.
• The maximum contribution is $5000 for 2012, and $6,000 if you are over 50.  You may also be able to make a contribution for your spouse in the same amounts subject to certain limits.
• You must make the contribution and open the Roth IRA no later than April 15th following the end of the calendar year.
• Roth IRA contributions may be withdrawn at any time without taxes or penalties; earnings may be withdrawn tax-free and penalty-free once you reach age 59½ and the account has been open for at least five years.
• Roth IRA Earnings may be subject to taxes and penalties if distributed before age 59½ and before the the contributions included in the distribution are at least five years old.

• There is a 6 percent penalty per year for over contributions
• We have noted one of the biggest mistakes made by expatriates is contributing money to regular IRAs (deductible) or Roth IRAs  when they are eligible under the rules above. The penalties for these over contribution can become extreme.
• Publication 590 contains all of the IRA complex rules. Download it here.
  
  

Let us know if you need help with your 2012 expatriate or international taxes. Visit our website at www.TaxMeLess.com . Email us at ddnelson@gmail.com