Cut IRS Audit Risk, Extend your April 18 IRS Tax Deadline To October 16

The IRS keeps secret what could cause your return to be audited (other than computer audits caused by omission of w2, 1099 or other items reported to the IRS separately from your return). However, after over 30 years of preparing tax returns and observing the results it does seem clear that extending your tax return using Form 4868 does appear to reduce your chance of audit.

 Several years ago an IRS agent confidentially to us that returns are audited in the order they are picked for audit (filing early or on time would cause your return to be picked first) and those filed later under extension are not as likely to be audited because the limited audit staff might not get around to auditing those returns filed undertension because they are busy with returns filed earlier in the year.

Read more in the Forbes article below.

Cut IRS Audit Risk, Extend April 18 Tax Deadline To October 16

If you have questions, are being audited or ? email us at ddnelson@gmail.com

Six IRS Tax Tips about Reporting Foreign Income

Are you a U.S. citizen or resident who worked abroad last year? Did you receive income from a foreign source in 2014? If you answered ‘yes’ to either of those questions here are six tax tips you should know about foreign income:

1. Report Worldwide Income.  By law, U.S. citizens and residents must report their worldwide income. This includes income from foreign trusts, and foreign bank and securities accounts.

2. File Required Tax Forms.  You may need to fileSchedule B, Interest and Ordinary Dividends, with your U.S. tax return. You may also need to file Form 8938, Statement of Specified Foreign Financial Assets. In some cases, you may need to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts. See IRS.gov for more information.

3. Review the Foreign Earned Income Exclusion. If you live and work abroad, you may be able to claim the foreign earned income exclusion. If you qualify, you won’t pay tax on up to $99,200 of your wages and other foreign earned income in 2014. See Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion, for more details.  On top of that amount you may also be eligible for the foreign housing exclusion or deduction if you earn in excess of the foreign earned income exclusion.

4. Don’t Overlook Credits and Deductions.  You may be able to take a tax credit or a deduction for income taxes you paid to a foreign country. These benefits can reduce your taxes if both countries tax the same income.

5. Tax Filing Extension is Available.  If you live outside the U.S. and can’t file your tax return by April 15, you may qualify for an automatic two-month extension of time to file. That will give you until June 16, 2015, to file your U.S. tax return. This extension also applies to those serving in the military outside the U.S. You will need to attach a statement to your return explaining why you qualify for the extension.

6. Get  Tax Help.  Check the international services Web page for the types of help the IRS provides. 

For more on this topic refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. 

If you are preparing your own return and have questions, we can provide you with the answers in a mini consultation. Or if you want your return reviewed prior to filing with the IRS, we can do that too.  And of course, we also prepare expatriate, nonresident and international tax returns.  We have over 30 years experience preparing expatriate and nonresident tax returns. We are the experts you need.

Email for assistance at ddnelson@gmail.com 

Additional IRS Resources:

• Taxation of U.S. Resident Aliens
• Publication 514, Foreign Tax Credit for Individuals
• International Taxpayers

Deadlines in 2013 For Filing Expat Taxes for Tax Year 2012

• March 15, 2013.  Due date of Form 3520A which must be filed by Foreign Trusts when a US person has ownership or control. This form can be extended with Form 7004 until September 15th
• April 15, 2013 – US tax return filing deadline for those living in  the US and due date for all taxes owed whether you are an expat or resident. If any taxes are owed after this payment, those amounts are subject to penalties and interest.
• June 17, 2013 – US tax return abroad deadline for expats but can be extended by filing form 4868 prior to this date with IRS
• June 30, 2013 – Foreign Bank Account Form is due (FBAR, or Form 90-22.1) - Must be received by IRS on this date (not date of mailing)
• October 15, 2013 – Final tax deadline for US tax returns for expats abroad IF you have already applied for an extension. NOTE. There may be one more extension available until December 15th, if you file a letter request with the IRS under certain circumstances.
• Forms 5471, 3520, 886,5, 8621 and most other foreign entity and special reporting forms are due on the extended due date of your personal tax return for 2012. If filed late, you may be subject to substantial penalties which are usually $10,000 or more.

Kauffman Nelson LLP, Certified Public Accountants have extensive experience over the past 30 years with US International, Nonresident  and Expatriate Taxation.  Visit our website at www.TaxMeLess.com or email us at ddnelson@gmail.com.  Our skype address is: dondnelson.   Thank you. Don D. Nelson, Attorney, CPA.

US Expatriate Tax Return Extension

US Expats get an automatic extension to file their IRS Form 1040 returns until 6/15/11 for 2010 if they live abroad on 4/15.  You can get a further extension until 10/15/11 if you file for one prior to 6/15 using form 4868.  We will electronically file that form for you without charge providing you ask us to prepare your expat return.  That form also extends the due date of Forms 5471, 8865, 3520 and form 5500EZ.

Though not officially confirmed by the IR S, many articles have appeared in the media stating extending your tax returns does reduce your chances of IRS Audit.  We have found that true in our 30 years of experience.  Therefore, extending your return even though it might be completed might be an excellent idea.

Keep in mind an extension does not extend the time you must pay any taxes due from the regular 4/15 date.  If you do not any taxes due, penalties and interest will accrue until any tax due for 2010 is paid in full.