2012 Proposed New Tax Laws from the President

You can read  the 200 pages of proposed new tax laws from the President some of which will not doubt be enacted in 2012  HERE.  Better act fast to beat some of these changes which may not be favorable to you.

IRS issues housing cost allowances for those working abroad in high-cost areas in 2012

Notice 2012-19, 2012-10 IRB   This new Notice provides adjustments to the limitation on housing expenses under the Code Sec. 911 housing cost exclusion for specific locations for 2012.


SEE TABLE WITH ALLOWABLE HOUSING DEDUCTION/ALLOWANCE FOR YOUR COUNTRY OF RESIDENCE.

Background. A qualified individual may elect to exclude from U.S. gross income his foreign earned income and housing cost amount. (Code Sec. 911(a)) Under Code Sec. 911(c)(1), the maximum excludable housing cost amount is calculated by way of a complex formula.

The excludable housing cost amount is the excess, if any, of (1) the individual's allowable housing expenses for the year (i.e., the housing expense limitation) over (2) a base amount. For 2012, a taxpayer's allowable housing expenses, assuming he is eligible for the entire year, generally can't exceed $28,530; subtracting the base amount of $15,216 yields a generally applicable maximum housing amount exclusion of $13,314.

IRS may issue regs or other guidance providing for the adjustment of the maximum allowable housing expense limitation on the basis of geographic differences in housing costs relative to housing costs in the U.S. (Code Sec. 911(c)(2)(B))

Increases for high-cost areas. Notice 2012-19, makes adjustments for housing costs during 2012 in high-cost foreign areas. Specifically, it contains a table that (1) identifies locations within countries with high housing costs relative to U.S. housing costs, and (2) provides an adjusted annual maximum and daily housing expense limitation for a qualified individual incurring housing expenses in one or more specified high-cost localities in 2012 to use (instead of the otherwise applicable annual housing expense limitation of $28,530, or the prorated daily amount) in determining his housing expenses. A qualified individual incurring housing expenses in one or more of the high-cost localities identified in the table for the year 2012 may use the adjusted limit provided in the table (in lieu of $28,530 or the prorated daily amount) in determining his housing cost amount on Form 2555, Foreign Earned Income.

Illustration: A U.S. taxpayer is posted to Hong Kong, China, for all of 2012. His maximum housing cost exclusion is $99,084 ($114,300 full year limit on housing expense in Hong Kong minus $15,216 base amount).

NOTE: For some locations, the limitation on housing expenses provided in Notice 2012-19, Sec. 3, may be higher than the limitation on housing expenses provided in Notice 2011-18 (for 2011). A qualified individual incurring housing expenses in such a location during 2011 may apply the adjusted limitation on housing expenses provided in Notice 2012-19, Sec. 3, in lieu of the amounts provided in Notice 2011-18 (and as set forth in the Instructions to Form 2555 (2011)).

IRS anticipates that future annual notices providing adjustments to housing expense limits will make a similar election available to qualified individuals that incur housing expenses in the immediately preceding year. For example, when adjusted housing expense limitations for 2013 are issued, it is expected that taxpayers will be permitted to apply those adjusted limitations to the 2012 tax year.

Download our 2011 Expatriate Tax Questionnaire Here (msword format) and email or fax it back to us for a fee quote subject to your approval.

IRS KNOWN TO BE INVESTIGATING BANK AND FINANCIAL ACCOUNTS IN THE FOLLOWING NAMED COUNTRIES

Though the IRS tries to keep their investigation into offshore financial accounts held by US taxpayers confidential, it is known that they are investigating bank accounts and other financial accounts owned by US taxpayers, Citizens and Permanent Residents in the following countries:

1. Switzerland
2. Liechtenstein
3. Israel
4. India
5. Singapore
6. Hong Kong

The risk of criminal and/or substantial civil penalties grows greater as the US Internal Revenue Service (IRS) and Department of Justice (DoJ) complete more bank-investigations and as foreign banks continue to co-operate with US government officials.

The Offshore Tax Evasion Crackdown Spreads to Other Countries

5 Nations Join US In Tax Evasion Crackdown Forbes The law has rankled many in the international community, reaching the long arm of theIRS into foreign countries. In effect, it orders foreign banks how to behave, forcingforeign institutions to do the IRS's dirty work. See Expats Call For FATCA .... If the IRS determines you have income and you have not filed one, they can file a Ghost Return making tax assessments you may not even be aware of until years later. That may be after they have already attached your bank account or levied other assets.  The only way to stop this from happening is to file a tax return before they file one for you. You can download our expat tax return questionnaire for 2011 here  (msword format) and send it to us for a fee quote subject to your approval.  Do not wait until it is too late.  Also, keep in mind, the statue of limitations which allows the IRS to assess taxes against you never runs out if you fail to file a tax return for any particular tax year.

Reporting Foreign Financial Assets

For your 2011 Tax  Year you may be required to File Form 8938 to Report your foreign financial assets with your tax return. You may also be required to File Form TDF 90-22.1 to report your foreign bank and financial accounts.  Sometimes you may be required to file both forms!

CHART SETTING FOR REQUIREMENTS FOR FILING ONE FORM OR IF YOU ARE REQUIRED TO FILE  BOTH FORMS FOR 2011

DOWNLOAD FORM 8938
DOWNLOAD INSTRUCTIONS TO FORM 8938
DOWNLOAD FORM TDF 90-22.1 AND INSTRUCTIONS

If you need help with these forms, filing them out, preparation of the forms, or review of the forms you self prepared contact us at ddnelson@taxmeless.com.  We have 30 plus  years experience preparing these  and other complex international tax forms. Download our 2011 expatriate tax questionnaire HERE and send it to us by email or fax for a fee quote.

Singapore is one of Best Places for Your Offshore Business Corporation

Singapore offers low taxes, stability and lots of other benefits if you are looking at where to locate your Offshore Corporation to conduct your business abroad.  This applies both to expatriates living abroad and to US business owners that want to conduct foreign business.

Read more about why Singapore is excellent off Offshore Business Corporations in this article in the PRWEB

There are many US tax concerns and filing requirements when you create a Singapore Company  and you are a US citizen that owns 10% or more of that foreign corporation. Read our website at www.TaxMeLess.com  to learn more about those IRS tax requirements.

India Signs International Tax Treaty to Exchange Tax Info with IRS

The new treaty will provide for mutual assistance and exchange of information between India and the other members of the Agreement.  One member is the USA.  It not only provides for exchange of information between the taxing agencies (IRS) but also provides for assistance in recovery of taxes.


It provides for simultaneous tax examinations in other countries and sharing of relevant information.  It also allows tax officials from one member country to enter the other to interview individuals and examine records.  The information received from another country can be used also for money laundering investigations.

Read more and the names of the Member nations in this Article from The Hindu

If you have been living in India and not filing your US tax return on your worldwide income even though you are a US Citizen or Green Card Holder, now is the time to catch up and become current with your returns. In the past few years we have helped hundreds of US taxpayers catch up and saved them untold sums in penalties and interest.

DOWNLOAD OUR EXPATRIATE TAX RETURN QUESTIONNAIRE HERE, and send it to us for a fee quote subject to your approval. It can be used for all past unfiled tax years.

Legal & Tax Procedures For US Citizenship Surrender/or Surrender of Green Card by Long Term Resident

Surrendering your US Citizenship or long term US Residency (holding a Green Card for 8 years or more) is a two step process.  Step one: A Citizen must fill out the forms and meeting with the US Embassy and Consul and paying the $450 fee.  A Green Card holder only needs to file the proper form with Immigration. Once that is done, you have established the effective date and completed the legal side.  Of course, they will not allow you to surrender your US Citizenship until you prove you are a Citizen of another country.  The State Department will not allow you to become a man or woman "without a country."

Of course surrendering your Citizenship or Residency relieves you of the necessity of filing US tax returns in future years except with respect to any of your future earnings the have a US source.

Step Two:  You must then get final approval of the Internal Revenue Service.  You must file a final US tax return (A Dual Status Return) and Form 8854 to determine if you owe an exit tax or not.  If you are married, both you and your spouse must go through this procedure separately.

As an Attorney/ CPA I  have advise and assisted over 70 clients with their US Citizenship or Green Card  surrender.  Let us help you.  READ MORE DETAILS OF THE PROCEDURES HERE. 

Mitt Romney 2010 Tax Return - View it Here and See the Tax Results of His Many Foreign Holdings

Mitt Romney's 2010 tax return (203 pages)  is a study in  the various IRS Forms required to report foreign income and holdings.  It includes the following IRS forms required for various foreign items of income:

• Form 1116- Foreign Tax Credits
• Form 8865 - Foreign Partnerships
• Form 926 - Contributions to Foreign Corporations
• Form 5471- Foreign Corporation ownership
• Form 8621- Passive Foreign Investment Company Reporting

LOOK AT AND REVIEW MITT ROMNEY'S 2010 TAX RETURN HERE

IRS Called Easy on Criminal Tax Evaders in Watchdog’s Critique

Read Article about Criminal Tax Evaders and Voluntary Disclosure Program from Bloomberg Here