IRS FBAR 114 REFERENCE GUIDE FOR TAXPAYERS

Download this excellent PDF reference guide to FBAR filing with answers to most questions. Need help or have further FBAR for Form 114 questions, write us at ddnelson@gmail.com. Remember FBARS now must be filed on line at   FBAR FILING SITE   and are due 6/30/14 for 2013 and cannot be extended.

Astralia and IRS sign tax sharing agreement

Read more here.  http://uk.mobile.reuters.com/article/idUKKBN0DE0QI20140428?irpc=932

If you need to catch up your returns before its too late go to www.expat attorney CPA.com.

IRS Announces How to Handle your BITCOIN for US tax Purposes

The Internal Revenue Service has  issued a notice providing answers to frequently asked questions (FAQs) on virtual currency, such as Bitcoin. These FAQs provide basic information on the U.S. federal tax implications of transactions in, or transactions that use, virtual currency.

In some environments, virtual currency operates like “real” currency -- i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance -- but it does not have legal tender status in any jurisdiction.

The notice provides that virtual currency is treated as property for U.S. federal tax purposes.  General tax principles that apply to property transactions apply to transactions using virtual currency.  Among other things, this means that:

• • Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
• • Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply.  Normally, payers must issue Form 1099.
• • The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
• • A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property. 

Further details, including a set of 16 questions and answers, are in Notice 2014-21, posted today on IRS.gov.

US International Social Security Agreements and Self Employed Expatriates

If you do not live and work in a country with a Social security agreement with the US, and are self employed as a sole proprietor (not an employee) you will have to pay US self employment tax which is medicare and social security ( 15.3% of your net profit).

The US has social security treaties with the countries below.  If self employed these treaties set forth rules on which countries social security you can pay into.

Countries with Social Security Agreements
Country	Entry into Force
Italy	November 1, 1978
Germany	December 1, 1979
Switzerland	November 1, 1980
Belgium	July 1, 1984
Norway	July 1, 1984
Canada	August 1, 1984
United Kingdom	January 1, 1985
Sweden	January 1, 1987
Spain	April 1, 1988
France	July 1, 1988
Portugal	August 1, 1989
Netherlands	November 1, 1990
Austria	November 1, 1991
Finland	November 1, 1992
Ireland	September 1, 1993
Luxembourg	November 1, 1993
Greece	September 1, 1994
South Korea	April 1, 2001
Chile	December 1, 2001
Australia	October 1, 2002
Japan	October 1, 2005
Denmark	October 1, 2008
Czech Republic	January 1, 2009
Poland	March 1, 2009
Slovak Republic	May 1, 2014

http://www.ssa.gov/pressoffice/factsheets/colafacts2014.html

Expat Tax Return Deadlines

Here are the most important tax filing deadlines for expatriates:

April 15th – US tax deadline to pay any US taxes owed (or penalties and fines begin to accrue). US expats get an automatic 2-month extension.

June 16th – US tax return deadline for expats

June 30th – FBAR forms are due to the US Department of the Treasury. Expats must file if they have had $10,000 or more in foreign bank and financial accounts. No extensions are or can be granted

October 15th – Final expat deadline for those who filed for an extension

If you are concerned that you won't be able to get your returns ready in time, you're not alone! Get started with with our help today by  downloading our expat tax questionnaire at www.Taxmeless.com. We offer a simple process, reasonable fees and expat tax experts who will make your US tax preparation quick and easy.
 

9 Facts about Penalties for Filing and Paying Late - For Expats and Those Living in the USA

April 15 is the tax day deadline for most people. If you’re due a refund there’s no penalty if you file a late tax return. But if you owe taxes and you fail to file and pay on time, you’ll usually owe interest and penalties on the taxes you pay late. Here are eight facts that you should know about these penalties. 

1. If you file late and owe federal taxes, two penalties may apply. The first is a failure-to-file penalty for late filing. The second is a failure-to-pay penalty for paying late.

2. The failure-to-file penalty is usually much more than the failure-to-pay penalty. In most cases, it’s 10 times more, so if you can’t pay what you owe by the due date, you should still file your tax return on time and pay as much as you can. You should try other options to pay, such as getting a loan or paying by credit card. The IRS will work with you to help you resolve your tax debt. Most people can set up a payment plan with the IRS using the Online Payment Agreement tool on IRS.gov.

3. The failure-to-file penalty is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. It will not exceed 25 percent of your unpaid taxes.

4. If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100 percent of the unpaid tax.

5. The failure-to-pay penalty is generally 0.5 percent per month of your unpaid taxes. It applies for each month or part of a month your taxes remain unpaid and starts accruing the day after taxes are due. It can build up to as much as 25 percent of your unpaid taxes.

6. If the 5 percent failure-to-file penalty and the 0.5 percent failure-to-pay penalty both apply in any month, the maximum penalty amount charged for that month is 5 percent.

7. If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 15 due date.

8. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for not filing or paying on time.

9. While US expatriates get an automatic extension of time to file their return until 6/15 following the year end, that extension does not apply to any taxes due. Therefore, you should estimate any taxes you might owe and pay on on the regular 4/15 date to avoid the 1/2 percent per month penalty. Since this penalty is low, many expats just pay when they file the return and pay the penalty.

Additional Resources on Late Payment:

• Electronic Payment Options Home Page
• Make a Payment – payment options
• Tax Topic 653 - IRS Notices and Bills, Penalties and Interest Charges
• Q&A about interest and penalties for filing and paying late
• Publication 594, The IRS Collection Process
• 1040 Central
• IRS Tax Map

Obama and Bidens 2013 Tax Returns Reviewed

SEE ACCOUNTING TODAY ARTICLE.   http://www.accountingtoday.com/news/obamas-paid-irs-204-tax-rate-on-2013-gross-income-of-481098-70313-1.html?utm_campaign=daily-apr%2015%202014&utm_medium=email&utm_source=newsletter&ET=webcpa%3Ae2573270%3A2450710a%3A&st=email

What You Should Know about the Additional Medicare Tax

Starting in 2013, you may be liable for an Additional Medicare Tax if your income exceeds certain limits. Here are six things that you should know about this tax:  

1. The Additional Medicare Tax is 0.9 percent. It applies to the amount of your wages, self-employment income and railroad retirement (RRTA) compensation that is more than a threshold amount. The threshold amount that applies to you is based on your filing status. If you’re married and file a joint return, you must combine your spouse’s wages, compensation, or self-employment income with yours to determine if you exceed the “married filing jointly” threshold.

2. The threshold amounts are:

 Filing Status                   Threshold Amount
 Married filing jointly         $250,000
 Married filing separately   $125,000
 Single                            $200,000
 Head of household          $200,000
 Qualifying widow(er) with dependent child      $200,000

3. You must combine wages and self-employment income to determine if your income exceeds the threshold. You do not consider a loss from self-employment when you figure this tax. You must compare RRTA compensation separately to the threshold. See the instructions for Form 8959, Additional Medicare Tax, for examples.

4. Employers must withhold this tax from your wages or compensation when they pay you more than $200,000 in a calendar year, without regard to your filing status, wages paid to you by another employer, or income that you may have from other sources. Your employer does not combine the wages for married couples to determine whether to withhold Additional Medicare Tax. 

5. You may owe more tax than the amount withheld, depending on your filing status and other income. In that case, you should make estimated tax payments /or request additional income tax withholding using Form W-4, Employee's Withholding Allowance Certificate. If you had too little tax withheld, or did not pay enough estimated tax, you may owe an estimated tax penalty. For more on this topic, see Publication 505, Tax Withholding and Estimated Tax.

6. If you owe this tax, file Form 8959, with your tax return. You also report any Additional Medicare Tax withheld by your employer on Form 8959.

Visit IRS.gov for more on this topic. Enter “Additional Medicare Tax” in the search box. 

Need help. Visit us at www.expatattorneycpa.com and email ddnelson@gmail.com 

WHAT TO DO IF YOU NEED MORE TIME TO FILE YOUR TAXES

The April 15 tax deadline is approaching. What happens if you can’t get your taxes done by the due date? If you are an expat you have until June 15 th to file. The IRS has given you an automatic extension. However if you live in the US and you need more time, you can get an automatic six-month extension from the IRS using form 4868. You don’t have to explain why you’re asking for more time. Here are five important things to know about filing an extension:

1. File on time even if you can’t pay.  If you complete your tax return but can’t pay the taxes you owe, do not request an extension. Instead, file your return on time and pay as much as you can. That way you will avoid the late filing penalty, which is higher than the penalty for not paying all of the taxes you owe on time. Plus, you do have payment options. Apply for a payment plan using the Online Payment Agreement tool on IRS.gov. You can also file Form 9465, Installment Agreement Request, with your tax return. If you are unable to make payments because of a financial hardship, the IRS will work with you.

2. Extra time to file is not extra time to pay.  An extension to file will give you six more months to file your taxes, until Oct. 15. It does not give you extra time to pay your taxes. You still must estimate and pay what you owe by April 15. You will be charged interest on any amount not paid by the deadline. You may also owe a penalty for not paying on time.

3. Use IRS Free File to request an extension.  You can use IRS Free File to e-file your extension request. Free File is only available through the IRS.gov website. You must e-file the request by midnight on April 15. If you e-file your extension request, the IRS will acknowledge receipt. You also can return to Free File any time by Oct. 15 to prepare and e-file your tax return for free.

4. Use Form 4868.  You can also request an extension by mailing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You must submit this form to the IRS by April 15. Form 4868 is available on IRS.gov.

You don’t need to submit a paper Form 4868 if you make a payment using an IRS electronic payment option. The IRS will automatically process your extension when you pay electronically. You can pay online or by phone.

5. Electronic funds withdrawal.  If you e-file an extension request, you can also pay any balance due by authorizing an electronic funds withdrawal from your checking or savings account. To do this you will need your bank routing and account numbers.

Need help? We are www.Taxmeless.com and have been doing expat returns for over 30 years. Email us at ddnelson @gmail.com.

How To Pay IRS Taxes Electronically Today Without Mailing a Check

This link will guide you to the various methods .   http://www.irs.gov/uac/Electronic-Payment-Options-Home-Page