Tax Freedom Day is April 24 this year

Read more     http://www.valuewalk.com/2016/04/tax-freedom-day-2016-arrives-april-24/

Luxembourg Leaks: tax Tricks of the Trade

US Expats - Filing Too Late Can Cause you to Lose the Foreign Earned Income Exclusion

The foreign earned income exclusion is not automatic. US expats must file returns to claim it. If you file your return for any year late (more than 18 months), the IRS can deny the exclusion (and you would have to pay tax on your entire income--- but could still take foreign tax credits) if you owe taxes with the return. If your never file a return the statute of limitations for the IRS to assess taxes or require a return never expires!

Need help catching up or filing your return?  Need US International, Expatriate or Nonresident tax assistance. Go to www.TaxMeLess.com.  We offer all of your clients the absolute privacy of attorney-client privilege. We have over 30 years specialized experience in expatriate and nonresident US taxation.

Home Office Deduction for US Expatriate Taxpayers

If you use your home for business when working abroad, you may be able to deduct expenses for the business use of your home. If you qualify, you can claim the deduction whether you rent or own your home. You may use either the simplified method or the regular method to claim your deduction. Here are six tips that you should know about the home office deduction:

1. Regular and Exclusive Use. As a general rule, you must use a part of your home regularly and exclusively for business purposes. The part of your home used for business must also be:

Your principal place of business, or
A place where you meet clients or customers in the normal course of business, or
A separate structure not attached to your home. Examples could include a garage or a studio.
2. Simplified Option. If you use the simplified option, multiply the allowable square footage of your office by a rate of $5. The maximum footage allowed is 300 square feet. This option will save you time because it simplifies how you figure and claim the deduction. It will also make it easier for you to keep records. This option does not change the rules for claiming a home office deduction.

3. Regular Method. This method includes certain costs that you paid for your home. For example, if you rent your home, part of the rent you paid may qualify. If you own your home, part of the mortgage interest, taxes and utilities you paid may qualify. The amount you can deduct usually depends on the percentage of your home used for business.

4. Deduction Limit. If your gross income from the business use of your home is less than your expenses, the deduction for some expenses may be limited.

5. Self-Employed. If you are self-employed and choose the regular method, use Form 8829, Expenses for Business Use of Your Home, to figure the amount you can deduct. You can claim your deduction using either method on Schedule C, Profit or Loss From Business. See the Schedule C instructions for how to report your deduction.

6. Employees. You must meet additional rules to claim the deduction if you are an employee. For example, your business use must also be for the convenience of your employer. If you qualify, you claim the deduction on Schedule A, Itemized Deductions.

For more on this topic, see Publication 587, Business Use of Your Home. You can view, download and print IRS tax forms and publications on IRS.gov/forms anytime.  Have questions write us for help at ddnelson@gmail.com or visit our website for a wealth of information at www.TaxMeLess.com

Do You Need Additional Time To Get Your 2015 US Tax Return Done?

The April 18 tax deadline is coming up. 2015 Expat returns are due June 15. If you need more time to file your taxes, you can get an automatic six-month extension from the IRS. Here are five things to know about filing an extension:

1. Use IRS Free File to file an extension. You can use IRS Free File to e-file your extension request for free. Free File is only available through IRS.gov. You must e-file the extension request by midnight April 18. If you do request an extension, come back to Free File to prepare and e-file your taxes for free. You can access the program at any time through Oct. 17.

2. Use Form 4868. You can also request an extension by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You must mail this form to the IRS by April 18. Form 4868 is available on IRS.gov/forms. You cannot extend the Form 114 FBAR deadline which is June 30.

3. More time to file is not more time to pay. An extension to file will give you until Oct. 17 to file your taxes. It does not, however, give you more time to pay your taxes. Estimate and pay what you owe by April 18 to avoid a potential late filing penalty. You will be charg  ed interest on any tax that you don’t pay on time. You may also owe a penalty if you pay your tax late. Interest is normally charged on any unpaid tax.

4. IRS Direct Pay. Pay your tax with IRS Direct Pay. Visit IRS.gov/directpay to use this free and secure way to pay from your checking or savings account. You also have other electronic payment options. The IRS will automatically process your extension – and you don’t have to file a separate request -- when you pay electronically. You can pay online or by phone.

5. IRS helps if you can’t pay all you owe. If you can’t pay all the tax you owe, the IRS offers you payment options. In most cases, you can apply for an installment agreement with the Online Payment Agreement application on IRS.gov. You may also file Form 9465, Installment Agreement Request. If you can’t make payments because of financial hardship, the IRS will work with you.

Reporting Foreign Income: Six Tax Tips from www.taxmeless.com

Did you receive income from a foreign source in 2015? Are you a U.S. citizen or resident who worked abroad last year? If you answered ‘yes’ to either of those questions, here are eight tips to keep in mind 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 file Schedule 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. Visit 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 $100,800 of your wages and other foreign earned income in 2015. See Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion, for more details.

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

5. Additional Child Tax Credit. You cannot claim the additional child tax credit if you file Form 2555, Foreign Earned Income, or 2555-EZ, Foreign Earned Income Exclusion.

6. Tax Filing Extension is Available.  If you live outside the U.S. and can’t file your tax return by the April 18 due date, you may qualify for an automatic two-month extension until June 15. This extension also applies to those serving in the U.S. military abroad. You will need to attach a statement to your tax return explaining why you qualify for the extension.

For more on this topic refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. You can get all IRS tax products on IRS.gov/forms.

Need to discuss how to handle your expat or foreign taxes with respect to US taxation... both planning and resolving past problems. Email us at ddnelson@gmail.com and find lots of answers at www.taxmeless.com 

Move Your Business Abroad and Reduce or Eliminate Your US Taxes!

By Don D. Nelson, International Tax Attorney at Law

You can operate your sole proprietorship or corporate  business from a foreign country and secure terrific US tax advantages.  Depending on the country you chose, you may reduce your living expenses, and improve your lifestyle. We have helped hundreds of small business owners move their businesses abroad to achieve the maximum US tax savings and achieve an improved lifestyle. As an attorney and partner in a CPA firm we can offer you international legal and tax expertise which is difficult to find except with the largest and most expensive international law and accounting firms.

You can take advantage of the US offshore tax breaks with all types of businesses including almost all internet based businesses, programming, consulting, employee recruiting businesses, and many other types of  businesses.  What are the US tax advantages?

For 2016 there is a $101,300 exclusion for both you and your spouse(who also gets an exclusion) from US income taxes on the salary you earn abroad from your business operated abroad if you qualify under the physical presence test or the bonafide residence test.You get to deduct part of your  foreign housing costs (the foreign housing exclusion or housing deduction) abroad including rents paid, utilities, and maintenance on your personal residence.

You can claim credits against your US tax for all or part of the foreign income taxes you might have to pay on your income.Your can eliminate your US social security or self employment tax burden.With the proper structure you can still maintain a US business address and keep your US phones.You can set up US pension plans for shelter any earnings in excess of your foreign earned income exclusion.

You can use a foreign corporation to shelter your business income from US tax until the funds are paid out to you as a salary or as dividends.You can stop paying expensive taxes to a US state in most situations.Deduct on your tax return the expenses of moving yourself and your business abroad.We can help you avoid tax and compliance mistakes which can cost you tens of thousands of dollars in penalties and interest.If you plan to move your business abroad, or are thinking about it, contact us for help structuring the move for the best US tax  and legal advantages.  

We can help you determine the best US and foreign entities to use and structure the business for the ultimate US tax advantages. We can work with a CPA or Attorney in the country you wish to locate to help you also achieve the optimum results in your new country of residence.

With the proper planning you can achieve in most situations significant tax savings relocating your business and your family.  Please email or call us secure our expert assistance. We have been helping expats with their foreign businesses and relocation for over 35 years. Email: ddnelson@gmail.com. web: www.taxmeless.com

Red Flags That Trigger IRS Audits

Read below from MSN MONEY:

http://www.msn.com/en-us/money/taxes/top-15-red-flags-triggering-an-irs-tax-audit/ar-BBq2UAJ?li=BBnb7Kz#page=1

US Expatriate Tax Rules Every Expat Living Abroad Needs to Know

By. Don D. Nelson, International Tax Attorney

• Though most foreign assets are reportable on various specialized forms filed with your US tax return (5471, 8865, 114,.8938, etc) If you own foreign real estate and title is in your own name (or a Fideicomiso in Mexico) and do not rent out the property, there is no reporting required on your US tax return or for that matter any other reporting due the US Government.

• Foreign mutual funds (and most foreign money market funds) require filing of another special form with your tax return (Form 8621). If you do not file this form and make elections to report the income each year, you are penalized with higher taxes and interest when you finally sell your foreign mutual fund. These rules were put in many years when Congress was convinced by US Mutual Fund companies that there business would be hurt unless investment in foreign mutual funds was made unfavorable for tax purposes.

• The 2015 the $100,800 US foreign earned income exclusion applies to earned income (wages or self employment) income earned abroad if you meed the physical presence test or bonafide resident test. You can see if you qualify in IRS Publication 54. It is not automatic and can only be claimed on your US tax return. The IRS can deny this exclusion if you file your return more than 18 months late. This exclusion does not apply to rental income, dividends, interest or capital gains or any income other than earned income. You file Form 2555 to get this exclusion.

• You must report your rental net income in from your Mexican real estate on your US return and you may also owe taxes on it in the country in which it is located  even if you are not a resident. The Mexican income tax can be claimed as a credit directly offsetting any US income tax you owe on the rental income.  (Form 1116)

• If you own 10% or more of a foreign corporation you may have to file form 5471 with your US tax return if required by the rules governing that form. Failure to file that form in a timely manner may result in the IRS assessing a $10,000 US penalty for failure to file even if you owe no taxes. (Form 5471)

• The US has a tax treaty with approximately 66 countries. It also has in the past year entered into an OECD agreements with over 36 countries who have agreed to exchange income tax information with the other. At some point in the future what you do offshore  will not stay in offshore and visa versa due to these new OCED agreements. Claim treaty benefits on form 8833.

• If as a US Citizen you have lived and worked in abroad for a while and not filed your US tax return, the IRS currently has a “streamlined program” that may allow you to catch up by filing only the past 3 years US tax returns and past six year FBAR (foreign bank account reports). They will not penalize you under that program for failing to file FBAR forms or other foreign reporting forms. They have stated they may discontinue this program at any time. Now is the time to surface with the IRS and avoid potentially huge penalties.Go to this link to read more about the "Streamlined Program." https://www.irs.gov/Individuals/International-Taxpayers/Streamlined-Filing-Compliance-Procedures

• FBAR (foreign bank account reporting forms) must be filed each year with US Treasury if at any time during the calendar year your combined highest balances in your foreign financial accounts exceeds $10,000 US. This form must be filed on line. Foreign accounts include foreign pension plans, cash surrender value in foreign insurance, foreign brokers accounts, and even gold if held for you in a foreign country a custodian. Failure to file thisl form or filing it late can result in penalties of $10,000 US or more.  File your form 114 at :  
                                                       http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

Don D. Nelson is a US tax attorney who has been assisting Americans everywhere in the World for over 25 years with their US tax returns and tax planning. Because he is an attorney at law, you get the abolute confidentiality of "attorney-client privilege."  when you talk with him. He is also a partner in Kauffman Nelson LLP, Certified Public Accountants. His website is located at www.TaxMeLess.com. His tax blog has the lastest tax developments of interest to those abroad at www.usexpatrate.blogspot.com.His email address is ddnelson@gmail.com. He can be reached at his US phone number 949-480-1235. 

US Expatriate Tax Return IRS Statute of Limitations on IRS Action Against Taxpayers

IRS Statute of Limitations for US expatriates living abroad.

1. Fail to file a return for any tax year that one is due on your worldwide income?  The statute of limitations nevers runs out to assess taxes for that year.  The IRS can come after you 10 years from now and assess taxes if you never filed the required return or forms.

2. Fail to pay taxes on past filed returns or assessed by the IRS?  The normal statute of limitations is 10 years from the date of assessment and filing a tax lien (that may be a later date from the date you filed the return) to collect tax. However, if you leave the country or the tax is assessed while you are outside the USA, that statue of limitations is put on hold until you return to the USA when it starts to run again. WHEN YOU OWE TAXES AND ARE OUTSIDE THE USA THE STATUTE OF LIMITATIONS TO COLLECT THOSE TAXES NEVER RUNS OUT.

3. Failed to file Foreign Bank Account Reporting Forms (FBAR or now form 114)?  The statute of limitations to assess penalties for failing to file is 6 years from the due date of each years forms.

4. 3 years from date return is filed is normal statute of limitations for assessing additional taxes on your filed return. 6 years from date return filed your return if you omitted 25 percent or more of gross income.

5. The statute never runs out if you fail to file forms 5471, 8938 8865, or 3520 --3520A. The penalties for not including these forms with your return can be $10,000 or more.

6. Criminal Tax Evasion - the statute for possible criminal prosecution is most often 6 years, but there are exceptions.

7. The statute of limitations for IRS action for civil fraud (this means assessment of  the 75% civil fraud  monetary penalty against a taxpayer) is indefinite and never runs out.  Therefore if you cheat on your tax return you are never safe.

8. If you owe $50,000 or more the IRS can have your passport taken away when you enter the US.

As a Tax Attorney, you can talk with us without fear of anything you say being used against you due to the rule of  "attorney - client privilege."

Read more at www.taxmeless.com. or email us with questions at ddnelson@gmail.com.