US Expatriate Tax Return Due Date Deadlines

Several tax return deadlines are coming up very soon. Failure to meet these deadlines or file extensions can result in substantial penalties and other problems.

• June 15, 2016: US Expat Tax Tax Return Deadline (without  applying for an extension)

This is the US expat deadline and also the deadline to file an additional extension until October 15. Remember that if you are required to file FATCA Form 8938 (to report your foreign assets), it must be filed along with your US expat tax return. If you file for an extension, the extension applies to Forms 5471, 8865, and  8938, as well.

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• June 30, 2016: Foreign Bank Account Report (FBAR) Filing Deadline

Form FinCEN 114 must be filed online using the BSA e-filing system. It is filed on line only and can easily be done by you if you are good with computers. No further extensions can be granted. Failure to timely file can result in a $10,000 penalty..

• October 17, 2016: Final US Expat Tax Deadline

If you filed an extension prior to June 15th using form 4868 and marking the expat box  this is your final deadline. Normally the deadline is October 15th, but due to it falling on a Saturday the tax deadline is extended.  You can get a further extension if necessary by following the required procedure and sending a letter to the IRS which can give you until December 15, 2016 to file your return. This additional extension is discretionary with the IRS.

If you need help email us at ddnelson@gmail.com or for additional information visit our website at www.taxmeless.com 

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WHEN THE IRS CALLS, DON'T BE FOOLED... IT MOST LIKELY IS SOMEONE ELSE

The Internal Revenue Service has some advice for taxpayers this April Fool’s Day that  may prevent them from being the victim of a tax scam: Don’t be fooled by scammers. Stay safe and be informed. Here are some of the most recent IRS-related scams to be on the lookout for:

Telephone Scams. Aggressive and threatening phone calls by criminals impersonating IRS agents remain an ongoing threat. The IRS has seen a surge of these phone scams in recent years as scam artists threaten taxpayers with police arrest, deportation, license revocation and more. These con artists often demand payment of back taxes on a prepaid debit card or by immediate wire transfer. Be alert to con artists impersonating IRS agents and demanding payment.

Note that the IRS will never:

• Call to demand immediate payment over the phone or call about taxes owed without first having mailed you a bill.
• Threaten to immediately bring in local police or other law enforcement groups to have you arrested for not paying.
• Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
• Require you to use a specific payment method for your taxes, such as a prepaid debit card.
• Ask for credit or debit card numbers over the phone or threaten to bring in local police or other law enforcement groups to have you arrested for not paying.

Scammers Change Tactics. The IRS is receiving new reports of scammers calling under the guise of verifying tax return information over the phone. The latest variation on this scam uses the current tax filing season as a hook. Scam artists call saying they are from the IRS and have received your tax return, and they just need to verify a few details to process it. The scam tries to get you to give up personal information such as a Social Security number or personal financial information, such as bank numbers or credit cards.

Tax Refund Scam Artists Posing as TAP. In this new email scam targeting taxpayers, people are receiving emails that appear to come from the Taxpayer Advocacy Panel, a volunteer board that advises the IRS on issues affecting taxpayers. They try to trick you into providing personal and financial information. Do not respond or click the links in these emails. If you receive an email that appears to be from TAP regarding your personal tax information, forward it to phishing@irs.gov.

Email, Phishing and Malware Schemes. The IRS has seen an approximate 400 percent surge inphishing and malware incidents so far in the 2016 tax season.

The emails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask taxpayers about a wide range of topics. Emails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.

Variations of these scams can be seen via text messages, and the communications are being reported in every section of the country.

When people click on these email links, they are taken to sites designed to imitate an official-looking website, such as IRS.gov. The sites ask for Social Security numbers and other personal information, which could be used to help file false tax returns. The sites also may carry malware, which can infect your computer and allow criminals to access your files or track your keystrokes to gain information.

If you get a ‘phishing’ email, the IRS offers this advice:

• Don’t reply to the message.
• Don’t give out your personal or financial information.
• Forward the email to phishing@irs.gov. Then delete it.
• Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.

More information on how to report phishing or phone scams is available on IRS.gov.

Additional IRS Resources:

• IRS Releases the “Dirty Dozen” Tax Scams for 2016

IRS YouTube Video:

• Tax Scams - English | Spanish | ASL

Podcasts:

• Tax Scams -  English | Spanish

US EXPATRIATES - HOW DO YOU KNOW WHEN YOUR ARE COMMITTING TAX FRAUD SUBJECT TO CIVIL AND CRIMINAL PENALTIES?

The Courts have developed a nonexclusive list.of factors, or "badges of fraud," that demonstrate fraudulent intent with respect to US income taxes (or the failure to pay those taxes).  If your situation involves some of the following you are at risk. The civil and criminal penalties can be extreme

• Understating income,
• Maintaining inadequate records,
• Implausible or inconsistent explanations of behavior,
• Concealment of income or assets,
• Failing to cooperate with tax authorities,
• Engaging in illegal activities,
• Lack of credibility of the taxpayer's testimony,
• Filing false documents,
• Failing to file tax returns,
• Failing to make estimated payments, and
• Dealing in cash.

A taxpayer's background, level of education, and relative business sophistication are also rely evant considerations as they inform the court about the taxpayer's ability to understand the transactions and issues at hand. 

If you wish to discuss your situation and find ways out of potential expensive and criminal situations we can help. As an attorney our consultations provide the complete confidentiality and privacy of "attorney client privilege."  Email

 for phone phone consultation with Don D. Nelson, who is a an admitted attorney in US Tax Court at ddnelson@gmail.com. 

US Expatriates Who Are Self Employed May Save Taxes With The Home Office Deduction

As an expatriate ifyou use part of your home for business, you may be able to deduct expenses for the business use of your home. The home office deduction is available for homeowners and renters, and applies to all types of homes.
Simplified Option
For taxable years starting on, or after, January 1, 2013 (filed beginning in 2014), you now have a simpler option for computing the business use of your home (IRS Revenue Procedure 2013-13, January 15, 2013). The standard method has some calculation, allocation, and substantiation requirements that are complex and burdensome for small business owners. This new simplified option can significantly reduce recordkeeping burden by allowing a qualified taxpayer to multiply a prescribed rate by the allowable square footage of the office in lieu of determining actual expenses.
Regular Method
Taxpayers using the regular method (required for tax years 2012 and prior), instead of the optional method, must determine the actual expenses of their home office. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Generally, when using the regular method, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.
Requirements to Claim the Deduction
Regardless of the method chosen, there are two basic requirements for your home to qualify as a deduction:
1. Regular and Exclusive Use.
You must regularly use part of your home exclusively for conducting business. For example, if you use an extra room to run your business, you can take a home office deduction for that extra room.
2. Principal Place of Your Business.
You must show that you use your home as your principal place of business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction. For example, if you have in-person meetings with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business. You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business. The structure does not have to be your principal place of business or the only place where you meet patients, clients, or customers.
Generally, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.
Additional tests for employee use. If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. You must meet the tests discussed above plus:
Your business use must be for the convenience of your employer, and
You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.
If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home.

9 Tax Return Items That Will Cause An IRS Audit

MONEY Magzine has a very good article if you want to avoid an IRS audit which is expensive, times consuming and very stressful.  If you get an audit notice make certain to get a tax professional to represent you.  Why?  Because if the IRS agents asks you a question when you represent yourself you may more may not answer it to your benefit.  If you have a representative, the Agent must ask your representative and the your CPA or attorney can always stall and tell the agent they must ask their client. That gives everyone time to craft the best answer and make sure the wrong answer is not given to the agent.   READ MORE HERE

IRS URGES AMERICANS TO COME CLEAN FAST BEFORE THEY GO THRU PANAMA PAPERS

The IRS also encouraged any U.S. citizens and companies that may have money in offshore accounts to contact the agency now before any possible illegal activity on their part is identified. According to media reports, the documents contain information on potentially thousands of U.S. citizens and firms that have at least an indirect connection to offshore accounts affiliated with Mossack Fonseca. Many other firms provide similar services, and the Treasury Department estimated last yearthat more than $300 billion dollars of illicit proceeds are generated in the United States annually, with criminals using such companies here and abroad to launder funds.

What Foreign Taxes Qualify for the Foreign Tax Credit.... and other rules on foreign tax credits

Generally, the following four tests must be met for any foreign tax to qualify for the credit:

1. The tax must be imposed on you
2. You must have paid or accrued the tax
3. The tax must be the legal and actual foreign tax liability
4. The tax must be an income tax (or a tax in lieu of an income tax)

Tax Must Be Imposed on You

You can claim a credit only for foreign taxes that are imposed on you by a foreign country or U.S. possession. For example, a tax that is deducted from your wages is considered to be imposed on you.

Foreign Country

A foreign country includes any foreign state and its political subdivisions. Income, war profits, and excess profits taxes paid or accrued to a foreign city or province qualify for the foreign tax credit.

U.S. Possessions

For foreign tax credit purposes, all qualified taxes paid to U.S. possessions are considered foreign taxes.  For this purpose, U.S. possessions include Puerto Rico and American Samoa.

Tax Must Be Paid Or Accrued

You can claim a credit only if you paid or accrued the foreign tax to a foreign country or U.S. possession.

READ MORE OF THE RULES HERE

3% Tax Imposed on Expat Rentals in Abu-Dhabi

READ MORE.   http://www.gulfbusiness.com/articles/country/united-arab-emirates/abu-dhabi-introduces-3-tax-on-expat-property-rentals/

Link To Pay IRS Taxes On Line

https://www.irs.gov/Payments

US Expats Can Avoid Paying US Taxes

Read More in The Street  http://www.thestreet.com/story/13519656/1/expats-may-be-able-to-avoid-paying-u-s-income-taxes-say-experts.html