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US IRS rules, regulations and laws, for US Citizens, Americans, green card holders, and nonresidents living abroad or moving to the US or out of the US.... valuable information on IRS rules concerning U.S. expatriates and their tax returns, and tax planning.... by an experienced International Tax Attorney
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April 10, 2016
April 6, 2016
April 1, 2016
US Expats - Filing Too Late Can Cause you to Lose the Foreign Earned Income Exclusion
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
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.
March 30, 2016
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.
March 28, 2016
Reporting Foreign Income: Six Tax Tips from www.taxmeless.com
March 6, 2016
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
March 5, 2016
March 3, 2016
US Expatriate Tax Rules Every Expat Living Abroad Needs to Know
- 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.
February 27, 2016
US Expatriate Tax Return IRS Statute of Limitations on IRS Action Against Taxpayers
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.
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."
February 22, 2016
IRS ONLY ANSWERS 38% OF PHONE CALLS
What to do? Go to www.taxmeless.com for www.expatattorneycpa.com to find lots of answers. If you need specific help with your situation email us at ddnelson@gmail.com and a mini consultation can be set up by phone, skype or ? to answer your questions and help you plot the best course of action.
February 19, 2016
February 14, 2016
10 Countries With No Income Tax on Individuals - And More With Low Rates
Read more here and plan your offshore tax future. We can help coordinate these tax savings with your US tax filing obligation. Www.taxmeless.com
February 13, 2016
Watch Out for IRS Scams and alleged IRS Con Men - Emails and Telephone Calls
- Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
- Demand tax payment and not allow you to question or appeal the amount you owe.
- Require that you pay your taxes a certain way. For example, demand that you pay with a prepaid debit card.
- Ask for your credit or debit card numbers over the phone.
- Threaten to bring in local police or other agencies to arrest you without paying.
- Threaten you with a lawsuit.
- Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
- You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add "IRS Telephone Scam" to the comments of your report.
- Ask for a call back number and an employee badge number.
- Call the IRS at 800-829-1040. IRS employees can help you.
- 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.
- Tax Scams – English | Spanish | ASL
- Phishing-Malware – English | Spanish | ASL
- IRS Efforts On Identity Theft – English | Spanish | ASL
- IRS ID Theft FAQ – Going After the Bad Guys – English | Spanish |ASL
February 9, 2016
Foreign Earned Income Exclusion (form 2555) for Pilots, Airline Crews and Sailors
Time spend working on planes or ships while traveling across international waters does not count as working in a foreign country. Therefore the money earned while in International Waters is fully taxable the same as if you were living in the USA. None of it is excludable.
If you are audited by the IRS they will want to see logs, and other proof showing how many hours were earned while over international waters and use those figures to pro-rate any exclusion you may be claiming between work in foreign countries and work over the ocean. If you are not keeping such records you should since you as the taxpayer have the burden of proof.
Also, it would only be possible if you are a full time pilot or seaman to claim the exclusion for part of your income if you use the bonafide residence test on form 2555. Need help with an audit or determining the rules that apply to your situation. Email us at ddnelson@gmail.com and visit our website at www.TaxMeLess.com for more information.
February 6, 2016
IRS Filing and Payment Dates for Expatriates
Filing Deadlines
Default rule: April 15. If your “tax home” or “abode” is in the United States your filing deadline is April 15. This is the default rule.Automatic extension: June 15. If your “tax home” or “abode” is outside the United States, your deadline for filing your income tax return is June 15. This is automatic and you do not need to file anything to get it.Normal extension: Use Form 4868 (whether you qualify for the June 15 deadline or not) to make extend the filing deadline to October 15.Extra extension: Another extension is possible for some people — to December 15.Foreign Earned Income Exclusion. For people who need time in order to qualify for the foreign earned income exclusion, Form 2350 allows you to select your own filing deadline to achieve that goal.
Payment Deadlines
Default rule: The tax due on your tax return is payable on or before April 15.Some people: If you qualify for the June 15 extended deadline to file your tax return, you can pay your tax — without late payment penalties — on or before June 15. However, you will owe interest on the tax due, from April 15 until the day you pay the tax. No further extension of the payment due date is possible.
Filing Deadlines
The filing deadline rules are not too difficult to understand — after you ignore the confusing instructions for Form 4868.
Standard Rule: April 15
The standard rule is that you must file your income tax return on or before April 15. IRC § 6072(a).
February 5, 2016
IRS STREAMLINED COMPLIANCE PROCEDURES FORM 14653 NOW REQUESTS MORE INFORMATION THAN OLD FORM.
1. Provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Include the whole story including favorable and unfavorable facts.
2 Specific reasons, whether favorable or unfavorable to you, should include your personal background, financial background, and anything else you believe is relevant to your failure to report all income, pay all tax, and submit all required information returns, including FBARs.
4 If married taxpayers submitting a joint certification have different reasons, provide the individual reasons for each spouse separately in the statement of facts.
If you need help catching up with past unfiled foreign asset reporting forms you may be qualified for the streamlined program. We can help you come into compliance and reduce or eliminate some very heavy monetary penalties. Email us at ddnelson@gmail.com or go to www.taxmeless.com
February 4, 2016
Dept of Justice to Go After Fbar Criminals
There will be no letup in the federal government's ongoing campaign targeting U.S. taxpayers who hide foreign accounts and attempt to evade U.S. tax obligations, a key Justice Department (DOJ) official said on Jan. 29. In 2016, tax professionals will see "additional civil enforcement actions and ongoing and new criminal investigations and prosecutions," Caroline Ciraolo, acting assistant attorney general for DOJ's Tax Division, told participants at the American Bar Association's Tax Section midyear meeting. According to Ciraolo, taxpayers who have participated in IRS voluntary disclosure programs may be contacted and interviewed by the agency and DOJ as part of their ongoing cooperation. "Taxpayers who filed returns and FBARs [Report of Foreign Bank and Financial Accounts] pursuant to the streamlined filing procedures or the Delinquent International Information Return or FBAR submission procedures should be very concerned if they falsely claimed to have engaged in non-willful conduct or acted with reasonable cause," Ciraolo said. In addition, "financial institutions and individuals who have facilitated the concealment of offshore accounts and the evasion of U.S. tax obligations would be well advised to anticipate an investigation and consider voluntarily disclosing any criminal activity to the department before they become the subject of an investigation," she said. Ciraolo noted that over the past year, her division has bolstered its staffing with the addition of 80 attorneys who are receiving the appropriate training. Ciraolo's complete prepared remarks can be viewed atjustice.gov/opa/speech/acting-assistant-attorney-general-caroline-d-ciraolo-delivers-remarks-american-bar
January 28, 2016
January 24, 2016
5 Essential US Expatriate Estate Planning Steps
2. Also, if you give gifts of either foreign property or assets located in the US in excess of $14,000 per year per donee you must file a US gift tax return, though it is likely you may not owe any US gift taxes due to the lifetime exclusion mentioned above for estate and gift taxes.
3. In the US you may need a will, power of attorney and a trust to properly dispose of your assets locate there and void expensive and long probates. The trust in large estates may also reduce you estate taxes.
4. If you wish your children to live in the US, your US will can be used to appoint guardians for your children (while they are still minors) and guardians for their assets (this can also be done in the trust you establish).
5. Where your US estate plan documents will effectively pass on your assets located in other countries if subject to each countries laws and a local attorney in each country should be consulted to confirm whether the US documents will be honored or separate wills, etc. must be executed for each country to meet local requirements.
We can help you put together your US estate plan, and often prepare all necessary documents and assist you with coordinating your plan with counsel in your country of residence. If you require assistance please email me at ddnelson@gmail.com