Great Presentation on US Expatriate Taxes Presented by Don D. Nelson, Attorney, CPA

LINK TO POWER POINT SLIDES ON FBAR FILING AND EXPATRIATE TAX POWERPOINT PRESENTATION http://www.slideshare.net/dondnelson/intercam-presentation-pv-214-9

OPTIONS AVAILABLE TO OFFSHORE US TAXPAYERS FROM IRS

The IRS has prepared several documents that help explain those requirements, including FS-2011-13 and the U.S. Citizens and Resident Aliens Abroad page on IRS.gov. Situations of taxpayers with offshore compliance issues vary widely given the complexity of this area of tax law.  Taxpayers that recently learned of these tax requirements have many options are available outside of the normal filing process to help them get current with their tax obligations.  A number of the common situations and potential solutions are outlined below.

The IRS recommends taxpayers to consult with their professional tax advisor in determining which option is the most appropriate given their facts and circumstance.  We at www.TaxMeLess.com have helped over a hundred clients catch up with the IRS.  If you need to talk about this email us at ddnelson@gmail.com .  We are both attorneys and CPAs. As attorneys we can offer you  complete attorney client privilege (and all of its confidentiality and privacy) on all information we discuss. Regular accountants cannot provide you with that privilege and the IRS can force them to reveal information.

Situation	Compliance Option
Taxpayers who have properly reported all taxable income but recently learned that he/she should have been filing FBARs in prior years to report a personal foreign bank account or to report signature authority over bank accounts owned by an employer.	Taxpayers who reported, and paid tax on, all their taxable income for prior years but did not file FBARs, should file the delinquent FBAR reports according to the instructions (send to Department of Treasury, Post Office Box 32621, Detroit, MI 48232-0621) and attach a statement explaining why the reports are filed late. The IRS will not impose a penalty for the failure to file the delinquent FBARs if there are no underreported tax liabilities and you have not previously been contacted regarding an income tax examination or a request for delinquent returns.
Taxpayers who only have certain delinquent information returns, but no tax due.	A taxpayer who has failed to file tax information returns, such as Form 5471 for controlled foreign corporations (CFCs) or Form 3520 for foreign trusts but who has reported, and paid tax on, all their taxable income with respect to all transactions related to the CFCs or foreign trusts, should file delinquent information returns with the appropriate service center according to the instructions for the form and attach a statement explaining why the information returns are filed late. (The Form 5471 should be submitted with an amended return showing no change to income or tax liability.) The IRS will not impose a penalty for the failure to file the delinquent Forms 5471 and 3250 if there are no underreported tax liabilities and you have not previously been contacted regarding an income tax examination or a request for delinquent returns.
Non-resident U.S. taxpayers with delinquent returns with low risk factors (including tax owed less than $1,500/year).	Filing Compliance Procedures for Non-Resident U.S. TaxpayersNon-resident U.S. taxpayers should file delinquent tax returns, including delinquent information returns, for the past three years; delinquent FBARs for the past six years; and additional required information regarding compliance risk.  Payment of any federal tax and interest due must accompany the submission.
Taxpayers with undisclosed foreign accounts and unreported income.  Taxpayers seeking protection from criminal prosecution.	Offshore Voluntary Disclosure ProgramThe Offshore Voluntary Disclosure Program (OVDP) offers a civil settlement structure in which taxpayers pay an offshore penalty in lieu of a number of other penalties that may be assessed in cases of offshore noncompliance.  The OVDP also offers protection from criminal prosecution.  In order to participate in the OVDP, taxpayers must first request acceptance into the program.  Once they have been preliminarily accepted, taxpayers must submit certain information including eight years of amended tax returns, FBARs, and information returns as well as information about their offshore accounts.  In addition, taxpayers must submit full payment of the tax and interest due, and certain penalty amounts.  Taxpayers who have entered OVDP who disagree with the application of the offshore penalty given the facts and circumstances of their case may elect to opt out of the civil settlement structure of the program.  In such situations, the IRS will determine if penalty mitigation is appropriate.

Additional Information

• New Filing Compliance Procedures for Non-Resident U.S. Taxpayers
• 2012 Offshore Voluntary Disclosure Program

-Interests

Heirs Can Be Left With Unpaid Tax Bills to IRS

If you inherit property from someone who owes taxes, you may be liable. Read more in the Forbes Article HERE  The problems are increased when the deceased benefactor has undisclose offshore accounts, etc.  Do your estate planning now, surface with the IRS and avoid this problem.  Email us at ddnelson@gmail.com

Most Expata and Nonresidents May Be Exempt from US Health Care Tax or Required Insurance Coverage

Many  US taxpayers are exempt from Obama Care  (ACA) for 2014.   One exemption is expats who live and work abroad. See below:

Citizens living abroad and certain noncitizens - You are:

• A U.S. citizen or resident who spent at least 330 full days outside of the U.S. during a 12-month period;
• A U.S. citizen who was a bona fide resident of a foreign country or U.S. territory;
• A resident alien who was a citizen of a foreign country with which the U.S. has an income tax treaty with a nondiscrimination clause, and you were a bona fide resident of a foreign country for the tax year; or
• Not a U.S. citizen, not a U.S. national, and not an alien lawfully present in the U.S.

To read about the other exemptions  from the US ACA health care law, and tax read the following link  http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions

We are ready to help you with these complex rules. www.TaxMeLess.com   We offer a mini consultation to give you answers to all of your expat and international tax questions. We also offer a service to review self prepared expat returns or foreign tax forms which is much less costly than having us prepare the returns.  Email. ddnelson@gmail.com 

US Expatriates - Every Resource You Need to Know about filing Taxes When Living Abroad

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.

When to File

If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return without requesting an extension. For a calendar year return, the automatic 2-month extension is to June 15.  Note that you must pay any tax due by April 15 or interest will be charged starting from April 15.

Where to File

If you are a U.S. citizen or resident alien (including a green card holder) and you live in a foreign country, mail your U.S. tax return to:

Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
USA

Filing Requirements  U.S. Citizens and Resident Aliens Abroad - General InforWmation U.S. Citizens and Resident Aliens Abroad -- Filing Requirements U.S. Citizens and Resident Aliens Abroad -- Extensions of Time to File e-file Filing Prior Year Tax Returns Tax Information for Members of U.S. Armed Forces Tax Information for U.S. Government Civilian Employees Stationed Abroad Taxpayer Identification Number Requirement		U.S. Residency Status Election to Treat Nonresident Spouse as a Resident and File Joint Return Individuals Living or Working in U.S. Possessions U.S. Citizens and Resident Aliens Abroad -- Head of Household
Income Allowances, Differentials, and Other Special Pay Fulbright Grants Hong Kong Scheme 6000 Payments: FAQs Income from Abroad is Taxable U.S. Foreign Service Employees Yearly Average Currency Exchange Rates		Deductions Foreign Earned Income Exclusion Foreign Housing Exclusion Individual Retirement Arrangements and the Foreign Earned Income Exclusion/Deduction Moving Expenses to and from the United States
Credits Foreign Tax Credit Earned Income Tax Credit Rules Education Credits Child and Dependent Care Credit		Other Taxes Expatriation Tax Certification of U.S. Residency for Tax Treaty Purposes Persons Employed Abroad by a U.S. Person Persons Employed by a Foreign Employer Persons Employed by a Foreign Person Persons Employed by a Foreign Government or International Organization Social Security Tax Consequences of Working Abroad Social Security Agreements with Foreign Countries (Totalization Agreements) U.S. Citizens and Resident Aliens Employed Abroad -- Employees Wages Paid to U.S. Citizens and Resident Aliens Employed Abroad
Forms Certain Taxpayers Related to Foreign Corporations Must File Form 5471 Publication 54, Tax Guide for U.S. Citizens and Residents Abroad Publication 519, U.S. Tax Guide for Aliens  When you need more help go to our website at www.TaxMeLess or www.expatattorneycpa.com  We offer a service to review your self prepared return or one prepared by another for correct application of the complex expat and international tax laws. Email ddnelson@gmail.com for more		Resources/Help Frequently Asked Questions (FAQs) About International Individual Tax Matters New Developments in International Taxation

US Tax Reporting of Foreign Pension Plans by Expats

Foreign pension plans in almost every situation are not treated the same as US pension plans.  Often the employers contribution and earnings in the account are immediately taxable on your US tax return even though tax deferred in the foreign country of origin.  There are some beneficial exceptions to these rules in the US tax treaties with Canada and the UK.. In most situations you may also have to report the amounts in your foreign pension plan on Form 114 (foreign financial account report) which is filed separately from your US tax return and is due on 6/30 following the end of each calendar year.  READ MORE HERE

TaxPayer Advocate Slams the IRS Offshore Programs as Unfair

The IRS Offshore Voluntary Disclosure Program has unfairly penalized many ordinary citizens and often failed to catch the real offshore cheaters.  It is unfair to most expats and those who are ignorant of the IRS rules ..... primarily due to the IRS's failure to property publish those rules and keep the public informed.  Read more in the Forbes article below;

http://www.forbes.com/sites/robertwood/2015/01/14/national-taxpayer-advocate-slams-irs-offshore-programs-fbar-penalties-demands-change/

When a US Expat is Married to a Nonresident Spouse - Many Planning Opportunities May be Available

If you are married to a nonresident spouse who lives outside of the US, there are potential tax problems, but also many possible planning opportunities that should not be ignored.  You do not have to file a US tax return with your nonresident spouse or report their income. You do not have to report their foreign assets.  Your nonresident spouse can give you unlimited gifts so long as you file the proper form with the IRS to report those gifts (which will avoid any potential penalties). There are more strategies available.  Email us at ddnelson@gmail.com or visit our website at www.TaxMeLess.com 

Read more in the Wall Stree Journal Article Below:

http://blogs.wsj.com/expat/2015/01/12/ask-an-expert-tax-tips-for-u-s-expats-with-non-resident-alien-spouses/

Citizen Renunciation Fee to US Government Up 422%

Read More in Forbe Magazine: http://www.forbes.com/sites/robertwood/2015/01/13/citizenship-renunciation-fee-up-422-with-no-return-just-ask-bitcoin-jesus/

Let us know if you need help with your renunciation of US Citizenship or Long Term Green Card Holder Surrender (8 years). We can help you comply with the Tax Laws and help you plan to avoid the possible tax on appreciated property.  ddnelson@gmail.com 

Don't Expect IRS Help in 2015

With a 17% reduction in budget and 12,000 reduction in employees the IRS will not be there to help. We will be. Go to:  www.Taxmeless.com or email ustax@hotmail.com.com

Read more in time magazine: http://time.com/money/3667380/irs-tax-questions-olson-report/

China Taxes World Wide Income The Same as US .. IRS

Read more in Forbes Article.  China Plans to start enforcing law in 2015.

http://www.forbes.com/sites/taxanalysts/2015/01/13/chinas-fiscal-roadmap-tax-like-america/

The Best Places to Retire 2015

The Best Places to Retire 2015

The Best Places to Retire 2015

The Best Places to Retire 2015

College Savings Plans for Expats & Chidren - IRC 529 Plan

Great tax saving and planning Tool. Read More

http://blogs.wsj.com/expat/2015/01/05/ask-an-expert-tips-for-u-s-expats-using-529-college-savings-plans/

Affordable Health Care Law for Expatriates for 2014 (Obama care rules)

How does the Affordable Care Act affect U.S. citizens living abroad?

U.S. citizens living abroad are subject to the individual shared responsibility provision. However, U.S. citizens who are not physically present in the United States for at least 330 full days within a 12-month period are treated as having minimum essential coverage for that 12-month period regardless of whether they enroll in any health care coverage.

In addition, U.S. citizens who are bona fide residents of a foreign country (or countries) for an entire taxable year are treated as having minimum essential coverage for that year. In general, these individuals qualify for the foreign earned income exclusion under section 911.
Individuals may qualify for this rule even if they cannot use the section 911 exclusion for all of their foreign earned income because, for example, they are employees of the United States. Individuals that qualify for this rule need take no further action to comply with the individual shared responsibility provision during the months when they qualify.

They will report their status with their federal income tax return on Form 8965.

See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for further information on the foreign earned income exclusion.

U.S. citizens who do not meet the physical presence or residency requirements must have minimum essential coverage, qualify for a coverage exemption, or make an individual shared responsibility payment when they file their federal income tax returns. Note that minimum essential coverage includes a group health plan provided by an overseas employer. 

Download IRS Publication containing all rules by clicking HERE

2015Year End Tax Strategies

From USA TODAY 11 year-end tax strategies to use before Dec. 31st  http://usat.ly/1DHRTym

7 Big Tax Changes in 2015!

From USA TODAY 7 Big Tax Changes in 2015 http://usat.ly/16AaD4k Get USA TODAY on your mobile device: http://www.usatoday.com/mobile-apps

Our Holiday Tax Gift to You - 15 Surprising Deductions from Kiplinger

Click Here for 15 surprising Tax Deductions from Kiplinger. They run all the way from writing off your cat food to free beer for your customers. Be sure to click the arrows that say skip ad or your will never get to the  list of deductions.

Nonresident Aliens May Be Subject to US Estate Tax (and Must file an Estate Tax Return) on their Assets in the US

Deceased nonresidents who were not American citizens are subject to U.S. estate taxation with respect to their U.S.-situated assets. 

U.S.-situated assets include American real estate, tangible personal property, and securities of U.S. companies. A nonresident’s stock holdings in American companies are subject to estate taxation even though the nonresident held the certificates abroad or registered the certificates in the name of a nominee.

Exceptions: Assets that are exempt from U.S. estate tax include securities that generate portfolio interest, bank accounts not used in connection with a trade or business in the U.S., and insurance proceeds.

Estate tax treaties between the U.S. and other countries often provide more favorable tax treatment to nonresidents by limiting the type of asset considered situated in the U.S. and subject to U.S. estate taxation. Executors for nonresident estates should consult such treaties where applicable.

Executors for nonresidents must file an estate tax return, Form 706NA, United States Estate (and Generation-Skipping) Tax Return, Estate of a nonresident not a citizen of the United States, if the fair market value at death of the decedent's U.S.-situated assets exceeds $60,000. However, if the decedent made substantial lifetime gifts of U.S. property, and used the applicable $13,000 “unified credit exemption” amount to eliminate or reduce any gift tax on the lifetime gifts, a U.S. estate tax return may still be required even if the value of the decedent’s U.S. situated assets is less than $60,000 at the date of death (due to the decrease in the “unified credit exemption” for the lifetime gifts). See Unified Credit (Applicable Credit Amount) Section in Publication 559, Survivors, Executors, and Administrators, and the Form 706NA Instructions for more information.

American citizens are subject to U.S. estate taxation with respect to their worldwide assets. An estate tax return, Form 706, United States Estate (and Generation-Skipping) Tax Return, Estate of a citizen or resident of the United States, is required for a deceased American citizen, if the fair market value at death of the decedent's worldwide assets exceeds the "unified credit exemption" amount in effect on the date of death. However, if the U.S. citizen made substantial lifetime gifts, and used the applicable “unified credit exemption” amount to eliminate or reduce any gift tax on the lifetime gifts, a U.S. estate tax return may still be required even if the value of the decedent’s worldwide assets is less than the “unified credit exemption” amount at the date of death (due to the decrease in the “unified credit exemption” for the lifetime gifts). To determine the “unified credit exemption” amount for American citizens for any particular year, refer to the Instructions to Form 706 or to Publication 559, Survivors, Executors, and Administrators.

The Internal Revenue Service may collect any unpaid estate tax from any person receiving a distribution of the decedent’s property under transferee liability provisions of the tax code.

2015 New IRS Mileage Rates ..Based on old high Gas Prices

Read more here. http://www.forbes.com/sites/kellyphillipserb/2014/12/10/irs-announces-2015-standard-mileage-rates/

Let's hope gas prices remain down since mileage rates are based on previous high gas prices.