IRS and International Tax Agencies Fight Global Tax Evasion

Many countries are now banding together to locate and prosecute global tax evaders through J5 and the OCED to work together to mutual catch the evaders and report to countries who may be owed taxes by the evaders.  Therefore if you are paying taxes in the country you live in but not paying taxes in another country (such as the USA) where you should, you now run the risk of being turned in to the IRS.

READ MORE HERE

For 2019 You Will Not Have to report Vitural Currency held in an Offshore Account on Form 114 - This Rule May Change in the Future

For this year the FinCEN has stated: “Currently the FBAR (Form 114) regulations do not define virtual currency held in an offshore account as a type of reportable account. For this reason, at this time, virtual currency held in an offshore account is not reportable on the FBAR.” 

However for the future you need to follow this issue since the FINCEN position on virtual currency accounts is very likely to change at some point.

You can find FinCEN’s letter of January 22, 2020 in Appendix III of the Government Accountability Office report Virtual Currencies: Additional Information Reporting and Clarified Guidance Could Improve Tax Compliance .

We can help you with your Form 114 fiing, questions and other international and expat tax questions.  Email us at ddnelson@gmail.com and go to our website at www.taxmeless.com 

Your Heirs Will be Liable to FBAR Penalties if You Do Not Resolve filing FBARS and the penalties While you Are Alive

If you do not file your Form 114 (FBAR) reporting your foreign bank and financial accounts, you can be penalized severely and so can your heirs after your death.

Read case law below about the penalty for failure to file FBARS passing on to the taxpayer heirs:

In United States v. Schoenfeld (M.D. Fla. 3:16-cv-1248-J-34PDB), by order dated 9/25/18, here, the Court held (p. 37) that the "the Court finds that the Government's claim did not abate upon Steven Schoenfeld's death."  The reasoning for the holding is found at pp. 24-36.  The first 24 pages include a short one-page introduction and then 23 pages disposing of procedural issues arising from the death of the person putatively liable that the Government sued after he had died but without knowledge of his death.  

In this case the Court holds that  that the FBAR civil willful penalty survives death.  The Court does a good job of developing and resolving the issue. 

There are procedures available that may let you file Form 114 (FBAR form) while you are still alive and avoid or reduce penalties.  Don't leave this burden to your heirs. Email us for help at ddnelson@gmail.com  and read more on our website at www.taxmeless.com.  We are an expert on this issue.

Criminal Penalites Imposed for Faiing to FIle Tax Returns as an Expatriate or Taxpayer. - How to avoid this problem

A taxpayer that willfully attempts to evade paying income taxes is subject to criminal and civil penalties. The type of fraud will determine the applicable penalty. The following are some examples of possible punishments for specific types of tax fraud. Remember a delinquent taxpayer expat or nonresident, can never be certain if the IRS will not view their actions as beyond negligent but intentional fraud. Therefore, file your past due returns before the IRS finds you first.  Filing yourself before being caught is viewed as indicative of no criminal intent.

• Attempt to evade or defeat paying taxes: Upon conviction, the taxpayer is guilty of a felony and is subject to other penalties allowed by law, in addition to (1) imprisonment for no more than 5 years, (2) a fine of not more than $250,000 for individuals or $500,000 for corporations, or (3) both penalties, plus the cost of prosecution.

• Fraud and false statements: Upon conviction, the taxpayer is guilty of a felony and is subject to (1) imprisonment for no more than 3 years, (2) a fine of not more than $250,000 for individuals or $500,000 for corporations, or (3) both penalties, plus the cost of prosecution .

• Willful failure to file a return, supply information, or pay tax at the time or times required by law. This includes the failure to pay estimated tax or a final tax, and the failure to make a return, keep records, or supply information. Upon conviction, the taxpayer is guilty of a misdemeanor and is subject to other penalties allowed by law, in addition to (1) imprisonment for no more than 1 year, (2) a fine of not more than $100,000 for individuals or $200,000 for corporations, or (3) both penalties, plus the cost of prosecution .

     Information you give your CPA and tax preparers  is not privileged and cannot be protected from the IRS or other law enforcement agencies. When you use a Attorney you get the benefit of "attorney/client" privilege and information you give your attorney is protect from the IRS and law enforcement.  If you feel you might have criminal tax problems, best to talk first with an attorney.

Get Legal Help with Your Income Tax Problems avoid these criminal consequences.  We are CPAs and attorneys with over 35 years experience with US international, expatriate and nonresident taxation. We can solve your tax  problems before it becomes necessary to hire a criminal attorney.  Email us at ddnelson@gmail.com  and visit our website at www.taxmeless.com. 

Estate Planning for US Expatriates and US Nonresidents with US Assets

If you are an expatriate with foreign assets, US assets  or a nonresident of the US with US assets you

need to look into estate planning to reduce probate costs, make certain your assets go to the heirs you desire, and  reduce possible US estate taxes.  If you have assets located outside the US, you need to have attorneys prepare a will in that country to make certain those foreign assets go to the desired beneficiaries upon your death.

We can help with your US estate planning if you are an expatriate, resident or nonresident.

READ MORE  DETAILS HERE

IRS STREAMLINED PROGRAM- CATCH UP FILING YOUR RETURNS AND AVOID MOST PENALTIES

Purpose of the streamlined procedures

The streamlined filing compliance procedures describe below are available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part. The streamlined procedures are designed to provide to taxpayers in such situations with

• a streamlined procedure for fling amended or delinquent returns, and
• terms for resolving their tax and penalty procedure for filing amended or delinquent returns, and
• terms for resolving their tax and penalty obligations.

As reflected below, the streamlined filing procedures that were first offered on September 1, 2012 have been expanded and modified to accommodate a broader group of U.S. taxpayers. Major changes to the streamlined procedures include: 

• extension of eligibility to U.S. taxpayers residing in the United States
• Elimination of the $1,500 tax threshold, and 
• elimination of the risk assessment process associated with the streamlined filing compliance procedure announced in 2012.

Eligibility criteria for the streamlined procedures

The modified streamlined filing compliance procedures are designed only for individual taxpayers, including estates of individual taxpayers. The streamlined procedures are available to both U.S. individual taxpayers residing outside the United States and U.S. individual taxpayers residing in the United States. Descriptions of the specific eligibility requirements for the streamlined procedures for both non-U.S. residents (the "Streamlined Foreign Offshore Procedures") and U.S. residents ("Streamlined Domestic Offshore Procedures") are set forth below.

Taxpayers must certify that conduct was not willful. Taxpayers using either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures, will be required to certify, in accordance with the specific instructions set forth below, that the failure to report all income, pay all tax and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22,1) was due to non-willful conduct. Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.  READ MORE DETAILS OF THE STREAMLINED PROGRAM HERE

Our firm of CPAs and Attorney have represented and assisted hundreds of individuals enter the Streamlined Program. If you wish to learn more and want help entering the program EMAIL US to set up a consultation.

IF YOU EXPECT A TAX REFUND, DO NOT WAIT TO LONG TO FILE YOUR RETURN OR AMENDED RETURN

Do not wait to long to file an amended tax return or file your original  tax return if you  expect to get a refund.  The IRS has 10 years to  collect taxes you owe but when it comes to refunding your overpayments you have a limited time.

You have  3 years  from the date of the original deadline for your tax return to claim any refund you might be entitled to. Your 2019 tax return is due on April 15, 2020, so you have until April 15, 2023 to file your 2019 tax return and still get any tax refund that's due to you. Just add three years to the filing deadline...unless you paid any taxes that were due on the tax return.

In this case, the statute of limitations would be only two years from the date you paid if this date is later than the three-year due date deadline.  Amended returns claiming additional refunds must be filed with the IRS before the three-year statute of the limitations expires, which would be Oct. 15 if you filed an extension of the prior years return. 

If you need help filing an amended return to get a refund or your original return before the short  IRS refund statute of limitations expires contact us.  We most often can prepare your return in short order before it is too late.  EMAIL US FOR HELP

  

Cheapest States To Retire In USA for Expats returning

Many expats after living and working abroad for many years plan  to retire back in the USA. Marketwatch has done a study which shows the cheapest and most expensive states in which to retire.  Hawaii is the most expensive state with California coming in number 2.  The cheapest state is Mississippi.  READ DETAILS OF STUDY HERE   It will show you the cost of living, etc. for all of the states in the US.

You also need to consider things from your personal income tax point of view. The states that have no income taxes include:

• Texas
• Florida
• Nevada
• Washington
• Alaska
• South Dakota
• Wyoming

Contact us if you have questions or need to know more.   taxmeless@gmail.com  Kauffman Nelson LLP CPAs and Don D. Nelson, Attorney at Law.

When you Own Rental Property Abroad- How to Treat on Your US tax Return

When you own rental property outside of the USA  (which is required to be reported on your US income tax return) you will need to know the following to properly report it on your US taxes:

1. The lifetime its value  is depreciated most often is different from the rate in the USA.
2.  It is reported on Form 1040 schedule E, if it is not owned through a foreign partnership, corporation or foreign trust.
3. If the property is owned through a foreign corporation, trust or partnership special forms must be filed with your US personal tax return such as form 5471, 8865, 3520, etc.  Failure to file one of these forms if  required can result in a penalty of $10,000 or more.
4. The income and expenses of the rental must be reported for taxes in the same manner as a US rental property.
5. You will get a tax credit to offset your US tax on the rental income for income taxes paid the country in which the rental is located.
6. The US income tax rules for the rental apply to the property even though it as a VRBO, ARBNB, or other vacation rental.
7.  You cannot do a 1031 exchange from your rental into a US rental property or exchange a US rental property into a foreign rental property.
8. If you maintain a bank account abroad to collect rent and pay expenses you may be obligated to file Form 114 each year to report that (those) account(s). Failure to report can result in substantial penalties.

If you have questions or need further information EMAIL US FOR ANSWERS  We are US CPAs and Attorney with over 20 years experience in international taxation.

2019 New Tax Law Changes for US Expatriates and Other US Taxpayers

The US expatriate foreign earned income exclusion rises to  $105,900 for 2019  That means if you and  US taxpaying your  both work  you can exclude $211,800 from taxation on your form 1040.  The foreign housing deduction which can be taken on top of the foreign earned income exclusion has also increased and varies by your country of residency.     The amount deductible from foreign earnings  must exceed $16,944 and cannot be more than $31,770  in total.     This amount  can be greater based on the city and country of residency SEE TABLE IN PUBLICATION 54.

READ MORE ABOUT  MANY  OTHER TAX LAW CHANGES AND MODIFICATIONS FOR 2019 

30 YEARS US INTERNATIONAL, EXPAT AND NONRESIDENT EXPERIENCE - US TAX ATTORNEY AND CPAS ARE HERE TO HELP YOU.

Over 30 years of Internatinal Tax and Legal Expertise by CPAs and Attorneys provide you with the answers and guidance you need:

Tax Services

• US Expatriate Tax Planning & Return Preparation 
• International Tax Planning for Corporations, LLCs, Partnerships and Trusts 
• Past Year  Unfiled Returns for  Internal Revenue Service and all States 
• International Estate Planning
• Formation of US Corporations, Limted Liability Companies and Other Entities for use by offshore owners
• US Nonresident Taxation
• Corporate Expatriate Tax Equilization Assistance and Review
• Phone and Email Consulations on all U.S. Tax Matters as affecting those living abroad and offshore.
• Foreign bank and financial account reporting.

Tax Services for those working and residing in Mexico

• Preparation of individual, Expatriations US Returns in coordinateions with Mexican tax law.
• Mexican - US Business, personal and real estate tax planning.
• Preparation of Past Year Unfiled US Tax Returns
• Preparation of special US Tax Forms Required for those owning real estate or operating businesses in Mexico for Mexican Corporations, Fideicomisos, Mexican Bank Accounts, etc.

LEGAL SERVICES AND ENTITY FORMATION

• Formation of Corporations in all US States including California, Nevada, Florida and Washington
• Formation US Limited Liability Companies, Limited Partnerships and Partnerships for California and Nevada
• Planning and advising on best use of US Business Entities to Achieve your Offhshore Business Goals.
• US Estate Planning for Residents and Nonresidents
• U.S. Real Estate Law - Purchases, Sales and Leases
• Nonresident ownership of US Real Estate
• Contract review and Contract Drafting

Email Us with Your Questions and for Tax Return Preparation or Tax Planning

US Citizens Voting in Federal Elections While Living Abroad

Even though you live abroad full time and do not have a state of residence, you can still vote in Federal elections.

Most U.S. citizens 18 years or older who reside outside the United States are eligible to vote absentee for federal office candidates in U.S. primary and general elections. In addition, some states allow overseas citizens to vote for state and local office candidates and referendums. For information about your state, see the Voting Assistance Guide.

In some states, U.S. citizens who are 18 years or older and were born abroad but who have never resided in the United States are eligible to vote absentee. Direct your questions about eligibility to local election officials.

To learn more go to https://travel.state.gov/content/travel/en/international-travel/while-abroad/voting.html  Since you are paying for it as a US taxpayer (though living abroad) you might as well take part in directing the way your US taxes are used.  If you need help with your US taxes or estate planning, EMAIL US.

Expatriates That Owe IRS May Lose Their Passports

Over 8 million Americans are estimated to be living overseas.  Many of those live abroad due to debt and amounts owed the IRS for past taxes.  The IRS has a new program which puts those Americans in jeopardy should they return to the USA for a visit. READ MORE HERE

If you need help catching up with your taxes or entering into an offer in compromise or payment plan with the IRS for past due US income taxes, WE CAN HELP.  Email us with your questions or to set up a mini-consultation to solve your past due tax burden.  EMAIL US

DOWNLOAD YOUR EXPATRIATE TAX PLANNING NEWSLETTER

2019 Year End Tax Planning for US Expatriate Taxpayers and Others

Our year end  2019 Expatriate Tax Planning Letter can be read and downloaded here (pdf file).  Read it to learn of tax law changes for 2019 and possible planning steps you can take before year end to save you money.

If you want to get started early on your 2019 expatriate tax return you can download our 2019 Expatriate Tax Questionnaire HERE. (MS word file )  After you fill it out send it to us for a fee quote and fast preparation.

If you have  US expatriate, international or US nonresident tax questions email us by clicking HERE

Our firm CPAs and Attorney have combined experience in International Taxation of over 60 years. 

Excess Foreign Tax Credits - What to do about it?

If you live in a high tax country as an expatriate and you end up with excess foreign tax credits that cannot be used to offset the tax on the same income on your US Income Tax Return, all is not lost.
Excess foreign tax credits carry over and can be used for 10 years into the future on your returns assuming you do not have enough foreign tax credits to offset the tax on your foreign income.  See the instructions to the IRS foreign tax credit form 1116.

The best solution to recover your foreign taxes when you have excess foreign tax credits, is to move to a low tax country and you can then use them.  A list of countries in the world including the highest personal income tax rate for each country is HERE   You can use this to plan for the future use of excess foreign tax credits that are carried over.

US Expatriates May Be Eligible for Foreign Earned Income Exclusion Which increases for 2019

The foreign earned income exclusion has gone up for the 2019 tax year.   For the 2018 tax year, the maximum was $103,900. However, the Foreign Earned Income Exclusion 2019 maximum amount has risen to $105,900.  To be eligible to exclude this amount from your US tax return you must be a bonafide resident of a foreign country based on your physical presence for 330 days out of a 12 month fiscal year or be living and working in a foreign country for an entire calendar year.  The specific rules are set for in IRS publication 54.  

In additional to the foreign earned income exclusion an expat can exclude their housing costs so long as they exceeed a minimum amount  (see publication 54) and up to a maximum amount which may vary by country (see publication 54).

You also get a standard deduction of $24,400 if you file a joint return or $12,200 if you file as single. An additional $1,300 is added if you are aged.

We can help you reduce or save taxes you pay the US IRS.  Email us with your questions and help.  Visit our website at www.TaxMeLess.com   We have been assisting US expatriates and US nonresidents living abroad with the US taxes for over 25 years.  Kauffman Nelson LLP, CPAs and attorney.

WORRIED ABOUT IRS CRIMINAL INVESTIGATION? THERE ARE NOT THAT MANY EACH YEAR.

The link below is to the IRS Criminal Investigation Division 2019 Report.  Might be worth reading if you are worried about your situation.  Our of the 330 million plus Americans, the IRS last year only
instituted approx 1500 criminal investigations and less than 1000 resulted in criminal prosecutions.  If it does get that far, it is worth worrying about since they have a 91% conviction rate.

Download the pdf report here.... full of a lot of information that may be useful to you.

If you have personal concerns and was to discuss it with a tax attorney.  We offer mini consultations by phone, skype, whatsapp, etc.  Email us at ddnelson@gmail.com

ACCIDENTAL AMERICANS MAY HAVE PROBLEMS WITH IRS AND LOCAL BANKS UNLESS THEY REMEDY THEIR SITUATION

If you were born in the USA or your parents where US citizens you could be an Accidental American and may have problems soon with the IRS. Most individuals in this situation do not know that even if they never received a social security number or Taxpayer ID number, the IRS can come after them and make it difficult to open a foreign bank account even in the country which they reside.

READ MORE HERE   If you need help because you are an Accidental American we can help.  Email us at TAXMELESS.COM

How Your Wealth Compares with Wealth around the World - from CNBC and Bloomberg

Yesterday statistics for 2018 came out that indicated the one percent wealthy
in the USA are paying taxes at a percentage lower rate than the middle class. None
of recent tax cuts are trickling down to the middle class or  poor.

Yesterday the IRS admitted the mostly audit the lower middle class and poor
because it is easier to collect money than auditing the wealthy. They claimed
that they do not have a staff sophisticated enough to audit the wealthy and stand
up to the high priced tax lawyers and CPAs hired by the wealthy.

Write US if you want assistance with your taxes and to find every break that 
is available fo regular taxpayers.  We are attorney  and CPAs specializing in 
US expatriate, US nonresident and US international tax law. CLICK HERE

CRIMINAL PENALTIES FOR TAX FRAUD FOR EXPATRIATES AND NONRESIDENTS

A taxpayer that willfully attempts to evade paying income taxes is subject to criminal and civil penalties. The type of fraud will determine the applicable penalty. The following are some examples of possible punishments for specific types of tax fraud. Remember a delinquent taxpayer expat or nonresident, can never be certain if the IRS will not view their actions as beyond negligent but intentional fraud. Therefore, file your past due returns before the IRS finds you first.  Filing yourself before being caught is viewed as indicative of no criminal intent.

• Attempt to evade or defeat paying taxes: Upon conviction, the taxpayer is guilty of a felony and is subject to other penalties allowed by law, in addition to (1) imprisonment for no more than 5 years, (2) a fine of not more than $250,000 for individuals or $500,000 for corporations, or (3) both penalties, plus the cost of prosecution.

• Fraud and false statements: Upon conviction, the taxpayer is guilty of a felony and is subject to (1) imprisonment for no more than 3 years, (2) a fine of not more than $250,000 for individuals or $500,000 for corporations, or (3) both penalties, plus the cost of prosecution .

• Willful failure to file a return, supply information, or pay tax at the time or times required by law. This includes the failure to pay estimated tax or a final tax, and the failure to make a return, keep records, or supply information. Upon conviction, the taxpayer is guilty of a misdemeanor and is subject to other penalties allowed by law, in addition to (1) imprisonment for no more than 1 year, (2) a fine of not more than $100,000 for individuals or $200,000 for corporations, or (3) both penalties, plus the cost of prosecution .

Get Legal Help with Your Income Tax Problems avoid these criminal consequences.  We are CPAs and attorneys with over 30 years experience with US international, expatriate and nonresident taxation. We can solve your tax  problems before it becomes necessary to hire a criminal attorney.  Email us at ddnelson@gmail.com .com and visit our website at www.taxmeless.com.