Foreign Bank and Financial Account Forms Must Be Filed On Line by 6/30/14

Who Must File an FBAR by 6/30/14

United States persons are required to file an FBAR if:

1. The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
2. The aggregate value of all foreign financial accounts (this includes banks, stock brokerage accounts, cash surrender value of foreign life insurance, foreign pension plans in most situations) exceeded $10,000 US dollars at any time during the 2013 calendar year to be reported.

United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.

Exceptions to the Reporting Requirement

Exceptions to the FBAR reporting requirements can be found in the FBAR instructions. There are filing exceptions for the following United States persons or foreign financial accounts:

• Certain foreign financial accounts jointly owned by spouses;
• United States persons included in a consolidated FBAR;
• Correspondent/nostro accounts;
• Foreign financial accounts owned by a governmental entity;
• Foreign financial accounts owned by an international financial institution;
• IRA owners and beneficiaries;
• Participants in and beneficiaries of tax-qualified retirement plans;
• Certain individuals with signature authority over, but no financial interest in, a foreign financial account;
• Trust beneficiaries (but only if a U.S. person reports the account on an FBAR filed on behalf of the trust); and
• Foreign financial accounts maintained on a United States military banking facility.

Review the FBAR instructions for more information on the reporting requirement and on the exceptions to the reporting requirement.

Reporting and Filing Information

A person who holds a foreign financial account may have a reporting obligation even though the account produces no taxable income. The reporting obligation is met by answering questions on a tax return about foreign accounts (for example, the questions about foreign accounts on Form 1040 Schedule B) and by filing an FBAR.

The FBAR is a calendar year report and must be filed on or before June 30, 2014 for the calendar year 2013 foreign bank and financial account balances. Effective July 1, 2013, the FBAR must be filed electronically through FinCEN’s  BSA E-Filing System. The FBAR is not filed with a federal tax return. A filing extension, granted by the IRS to file an income tax return, does not extend the time to file an FBAR. There is no provision to request an extension of time to file an FBAR.

A person required to file an FBAR who fails to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation for nonwillful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50% of the balance in the account at the time of the violation, for each violation.  For guidance when circumstances such as natural disasters prevent the timely filing of an FBAR, see FinCEN guidance,FIN-2013-G002 (June 24, 2013).

U.S. Taxpayers Holding Foreign Financial Assets May Also Need to File Form 8938

Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets, which is filed with an income tax return. The new Form 8938 filing requirement is in addition to the FBAR filing requirement. A chart providing a comparison of Form 8938 and FBAR requirements may be accessed on the IRS Foreign Account Tax Compliance Act web page.

IRS NEW 6/18/14 STREAMLINED DISCLOSURE PROGRAM - DETAILS AND PROCEDURES

The information on the program changes are:

• IR-2014-73, June 18, 2014 is read here; announces the changes.
• OVDP 2012 (as changed 6/18/14), read here.
• Streamline Filing Compliance Process (as changed 6/18/14), read here.  This is the description.  There are two types of Streamline filings:  Non-resident and Resident.  The Nonresident program -- referred to as Streamlined Foreign Offshore Procedures -- is described on a web page titled: U.S. Taxpayers Residing Outside the United States, read here. The Resident program -- referred to as Streamlined Domestic Offshore Procedures -- is described on a web page titled U.S. Taxpayers Residing in the United States, read here.
• Delinquent FBAR Submission Procedures (as changed 6/18/14), read here. 
• Delinquent International Information Return Submission Procedures (as changed 6/18/14), read here. (This relates to the Forms required for entities, such as CFC's, trusts,etc.)
• IRS OVDP 2014 FAQs, read here.  Pay attention particularly par. 1.1 on the changes from the original OVDP 2012.
• Transition Rules FAQs, read here.
• Bank and Promoter List, read  here.  This list is the basis for the 50% penalty in OVDP 2014 (See FAQ 7.2 in the OVDP 2014 FAQs, read here.)   

The new procedures are as follows:

1. Foreign residents (requiring only foreign residence in the 3 year period):  File 3 years of delinquent or amended returns and pay tax and interest.  No penalties (including FBAR or miscellaneous) will be assessed.  Must also complete and sign a statement on the Certification by U.S. Person Residing Outside of the U.S. certifying (i) eligibility for the procedure, (ii) filing of all required FBARs, and (iii) that the failure to file tax returns, report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct.

2.  Nonforeign residents (Domestic residents):  Must file 3 years of returns and pay tax and interest.  No penalties other than a 5% miscellaneous penalty on foreign financial accounts only will be assessed.  Must complete and Sign the Certification by U.S. Person Residing in the U.S. that (i) eligibility is met; (ii) all FBARs have been filed; (iii) "the failure to report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct;" and (iv) that the miscellaneous penalty amount is accurate.

Nonwillful conduct for the purposes of #1 and #2 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; 

The taxpayers can be audited under the income tax audit guidelines but will not be automatically audited.

A couple of the material changes to OVDP 2012 are described in par. 1.1 of the FAQs as follows:

• A 50% offshore penalty applies if either a foreign financial institution at which the taxpayer has or had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement has been publicly identified as being under investigation or as cooperating with a government investigation. See FAQ 7.2.
• FAQ 7 has been modified to require that the offshore penalty be paid in full at the time of the OVDP submission.

NEW STREAMLINED OFFSHORE DISCLOSURE REDUCES PENALTIES AND IS EASIER

Read new IRS rules below.

http://www.irs.gov/Individuals/International-Taxpayers/Streamlined-Filing-Compliance-Procedures

New Easier IRS Disclosure Rules for Expats and those Living in USA

Read new rules at this link:

http://www.cpapracticeadvisor.com/news/11527344/taxpayers-offered-new-options-in-offshore-voluntary-disclosure-program

Bitcoin Accounts May Now Need to be Reported on FBAR (114) Regardless of Prior IRS Statement!

Read more below. To be safe due to uncertainties list your account!

http://www.bna.com/bitcoin-exchange-accounts-n17179891170/

On Line Poker Accounts Abroad Must Be Reported on Fbar ( form 114) by 6-30-14

Read more below. No extension of 6-30-14 Deadline for 2013 form 114 can be granted. Penalty for not filing is $10,000 or more!

http://www.onlinepokerreport.com/12647/fbars-us-online-gambling/

IRS RELEASES NEW TAXPAYER BILL OF RIGHTS

IR 2014-72

In a news release, IRS has announced the adoption of a "Taxpayer Bill of Rights" to help taxpayers better understand their rights.

Background. In the past, Congress passed multiple pieces of legislation with the title "Taxpayer Bill of Rights." But National Taxpayer Advocate Nina Olson discovered that most taxpayers were unaware that "they have rights before the IRS."

New rights. After getting input from Ms. Olson, and because existing rights are scattered throughout the Code making it difficult for taxpayers to understand, IRS has announced the new Taxpayer Bill of Rights. It takes the multiple existing rights embedded in the Code and groups them into these 10 broad categories, making them more visible and easier for taxpayers to find on IRS's website:

1. The right to be informed.

2. The right to quality service.

3. The right to pay no more than the correct amount of tax.

4. The right to challenge IRS's position and be heard.

5. The right to appeal an IRS decision in an independent forum.

6. The right to finality.

7. The right to privacy.

8. The right to confidentiality.

9. The right to retain representation.

10. The right to a fair and just tax system.

The rights have been incorporated into a redesigned version of Publication 1, a document that is routinely included in IRS correspondence with taxpayers. The new version has been added to irs.gov. IRS says print copies will start being included in IRS correspondence in the near future.

TAXES, WHO PAYS AND HOW MUCH - BY COUNTRY, BY STATE AND WEALTH LEVEL

Great article by Bill Moyers with 8 charts showing tax levels by country, state, income level, etc.  READ MORE HERE

REPORTING BITCOIN ACCOUNTS ON FBAR (FORM 114) NOT REQUIRED FOR 2013

Virtual currency  (such as bitcoin) isn't subject to FBAR reporting... for now. During a recent IRS webinar titled "Reporting of Foreign Financial Accounts on the Electronic FBAR," Rod Lundquist, Senior Program Analyst in IRS's Small Business/Self Employed (SB/SE) division, stated that for purposes of the current filing season (i.e., for 2013 FBARs due later this month), taxpayers aren't required to report Bitcoin on an FBAR. However, he cautioned that IRS is continuing to analyze virtual currency and that this policy could very well change going forward.

Tool to Check If Your Foreign Bank is Registered to Report Your Bank Account To IRS

Click link below to find out:

http://www.irs.gov/Businesses/Corporations/FATCA-Foreign-Financial-Institution-List-Search-and-Download-Tool

77,000 Foreign Banks to Share Tax Info with IRS

From USA TODAY 77,000 foreign banks to share tax info with U.S. WASHINGTON — More than 77,000 foreign banks have agreed to share information about U.S. account holders as part of a crackdown on offshore tax evasion, the Treasury Department said Monday. The list includes 515 Russian financial institutions. Russian banks had to apply directly to the tax-collecting Internal Revenue Service because the U.S. broke off negotiations with Russia over an information-sharing agreement after Russia's actions in Ukraine. Nearly 70 countries have agreed to share information from their banks as part of a U.S. law that targets Americans hiding assets overseas. Participating countries include all the world's financial giants, as well as many places where Americans have traditionally hid assets, including Switzerland, the Cayman Islands and the Bahamas. http://usat.ly/1h0qtJi Get USA TODAY on your mobile device: http://www.usatoday.com/mobile-apps

87 year old man owes 150% of high balance FBAR Penalty

Read more: http://mobile.businessweek.com/news/2014-05-28/florida-man-87-owes-150-percent-of-swiss-account-jury-says

Maybe IRS disclosure program would have been better but he applied too late.

IRS Direct Pay Now On Line for expats

If you file form 1040 as an expat or not. You can now pay taxes and estimates on line with a direct debit by IRS to your US  bank account for no extra charge. Do it here-   http://www.irs.gov/Payments/Direct-Pay

Ultimate US Tax Planning for Expatriates -CITIZENSHIP SURRENDER

Read about the high number of Americans surrender their US Citizenship. Once you do, in most situations (with some exceptions) you no longer have to file US tax returns. If you first acquire citizenship in a low income tax or no income tax country you may never have to pay income taxes again. Over 1,000 surrenders were listed for the first quarter of 2014 by the IRS and State Department.

Where are the low tax or no tax countries? See list of countries and tax rates HERE

See the list of countries with zero income tax per CNBC  HERE:http://www.cnbc.com/id/48054006

We have represented and advised over a hundred expats or US residents surrender their US Citizenship (or Long Term Green Card Holders surrender their residency).  We can prepare the tax forms, and give you the guidance to surrender successfully.  As an Attorney CPA we offer our clients attorney client privilege (absolute confidentiality) and have the knowledge and experience to do all of the complex tax paperwork. If you need assistance email me at ddnelson@gmail.com or visit my website at www.Taxmeless.com or www.expatattorneycpa.com.   

10 STEPS TO PAINLESS ESTATE PLANNING FOR EXPATS

Go to the following link for estate planning steps from CNN Money for expatriateshttp://money.cnn.com/2014/03/03/pf/estate-planning.moneymag/ .  If you need help from a US expat tax  Attorney  and CPA with over 32 years experience for your expat estate planning write ddnelson@gmail.com.

IRS FBAR 114 REFERENCE GUIDE FOR TAXPAYERS

Download this excellent PDF reference guide to FBAR filing with answers to most questions. Need help or have further FBAR for Form 114 questions, write us at ddnelson@gmail.com. Remember FBARS now must be filed on line at   FBAR FILING SITE   and are due 6/30/14 for 2013 and cannot be extended.

Astralia and IRS sign tax sharing agreement

Read more here.  http://uk.mobile.reuters.com/article/idUKKBN0DE0QI20140428?irpc=932

If you need to catch up your returns before its too late go to www.expat attorney CPA.com.

IRS Announces How to Handle your BITCOIN for US tax Purposes

The Internal Revenue Service has  issued a notice providing answers to frequently asked questions (FAQs) on virtual currency, such as Bitcoin. These FAQs provide basic information on the U.S. federal tax implications of transactions in, or transactions that use, virtual currency.

In some environments, virtual currency operates like “real” currency -- i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance -- but it does not have legal tender status in any jurisdiction.

The notice provides that virtual currency is treated as property for U.S. federal tax purposes.  General tax principles that apply to property transactions apply to transactions using virtual currency.  Among other things, this means that:

• • Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
• • Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply.  Normally, payers must issue Form 1099.
• • The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
• • A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property. 

Further details, including a set of 16 questions and answers, are in Notice 2014-21, posted today on IRS.gov.

US International Social Security Agreements and Self Employed Expatriates

If you do not live and work in a country with a Social security agreement with the US, and are self employed as a sole proprietor (not an employee) you will have to pay US self employment tax which is medicare and social security ( 15.3% of your net profit).

The US has social security treaties with the countries below.  If self employed these treaties set forth rules on which countries social security you can pay into.

Countries with Social Security Agreements
Country	Entry into Force
Italy	November 1, 1978
Germany	December 1, 1979
Switzerland	November 1, 1980
Belgium	July 1, 1984
Norway	July 1, 1984
Canada	August 1, 1984
United Kingdom	January 1, 1985
Sweden	January 1, 1987
Spain	April 1, 1988
France	July 1, 1988
Portugal	August 1, 1989
Netherlands	November 1, 1990
Austria	November 1, 1991
Finland	November 1, 1992
Ireland	September 1, 1993
Luxembourg	November 1, 1993
Greece	September 1, 1994
South Korea	April 1, 2001
Chile	December 1, 2001
Australia	October 1, 2002
Japan	October 1, 2005
Denmark	October 1, 2008
Czech Republic	January 1, 2009
Poland	March 1, 2009
Slovak Republic	May 1, 2014

http://www.ssa.gov/pressoffice/factsheets/colafacts2014.html

Expat Tax Return Deadlines

Here are the most important tax filing deadlines for expatriates:

April 15th – US tax deadline to pay any US taxes owed (or penalties and fines begin to accrue). US expats get an automatic 2-month extension.

June 16th – US tax return deadline for expats

June 30th – FBAR forms are due to the US Department of the Treasury. Expats must file if they have had $10,000 or more in foreign bank and financial accounts. No extensions are or can be granted

October 15th – Final expat deadline for those who filed for an extension

If you are concerned that you won't be able to get your returns ready in time, you're not alone! Get started with with our help today by  downloading our expat tax questionnaire at www.Taxmeless.com. We offer a simple process, reasonable fees and expat tax experts who will make your US tax preparation quick and easy.
 

9 Facts about Penalties for Filing and Paying Late - For Expats and Those Living in the USA

April 15 is the tax day deadline for most people. If you’re due a refund there’s no penalty if you file a late tax return. But if you owe taxes and you fail to file and pay on time, you’ll usually owe interest and penalties on the taxes you pay late. Here are eight facts that you should know about these penalties. 

1. If you file late and owe federal taxes, two penalties may apply. The first is a failure-to-file penalty for late filing. The second is a failure-to-pay penalty for paying late.

2. The failure-to-file penalty is usually much more than the failure-to-pay penalty. In most cases, it’s 10 times more, so if you can’t pay what you owe by the due date, you should still file your tax return on time and pay as much as you can. You should try other options to pay, such as getting a loan or paying by credit card. The IRS will work with you to help you resolve your tax debt. Most people can set up a payment plan with the IRS using the Online Payment Agreement tool on IRS.gov.

3. The failure-to-file penalty is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. It will not exceed 25 percent of your unpaid taxes.

4. If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100 percent of the unpaid tax.

5. The failure-to-pay penalty is generally 0.5 percent per month of your unpaid taxes. It applies for each month or part of a month your taxes remain unpaid and starts accruing the day after taxes are due. It can build up to as much as 25 percent of your unpaid taxes.

6. If the 5 percent failure-to-file penalty and the 0.5 percent failure-to-pay penalty both apply in any month, the maximum penalty amount charged for that month is 5 percent.

7. If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 15 due date.

8. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for not filing or paying on time.

9. While US expatriates get an automatic extension of time to file their return until 6/15 following the year end, that extension does not apply to any taxes due. Therefore, you should estimate any taxes you might owe and pay on on the regular 4/15 date to avoid the 1/2 percent per month penalty. Since this penalty is low, many expats just pay when they file the return and pay the penalty.

Additional Resources on Late Payment:

• Electronic Payment Options Home Page
• Make a Payment – payment options
• Tax Topic 653 - IRS Notices and Bills, Penalties and Interest Charges
• Q&A about interest and penalties for filing and paying late
• Publication 594, The IRS Collection Process
• 1040 Central
• IRS Tax Map

Obama and Bidens 2013 Tax Returns Reviewed

SEE ACCOUNTING TODAY ARTICLE.   http://www.accountingtoday.com/news/obamas-paid-irs-204-tax-rate-on-2013-gross-income-of-481098-70313-1.html?utm_campaign=daily-apr%2015%202014&utm_medium=email&utm_source=newsletter&ET=webcpa%3Ae2573270%3A2450710a%3A&st=email

What You Should Know about the Additional Medicare Tax

Starting in 2013, you may be liable for an Additional Medicare Tax if your income exceeds certain limits. Here are six things that you should know about this tax:  

1. The Additional Medicare Tax is 0.9 percent. It applies to the amount of your wages, self-employment income and railroad retirement (RRTA) compensation that is more than a threshold amount. The threshold amount that applies to you is based on your filing status. If you’re married and file a joint return, you must combine your spouse’s wages, compensation, or self-employment income with yours to determine if you exceed the “married filing jointly” threshold.

2. The threshold amounts are:

 Filing Status                   Threshold Amount
 Married filing jointly         $250,000
 Married filing separately   $125,000
 Single                            $200,000
 Head of household          $200,000
 Qualifying widow(er) with dependent child      $200,000

3. You must combine wages and self-employment income to determine if your income exceeds the threshold. You do not consider a loss from self-employment when you figure this tax. You must compare RRTA compensation separately to the threshold. See the instructions for Form 8959, Additional Medicare Tax, for examples.

4. Employers must withhold this tax from your wages or compensation when they pay you more than $200,000 in a calendar year, without regard to your filing status, wages paid to you by another employer, or income that you may have from other sources. Your employer does not combine the wages for married couples to determine whether to withhold Additional Medicare Tax. 

5. You may owe more tax than the amount withheld, depending on your filing status and other income. In that case, you should make estimated tax payments /or request additional income tax withholding using Form W-4, Employee's Withholding Allowance Certificate. If you had too little tax withheld, or did not pay enough estimated tax, you may owe an estimated tax penalty. For more on this topic, see Publication 505, Tax Withholding and Estimated Tax.

6. If you owe this tax, file Form 8959, with your tax return. You also report any Additional Medicare Tax withheld by your employer on Form 8959.

Visit IRS.gov for more on this topic. Enter “Additional Medicare Tax” in the search box. 

Need help. Visit us at www.expatattorneycpa.com and email ddnelson@gmail.com 

WHAT TO DO IF YOU NEED MORE TIME TO FILE YOUR TAXES

The April 15 tax deadline is approaching. What happens if you can’t get your taxes done by the due date? If you are an expat you have until June 15 th to file. The IRS has given you an automatic extension. However if you live in the US and you need more time, you can get an automatic six-month extension from the IRS using form 4868. You don’t have to explain why you’re asking for more time. Here are five important things to know about filing an extension:

1. File on time even if you can’t pay.  If you complete your tax return but can’t pay the taxes you owe, do not request an extension. Instead, file your return on time and pay as much as you can. That way you will avoid the late filing penalty, which is higher than the penalty for not paying all of the taxes you owe on time. Plus, you do have payment options. Apply for a payment plan using the Online Payment Agreement tool on IRS.gov. You can also file Form 9465, Installment Agreement Request, with your tax return. If you are unable to make payments because of a financial hardship, the IRS will work with you.

2. Extra time to file is not extra time to pay.  An extension to file will give you six more months to file your taxes, until Oct. 15. It does not give you extra time to pay your taxes. You still must estimate and pay what you owe by April 15. You will be charged interest on any amount not paid by the deadline. You may also owe a penalty for not paying on time.

3. Use IRS Free File to request an extension.  You can use IRS Free File to e-file your extension request. Free File is only available through the IRS.gov website. You must e-file the request by midnight on April 15. If you e-file your extension request, the IRS will acknowledge receipt. You also can return to Free File any time by Oct. 15 to prepare and e-file your tax return for free.

4. Use Form 4868.  You can also request an extension by mailing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You must submit this form to the IRS by April 15. Form 4868 is available on IRS.gov.

You don’t need to submit a paper Form 4868 if you make a payment using an IRS electronic payment option. The IRS will automatically process your extension when you pay electronically. You can pay online or by phone.

5. Electronic funds withdrawal.  If you e-file an extension request, you can also pay any balance due by authorizing an electronic funds withdrawal from your checking or savings account. To do this you will need your bank routing and account numbers.

Need help? We are www.Taxmeless.com and have been doing expat returns for over 30 years. Email us at ddnelson @gmail.com.

How To Pay IRS Taxes Electronically Today Without Mailing a Check

This link will guide you to the various methods .   http://www.irs.gov/uac/Electronic-Payment-Options-Home-Page

20 Things Expat Taxpayers Do Not Know

Great Article From Forbes Magazine...      http://www.forbes.com/sites/robertwood/2013/09/17/20-things-taxpayers-dont-get/?ss=tax-plannig

Let us be your Expat Tax Expert.  Don D Nelson attorney CPA

Www.Taxmeless.com.      email. ddnelson@gmail.com.com

11 Illegal Tax Deductions

No, You Can't Deduct That: 11 Tax Deductions That Can Get You in Trouble http://www.inc.com/kimberly-weisul/eleven-questionable-tax-deductions.html

Tips for U.S. Taxpayers with Foreign Income

Did you live or work abroad or receive income from foreign sources in 2013? If you are a U.S. citizen or resident, you must report income from all sources within and outside of the U.S. The rules for filing income tax returns are generally the same whether you’re living in the U.S. or abroad. Here are seven tips from the IRS that U.S. taxpayers with foreign income should know:

1. Report Worldwide Income.  By law, U.S. citizens and resident aliens 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. See IRS.gov for more information.

3. Consider the Automatic Extension.  If you’re living abroad and can’t file your return by the April 15 deadline, you may qualify for an automatic two-month filing extension. You’ll then have until June 16, 2014 to file your U.S. income tax return. This extension also applies to those serving in the military outside the U.S. You’ll need to attach a statement to your return to explain why you qualify for the extension.

4. 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 $97,600 of your wages and other foreign earned income in 2013. See Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion, for more details.

5. Don’t Overlook Credits and Deductions.  You may be able to take atax credit or a deduction for income taxes you paid to a foreign country. These benefits can reduce the amount of taxes you have to pay if both countries tax the same income.

You can get more on this topic in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. IRS forms and publications are available on IRS.gov. 

Additional IRS Resources:

• Taxation of U.S. Resident Aliens
• Publication 514, Foreign Tax Credit for Individuals
• International Taxpayer

The best resource is Kauffman Nelson LLP. We prepare returns for expats and nonresidents and have done so for over 30 years.  We know the law and we know the the forms.  Want a consultation?  Email ddnelson@gmail.com  and ask for Don Nelson, Attorney, CPA.

IRS DECIDES TO TAX BITCOIN LIKE PROPERTY

From USA TODAY IRS: Bitcoin is not currency The federal government will tax digital money such as Bitcoin like property, not currency, the IRS said Tuesday in its first significant guidance on the virtual coin. Although Bitcoin may operate like coin and paper currency and can be used to pay for goods and services, no country accepts it as "legal tender," the Internal Revenue Service said in its notice. "Virtual currency is treated as property for U.S. federal tax purposes," the notice said. "General tax principles that apply to property transactions apply to transactions using virtual currency." The guidance means that wages paid in Bitcoin are subject to federal income tax withholding and payroll taxes and must be reported on W-2 forms. Businesses that accept Bitcoin for goods and services will be taxed on the fair market value of the Bitcoin payment as part of their gross income, the IRS said. The fair market value would be calculated as the U.S. dollar value on the date payment was received. http://usat.ly/Qcwsiz Get USA TODAY on your mobile device: http://www.usatoday.com/mobile-apps

New China tax Residency Requirements for US Expats Explained

http://www.china-briefing.com/news/2014/03/18/china-expat-tax-filing-and-declarations-for-2013-income.html

TAX RULES FOR CHILDREN WITH INVESTMENT INCOME

You normally must pay income tax on your investment income. That is also true for a child who must file a federal tax return. If a child can’t file his or her own return, their parent or guardian is normally responsible for filing their tax return.

Special tax rules apply to certain children with investment income. Those rules may affect the tax rate and the way you report the income.

Here are four facts from the IRS that you should know about your child’s investment income:

1. Investment income normally includes interest, dividends and capital gains. It also includes other unearned income, such as from a trust.

2. Special rules apply if your child's total investment income is more than $2,000. Your tax rate may apply to part of that income instead of your child's tax rate.

3. If your child's total interest and dividend income was less than $10,000 in 2013, you may be able to include the income on your tax return. If you make this choice, the child does not file a return. See Form 8814, Parents' Election to Report Child's Interest and Dividends. 

4. Children whose investment income was $10,000 or more in 2013 must file their own tax return. File Form 8615, Tax for Certain Children Who Have Investment Income, along with the child’s federal tax return.

Starting in 2013, a child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax. NIIT is a 3.8% tax on the lesser of either net investment income or the excess of the child's modified adjusted gross income that is over a threshold amount. Use Form 8960, Net Investment Income Tax, to figure this tax. For more on this topic, visit IRS.gov.

For more on this topic, see Publication 929, Tax Rules for Children and Dependents. Visit IRS.gov to get this booklet and IRS forms.

Simplified Home Office Deduction Explained By IRS

http://content.govdelivery.com/accounts/USIRS/bulletins/aba73d?reqfrom=share

Are You Inviting An Audit?

http://triblive.com/mobile/5740073-96/irs-business-audit

PROBLEMS WITH FOREIGN PENSION PLANS

Excellent article  from Forbes.  http://www.forbes.com/sites/janetnovack/2014/03/06/pensions-create-yet-another-tax-trap-for-u-s-expatriates/

600,000 Dollars in Cash Hidden in Foreign Bank Causes Taxpayer to Go to Prison

California Taxpayer put earnings in Swiss Bank and did not file Fbar sentenced to prison for one year and pays over $500,000 in penalties and taxes. Read more below

http://www.imperialvalleynews.com/index.php/news/california-news/7369-california-man-sentenced-to-prison-for-failure-to-report-foreign-bank-accounts-held-at-ubs.html

Bank deal fallout: ‘Chaotic’ US tax stampede overwhelms specialists - swissinfo.ch

Bank deal fallout: ‘Chaotic’ US tax stampede overwhelms specialists - swissinfo.ch  We can help you no matter where you are in the world prepare past tax returns and enter the IRS Offshore Disclosure Program, Streamlined Program or Regular Disclosure Program.  Visit our website at www.TaxMeLess.com for more information or email me at ddnelson@gmail.com  When offer our clients the absolute confidentiality and privacy of Attorney-Client Privilege.

IRS Examining Foreign Life Insurance and Other Products to Discover Hidden Foreign Assets and Income

The Wall Street Journal articles indicates the IRS is now getting smarter. They are starting to examine offshore insurance products owned by US taxpayers. These policies are often used to hide foreign assets and foreign income not being reported on the tax returns of their US owners.  If you have cash surrender value or assets in a foreign life insurance policy you are required to show that policy on your US FBAR each year and may be required to report the income. It would also go on form 8938 if you are required to file that form.  If the policy holds foreign mutual funds you may be required to file the form reporting Passive Foreign Investment Companies also to avoid adverse tax consequences.

READ ARTICLE HERE

Rules for each State on How to Stop Filing and Paying State Income Taxes when an Expat Moves Abroad.

Great article from BNA including a chart listing tax laws and rules for each state in the US stating their individual rules (vary a lot from state  to state) on how to successfully terminate your state tax domicile when moving abroad. The chart at the end is a great reference tool to use when you want to stop paying state income taxes when you move to live and work abroad.  DOWNLOAD PDF ARTICLE HERE

If you need guidance on how to avoid paying state income taxes after moving abroad we can put together a strategy for you.  Email us at ddnelson@gmail.com

Where Offshore Tax Form Evaders Live and Keep Their Foreign Accounts

From Forbes.  Looks like if you live in California or New York you are primary suspect based on IRS statistics.  http://www.forbes.com/sites/ashleaebeling/2014/02/20/gao-report-where-offshore-tax-evaders-live-and-bank/

5 Most Tax Friendly States For Expats or Nonresidents to Locate a U S Business

Read the following link. Wyoming is no. 1. We recommend Nevada for ease of operation. Its no. 3.

http://www.dailyfinance.com/2014/02/15/the-5-most-tax-friendly-states-for-running-a-busin/

FBAR and Form 8938 Presentation in Puerto Vallarta & Melaque Mexico

US Expat Foreign Bank, Financial & Asset Reporting Guidance from dondnelson

Estate Planning Tips For Expats from Motlley Fool

http://www.fool.com/investor-alert/1255/estate-planning-loopholes-dont-let-uncle-sam-inher/?iid=61836479&vsaid=7123&email=ddnelson%40gmail.com&dest_url=%2Finvestor-alert%2F1255%2Festate-planning-loopholes-dont-let-uncle-sam-inher%2F&src=eunlinsbr0860003

4 Common Myths About Taxes

From USA TODAY 4 common myths about taxes It's not that surprising that there's a lot of misinformation out there about taxes. The U.S. tax code is over 4 million words long and not one of us has the time to go through it all. Most of us treat the tax code like the monster it is, interfacing with it only from a distance and once a year paying homage to it in the form of a tax return. Since there's so much to know about taxes and so little willingness to learn about them, people sometimes make assumptions about how the system works that turn out to be false. These bits of false information sometimes take on a life of their own and, unfortunately, become common knowledge. This is problematic because a misunderstanding of how the tax system works can have consequences — most personal financial planning requires a basic, and reality-based, understanding of how taxes work. Otherwise, you could find yourself owing a lot more money than you expected — or, at least, worrying about irrelevant details when you should be relaxing. http://usat.ly/1lPpttt Get USA TODAY on your mobile device: http://www.usatoday.com/mobile-apps

US EXPATRIATE AND INTERNATIONAL TAX EXPERT ATTORNEY CPA TO SPEAK AT FREE PUBLIC SEMINAR ON FEBRUARY 12, 2014 IN PUERTO VALLARTA, MEXICO

FATCA AND IRS REPORTING FOR DUMMIES - INVESTING IN MEXICO MADE EASY

INTERCAM GRUPO FINANCIERO will Present a Seminar on February 12, 2014 in Puerto Vallarta at the Hotel Marriott Casa Magna featuring Don D. Nelson, US Attorney and CPA.  He is a US expatriate and international tax expert who has been assisting Americans in Mexico for over 23 years.  The seminar will be at 6pm.

He will speak on:

• IRS filing requirements for reporting Mexican and other foreign financial accounts and how to avoid penalties for failing to file in a timely manner.
• The new form 8938 required to report Mexican and other foreign financial assets
• The new on line filing requirements for FBAR (foreign bank account reporting).  Yes you can no longer file on paper.
• IRS Reporting for Mexican Businesses, Corporations, and real estate.
• What to do if you have not been filing your US tax returns or foreign assets reporting forms and how to reduce or avoid the high penalties that may be imposed.
• Current IRS audit procedures and policies for expatriates.
• And he will answer your other questions on US taxation of those who live and work in Mexico

Don's informative and useful tax websites are located at www.TaxMeLess.com and www.Expatattorneycpa.com

Contact intercam at 52-322-2090696 to reserve your space.

Mr. Nelson will also be presenting a seminar in Melaque  the next evening. Intercam can provide you with more information on that seminar.

IRS TAXES CANNOT BE AVOIDED BY MOVING ABROAD

Read why 6.3 million Americans living abroad still must file a US tax return each year.  http://finance.yahoo.com/news/non-us-residents-abroad-must-file-income-taxes-195444214.html

INTERNATIONAL TAX RATES AROUND THE GLOBE

Click here for a great graphic with the international tax rates around the world (both corp and individual) including other interesting facts from INTERNATIONAL RELATIONS ON LINE.  You can use it to plan where to locate your business and personal affairs.

Need more information on US International Taxation, email us ddnelson@gmail.com or view more information at TAXMELESS.COM

US TAXATION OF FOREIGN INVESTMENTS

Great article from Forbes Magazine. ..foreign tax credits and foreign mutual funds explained. http://www.forbes.com/sites/investopedia/2014/01/31/understanding-taxation-of-foreign-investments/

Learn more at www.Taxmeless.com. Questions? Email ddnelson@gmail.com

Qualifying for the Foreign Earned Income Exclusion Physical Presence - When You Have Foreign Residence or Tax Domicile

The IRS can cause you problems if you claim a foreign residence for the Physical Present Test when attempting to use the  foreign earned income exclusion on your tax return. Factors that are looked at to determine if you have a foreign residence are:

In Sochurek v. CIR, the Court of Appeals for the Seventh Circuit listed some of the factors to be weighed in determining a taxpayer's residence:

a. The taxpayer's intention.

b. Establishment of a home temporarily in the foreign country for an indefinite period.

c. Participation in the activities of the community on social and cultural levels, identification with the daily lives of the people, and, in general, assimilation into the foreign environment.

d. Physical presence in the foreign country consistent with the taxpayer's employment.

e. The nature, extent, and reasons for temporary absences from the foreign home.

f. Assumption of economic burdens and payment of taxes to the foreign country.

g. Status of a resident of the foreign country as contrasted to that of a transient or sojourner.

h. The taxpayer's employer's classification of the taxpayer's income tax status.

i. Marital status and residence of the taxpayer's family.

j. Nature and duration of his employment; whether his assignment abroad could be promptly accomplished within a definite or specified time.

k. Whether the taxpayer's purpose in establishing a foreign home is tax evasion.

Want help with your tax return or have expat or international tax questions. Email us at ddnelson@gmail.com.  We have been doing expat taxes for over 30 years.

IRS DELAYS 2013 FILING START DATE

Due to government shut downs in 2013, IRS will not start processing 2013 Tax returns until end of January 2014.  We have noted that the IRS is slow or running behind on almost everything else too. The filing deadlines have not been extended!

We can still get started on your expat or nonresident tax return right now so you can file by the date the IRS is ready to go.  You can download our forms at our website at www.TaxMeLess.com