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).

IRS STREAMLINED COMPLIANCE PROCEDURES FORM 14653 NOW REQUESTS MORE INFORMATION THAN OLD FORM.

Form 14653 ( used then a taxpayer has not filed for many years forms required to report foreign  assets, bank accounts, foreign corporations, foreign trusts, etc) in which you must explain the reasons you did not willfully fail to file your tax forms reporting foreign assets has now been expanded to request much more information from applicants. Failure to use the new form asking this information may cause problems with your application which needs to be accompanied with last three year incorrect or past due returns and 6 year past  due amended or original FBAR forms (Form 1140  It now requests the following;


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.

3 Additionally, explain the source of funds in all of your foreign financial accounts/assets. For example, explain whether you inherited the account/asset, whether you opened it while residing in a foreign country, or whether you had a business reason to open or use it. And explain your contacts with the account/asset including withdrawals, deposits, and investment/ management decisions. Provide a complete story about your foreign financial account/asset. If you relied on a professional advisor, provide the name, address, and telephone number of the advisor and a summary of the advice.

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 

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

US NEW SECRET TAX HAVEN FOR REST OF WORLD

Read more in Bloomberg:

http://www.bloomberg.com/news/articles/2016-01-27/the-world-s-favorite-new-tax-haven-is-the-united-states

5 Essential US Expatriate Estate Planning Steps

1. US Expatriates do need to plan for both their foreign assets and US assets in the event of their demise.  The US does look at your worldwide assets and if their values exceed approximately 5.45 million dollars you must file an estate tax return and may owe US estate taxes.

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

Cathay Pacific to Withhold US Taxes From Pilots Wages Paid Abroad

Foreign companies such as Cathay Pacific have now decided to comply with US IRS instructions to withhold US taxes (and remit to the IRS) from US Citizens working abroad.  Foreign companies are going to be doing this in the future to avoid penalties which could be imposed against them by the IRS if they do business in the USA.



See Article with more details  In South China Morning Post

IRS Taxpayer Service Hits All Time Low for 2016

Don't count on the IRS for help this year. Only 38 percent of phone inquiries get answered. There are 15,000 fewer employers and the organization is suffering from a huge budget cuts.  The good news is that your chance of audit is about 1 percent and with respect to expatriate and international taxes the very few IRS personnel have any expertise.

The IRS keeps coming up with new forms, new rules and new procedures. Therefore, complying with your tax filing obligations and planning is becoming more complex daily and they are no longer there to help.

So when you have questions on your nonresident, expatriate or international US taxes this year, you may want to consider asking the expert CPAs and Attorneys at our firm.  We offer a mini consultation by phone, email, whatsapp, or skype that allocates up to 1/2 hour of time to answer your questions and help you with a tax strategy for your particular situation.  Write us to request a mini consultation

READ MORE ABOUT IRS BUDGET CUTS AND POOR SERVICE

Stronger Dollar Makes It Good Time to Buy in Mexico

The Street Article on Strengthening US Dollar and Good Time to Buy Real Estate in Mexico:

http://www.thestreet.com/story/13424393/1/strengthening-dollar-makes-it-a-good-time-to-buy-in-mexico.html

The IRS is watching You...so pay up!

Read more in New York Times Article