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January 27, 2023

There are hundreds of IRS forms and schedules — that may apply to US expatriates living abroad and nonresidents

Some of the many expat and nonresident forms include the following. Many forms require 5 or more hours to complete - if filled out by an average taxpayer. We can reduce your time and save money.

  1. Form 1040 – The form every American files during tax season to report income to the IRS.
  2. FBAR (FinCEN Form 114) – Your Foreign Bank Account Report, used to report any assets in foreign financial institutions to the Financial Crimes Enforcement Network of the U.S. Treasury.
  3. Foreign Earned Income Exclusion Form 2555 – One of two methods for U.S. expats to avoid being double-taxed on income earned abroad.
  4. Foreign Tax Credit Form 1116 – One of two methods for U.S. expats to avoid being double-taxed on income earned abroad.
  5. FATCA Form 8938 – How you report assets in foreign financial institutions to the IRS.
  6. Form 5471 – Informational return for U.S. citizens who are also shareholders, officers, or directors of a foreign corporation.
  7. Form 8621 – Informational return for U.S. citizens who are also shareholders of a passive foreign investment company.
  8. Form 3520 – Informational return expats use to report certain transactions with foreign trusts, ownerships of foreign trusts, or if you receive certain large gifts from certain foreign persons.

Ready to file or confused about expat tax formsGet started with Kauffman Nelson LLP CPAs. We have been doing taxes for US expats and nonresidents for over 30 years.  Email us at taxmeless@gmail.com or call 949-480-1235 (this is a US number.  We offer phone consultations  to answer you questions and solve your problems.


January 24, 2023

Expatriate and Nonresident US Taxpayers should avoid these common mistakes when they file their tax return

Most of the common errors taxpayers make on their tax returns are easily avoidable. By carefully reviewing their return, taxpayers can save time and effort by not having to correct it later. Filing electronically also helps prevent mistakes. Tax software does the math, flags common errors and prompts taxpayers for missing information. It can also help taxpayers claim valuable credits and deductions. Taxpayers who qualify may use IRS Free File to file their return electronically for free.

Here are some of the mistakes to avoid:

  • Filing too early. While taxpayers should not file late, they also should not file prematurely. They should wait to file until they’re certain they’ve received all their tax reporting documents, or they risk making a mistake that may lead to a processing delay.
  • Missing or inaccurate Social Security numbers. Each SSN on a tax return should appear exactly as printed on the Social Security card.
  • Misspelled names. The names of all taxpayers and dependents listed on the return should match the names on their Social Security cards.
  • Inaccurate information. Taxpayers should carefully enter any wages, dividends, bank interest and other income they received to make sure they report the correct amounts. This includes any information taxpayers need to calculate credits and deductions.
  • Incorrect filing status. Some taxpayers choose the wrong filing status. Publication 501 has detailed information about filing statuses.
  • Math mistakes. Math errors are some of the most common mistakes. They range from simple addition and subtraction to more complex calculations. Taxpayers should always double check their math. Better yet, tax prep software will check it automatically.
  • Incorrect bank account numbers. Taxpayers who are due a refund should choose direct deposit. This is the fastest way for them to get their money. However, taxpayers need to make sure they use the correct routing and account numbers on their tax return.
At Kauffman Nelson LLP CPAs we are experts and will make you tax preparation easy. We prepare over 800 returns for US nonresidents and US expatriates everywhere in the world and have done so for over 25 years.  For tax preparation questionnaires, tax consultations and more information please email us a ddnelson@gmail.com. Thank you. 

January 20, 2023

US Estate Planning Requirements for Expatriates and Nonresidents with assets located in the USA

 If you are a US expatriate living abroad, you are still subject to US estate tax on your assets no matter where they are located in the world.  Also, even if you are below the estate tax threshold, your US assets will be subject to probate unless proper planning is instituted. Your US assets may be bank accounts, real estate, stock accounts, etc. which are located somewhere in the USA.

For assets located outside the USA, it is best you do a will (or whatever procedure or document is appropriate) for those assets legal under the country of the assets location to make certain those assets will go to your designated heirs.  There are treaties with some countries that provide for honoring foreign wills, but still there are often problems and best to do a local will in the country where you live and where the assets are located.

If you are a nonresident but have assets located in the USA, you can also avoid expensive probate and possible estate taxes by planning in advance and make certain your property goes to the heirs you wish to receive them.

To avoid expensive and time consuming probate and possibly reduce US estate taxes you need to create US Wills, living trusts and other estate planning documents.  Our firm has assisted hundreds of expatriates and clients with their estate planning and are ready to help you. Email us at taxmeless.com or contacts us on whatsapp at 818-519-9219 (a us cel phone number).  We can then set up a personal consultation to help you plan for the disposition of your US assets.



2022 Fast Tax Facts for US Expatriates and Green Card Holders Living and Working Abroad

 2022 Fast Tax Facts  for  US Expatriates and Green Card Holders

  Living and Working Abroad

Kauffman Nelson LLP CPAS - Don D. Nelson , Attorney,   Charles Kauffman  CPA


If you are a US Citizen or green card holder you must file a US tax return every year unless

your taxable income is below a certain threshold.  Even if your income is below that threshold,

you may still be required to file certain forms to report foreign assets, etc. Failure to file these

forms can result in severe IRS penalties If you do not itemize your health, tax, interest, charitable

and miscellaneous deductions you get a standard deduction of $12,950 if single or filing as

married filing separately or $25,900 if you file jointlywith your spouse. 


As a US expatriate living and working abroad 4/18/2023 your 2022 tax return is automatically

extended until 6/15/23  but any taxes due must be paid by 4/18/23  to avoid penalties and interest.

The return can be further extended until 10/15/2023 if the proper extension form is filed. An even

further extension until December may be available if the proper letter is sent to the IRS.


For 2022 if you are a qualified expatriate you get a foreign earned income exclusion (earnings from

wages or self employment) of $112,000 but this exclusion is only available if you file a tax return.

You must qualify under one of two tests to take this exclusion: (1) bona fide resident test or

(2) physical presence test. You can read more about how to qualify in IRS Publication 54. This

exclusion only applies to income taxes and does not apply to US self- employment tax

(social security plus medicare).  Your spouse who lives works abroad with you will also be

able to use this exclusion against any earned income they have abroad.

You can lose this exclusion if you file your return more than 18 months late.

The exclusion can only be claimed on filed tax return and does not apply if you fail to

file a tax return.


If you receive a gift or inheritance of $100,000 or more during 2022 from a nonresident

individual or nonresident corporation you must file form 3520 to report that gift. If you fail

to file that form you will incur substantial penalties and taxes. .


If your foreign earnings from wages or self -employment exceed the foreign earned income

exclusion you can claim a housing expense for the rent, utilities and maintenance you pay if

those amounts that exceed a minimum non-deductible amount.   There is a limit to the housing

amount and in certain “high-cost” locations there is a higher amount of housing expense which

can be considered. (For “high-cost” country limitations see Form 2555 instructions).


You get credits against your US income tax obligation for foreign income taxes paid to a

foreign country but you must file a US tax return to claim these credits. This avoids double

taxation of the same income. Value added taxes paid to foreign countries are not eligible

for this credit.


If you own 10% or more of a Foreign corporation or Foreign partnership (LLC) you must

file special IRS form 5471 or 8865,  or incur substantial penalties which can be greater

including criminal prosecution if the IRS discovers you have failed to file these forms.


If you create a foreign trust or are a beneficiary of a foreign trust you may be obligated

to file forms 3520 and /or 3520A each year to report those activities or be subject to

severe penalties of $10,000 US or more Foreign foundations and nonprofits which indirectly

benefit you may be foreign trusts in the eyes of the IRS.


Your net self-employment income in a foreign country (earned as an independent

contractor or in your own sole proprietorship) is subject to US self-employment tax

(medicare and social security) of  15.3%  which cannot be reduced or eliminated by the

foreign earned income exclusion or foreign tax credits. The one exception is if you live

in one of the very few countries that have a social security agreements with the US and

you pay the equivalent of social security in that country. 


Forming the correct type of foreign corporation and making the proper US tax election

(to cause the income and foreign taxes  the foreign corporation pays to flow through to your

personal US tax return) with the IRS for that corporation may save you significant income taxes

and avoid later adverse tax consequences. You need to investigate this procedure before you

actually form that foreign because it can be difficult to make that election later and only certain

types of foreign business entities are eligible to make this election.


If at any time during the tax year your combined highest balances in your foreign bank and

financial accounts (when added together) ever equal or exceed $10,000US you must file

a FBAR form 114 with the IRS by October 15, 2023 for the 2022 calendar year or incur a

penalty of $10,000 US or more including criminal prosecution. Foreign financial accounts

often include accounts when you sign on for a foreign corporation, foreign partnerships

foreign pension plans, stock brokerage accounts, and cash surrender value of foreign life

insurance.  This form does not go in with your personal income tax return and  can only be

filed separately on the web at:

http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html


The IRS gets lists of Americans applying or renewing for US passports or entering the country.

They will compare these lists with those who are filing US income tax returns and take action

against those who do not file US returns but are US residents or citizens.


Often due to foreign tax credits and the foreign earned income tax expats living abroad

who file all past year unfiled tax returns end up owing no or very little US taxes.

The IRS has a special program which will help you catch up if you are in arrears which will

reduce or possibly eliminateall potential penalties for failing to file the required foreign

asset reporting forms. We can direct you to the best program for your situation, prepare

the returns and forms and represent you before the IRS.


Beginning in 2011 a new law went into effect which requires all US Citizens report

all of their worldwide financial assets with their personal tax return if in total the value

of those assets exceed certain minimum amounts starting at $50,000. Failure to file that

form 8938 on time can result in a penalty of $10,000. The form is complex and has

different rules that apply to you if you live abroad or live in the US. This form is

required in addition to the FBAR form 114.


Certain types of income of foreign corporations are immediately taxable on the

US shareholder's personal income tax return. This is called Subpart F income. The rules are

complex and if you own a foreign corporation you need to determine if these rules apply to

you when you file the required form 5471 for that corporation. For 2018 a new tax was

enacted with the acronym of GILTI tax. This may or may not cause an owner of

a  Controlled Foreign Corporation (CFC) to owe taxes on the income it

does not distribute to its owners. This GILTI tax applies to 10% or more

owners of CFCs. 


If you own investments in a foreign corporation or own foreign mutual fund shares you

may be required to file the IRS form 8621 for owning part of a Passive Foreign Investment

Company (PFIC) or incur additional, taxes and penalties for your failure to do so. A PFIC

is any foreign corporation that has more than 75% of its gross income from passive income

or 50 percent or more of its assets produce or will produce passive income.


There are many more special tax laws too numerous to mention here that apply to expatriates,green card holders. nonresidents and US  taxpayers with foreign assets, businesses, etc.

  Please consult with Kauffman Nelson LLP  if you have other offshore tax planning or return

filing questions.


Download your   2022 Expatriate Tax Questionnaire at www.taxmeless.com


Send us your completed questionnaire and we will immediately provide you with a flat fee

quote for preparing your return(s). 


Don D. Nelson, US Tax Attorney, Charles Kauffman CPA,

Kauffman Nelson, LLP, CPAs
Huntington Beach, California USA
US Phone: (949) 480-1235, US Fax: (949) 606-9627
Email:ddnelson@gmail.com or ustax@hotmail.com
Skype address: dondnelson   whatsapp:  818-519-9219 (US)
Website: www.taxmeless.com 

Visit our International Tax Blog for the Latest Expat and International Tax

Developments atwww.usexpatriate.blogspot.com    /   http://us-mexicantax.blogspot.com


We have been preparing tax returns and assisting US clients located in over 123

countries around the world for over 30 years. We also assist US Nonresidents

meet their US tax obligations and return filing requirements. Email, skype or phone

us for immediate assistance. 


ARE YOU NOW CONFUSED OR HAVE SPECIFIC QUESTIONS?


WE OFFER MINI TAX CONSULTATIONS BY PHONE, SKYPE OR EMAIL: The mini

consultations(with attorney client privilege) to answer your tax questions and

resolve yourtax issues. Email ddnelson@gmail.com to learn more or request a

consultation


For additional useful information and tax assistance go to our website at.

www.TaxMeLess.com




Disclaimer and Conditions: The information contained herein is general in nature and is not to be construed

or relied on as tax or legal advice with respect to you individual tax situation or questions. Your use of this

does not create an attorney/CPA client relationship between you and this firm. You must retain competent

CPA and Attorney counsel to advise you on your particular situation.

September 24, 2022

Access Your IRS tax account online

Access your individual account information including balance, payments, tax records and more.

Sign in to your Online Account

If you don't have an existing IRS username or ID.me account, have your photo identification ready. More information about identity verification is available on the sign-in page.

View Your Balance

  • View the amount you owe and a breakdown by tax year

Make and View Payments

  • Make a payment from your bank account or by debit/credit card
  • View 5 years of payment history, including your estimated tax payments
  • View any pending or scheduled payments

View or Create Payment Plans

  • Learn about payment plan options and apply for a new payment plan
  • View details of your payment plan if you have one

Manage Communication Preferences

  • Go paperless for certain notices
  • Get email notifications for new account information or activity

Access Tax Records

  • View key data from your most recently filed tax return, including your adjusted gross income, and access transcripts
  • View information about your Economic Impact Payments
  • View information about your advance Child Tax Credit payments
  • View digital copies of certain notices from the IRS

View Tax Pro Authorizations

  • View any authorization requests from tax professionals
  • Approve and electronically sign Power of Attorney and Tax Information Authorization from your tax professional

Accessibility

There are compatibility issues with some assistive technologies. Refer to the accessibility guide for help if you use a screen reader, screen magnifier or voice command software.

Other ways to find your account information

Need to Pay?

See your payment options.

Need tax help from professional expert CPAs and Attorney?  Email us at ustax@hotmail.com or text or whatsapp to 1818 529 9219.

September 3, 2022

Guidance on Crowdfunding and Taxes for your US taxes

Crowdfunding has become one of the most popular ways to raise money for charities, businesses, and people enduring hardships. Depending on a variety of circumstances, money raised through a crowdfunding campaign may be either taxable or non-taxable.

In many cases, if people donate to a crowdfunding campaign and receive nothing in return, the IRS treats the donations as gifts. Therefore, the person who receives the funds may exclude them from their gross income for tax purposes. Also, if you organize a crowdfunding campaign for someone else’s benefit, you may exclude the funds raised from your own income, as long as you do not keep any of the money for yourself.

However, there are situations where funds received through crowdfunding are taxable, such as when an employer contributes to a campaign for an employee. Taxpayers generally must also report income received via crowdfunding if contributors get goods or services in exchange for their donations.

If the funds raised exceed $600 or contributors receive goods or services, you may get a Form 1099-K from the crowdfunding website.

We are experts on all aspects of Expatriate and US International Taxation including your crowd funding activies. Email us at taxmeless@gmail.com.  We are available for telephone and whatsapp tax consultations including US business law as it relates to international business.


August 26, 2022

IRS PENALTY RELEIF FOR RETURNS FILED IN 2019 AND 2020

The IRS is providing penalty relief to certain taxpayers who filed their 2019 and/or 2020 tax returns late. The penalty relief also extends to certain domestic and international information return filers.


Who qualifies for relief? For income tax filers to qualify for this penalty relief, any “eligible income tax return” must be filed on or before September 30, 2022.

Note. For those with an outstanding 2019 or 2020 income tax return, if they file it before September 30, 2022, they won’t have to pay the failure-to-file penalty.

Read More about the details here    Need help catching up with unfiled past US tax returns for the IRS or any state. Contact us by email at ddnelson@gmail.com