Examples of Willful and Nonwillful FBAR (form 114) Excuses for Streamlined Program and Other Purposes

Following article gives excellent FBAR unwillful excuse guidance for the streamlined program and filing foreign reporting forms outside of the streamlined program from the International Tax Blog.

http://intltax.typepad.com/intltax_blog/2014/11/willful-vs-non-willful-fbar-violations.html

If you need help with drafting your unwillful failure to file or report income excuse or a review of what you have written, we can provide that service.

Hidden Costs of living in UAE - United Arab Emirates0

The UAE may have no income taxes but is is very expensive to live there. Remember you will still have file a US tax return  and pay us taxes after deducting the $99200 (2014) foreign earned income exclusion and housing deduction.  Read more at www.taxmeless.com

Read more about hidden other costs at: 

http://www.arabianbusiness.com/expats-need-count-hidden-costs-of-living-in-uae-report-572603.html

When is Social Security Taxable to Those Retired Abroad or Expatriates

Read the following ARTICLE FROM USA TODAY to find out when your social security is taxable. 

Remember, to collect social security you must pay in a minimum amount and qualify. Go to the Social Security Administration Website to find out how much you must pay in, your possible benefits, and collecting social security while living abroad or after surrendering your green card or citizenship.  That website is at www.ssa.gov 

Obamacares Impact on US Expats Explained

It may be surprising, but Americans overseas may not actually be exempt from Obamacare’s provisions. Obamacare, or the Affordable Care Act, is a new initiative created to ensure that every American has proper health care coverage. There are ‘minimum essential requirements’ that your plan must meet in order to satisfy Obamacare’s provisions and the Act applies to all US citizens, regardless of where they live. So depending on your personal circumstances, you may be required to purchase an acceptable policy. Those who don’t comply are subject to an Obamacare tax on their Federal tax returns.  Read more from Costa Rican News

What Unwillful excuse to use for the IRS when entering the Streamlined Program or Offshore Disclosure Programs?

Read this excellent article on writing your "Unwillful excuse" when entering the Streamlined  or Offshore Disclosure Program to file the various international tax forms which you failed to file in earlier years.

http://www.forbes.com/sites/irswatch/2014/08/08/am-i-non-willful-under-the-ovdp-streamlined-procedures/

If you need help with the forms or filing your Offshore Disclosure or Streamlined Filing email us at ddnelson@gmail.com. We have assisted hundreds of clients with these complicated forms and procedures with great success.

Wyoming Deemed Best of Income Tax Free States

If you are a nonresident or expatriate and need to set up a US corporation for your business, Wyoming is a good choice. Other states that are  state income tax fee and excellent include Nevada, Washington, Florida and Texas.  Operating the US side of your business in one of these states can save you having to pay state taxes.

Read more about Wyoming below:

http://tucson.com/ap/commentary/wyoming-the-fairest-of-the-low-tax-states/article_dcab31e2-289d-5998-84db-08fef5ddfd78.html

Some Nonresidents with U.S. Assets Must File Estate Tax Returns

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

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

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

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

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

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

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

Special Rules Applicable to Gifts or Bequests from Covered Expatriates

U.S. citizens and long-term residents who relinquished their U.S. citizenship or ceased to be U.S. lawful permanent residents (green card holders) on or after June 17, 2008, and who meet specific average tax or net worth thresholds on the day prior to their expatriation are considered “covered expatriates” – subject to IRC section 877A. See Expatriation Tax for more information on covered expatriates.

U.S. citizens and residents who receive gifts or bequests from covered expatriates under IRC 877A may be subject to tax under new IRC section 2801, which imposes a transfer tax on U.S. persons who receive gifts or bequests on or after June 17, 2008, from such former U.S. citizens or former U.S. lawful permanent residents.

In addition, covered expatriates under IRC 877A are not considered U.S. expatriates for purposes of Form 706NA, United States Estate (and Generation-Skipping) Tax Return, Estate of a nonresident not a citizen of the United States.

The Scariest Halloween Costume

5 Biggest Tax Differences Between LLCs and Corporations

Read article from Entrepreneur Magazine:  http://www.entrepreneur.com/article/238844

If you need a US corporation or LLC for your expat or International business that is our specialty. Email. ddnelson@gmail.com.

IRS Continues to Prosecute for Failing to File FBAR (form 114) forms and Collect Large Penalties

Howard Bloomberg, a forensic account and certified fraud examiner of Atlanta, Georgia, pleaded guilty on Friday to failing to file a Foreign Bank Account Report (FBAR) for the year 2008. Mr. Bloomberg opened a bank account at UBS AG in July 1997. The value of Mr. Bloomberg’s account increased to approximately $930,000 in 2001, and he routinely wired funds from the UBS account to his U.S. accounts. He closed the UBS account in April 2008 and wired the balance of over $540,000 to the U.S.

For having admitted to not filing the 2008 FBAR, Mr. Bloomberg has agreed to pay a penalty of $278,397, representing 50% of highest balance in 2008, and file accurate FBARs from 1997 to 2008. At sentencing, currently scheduled for December, Mr. Bloomberg faces a maximum of five years’ imprisonment and 3 years’ supervised release. According to the U.S. Attorney for the Northern District of Georgia, Sally Quillian Yates:

IRS Simplifies Procedures for Favorable Tax Treatment on Canadian Retirement Plans and Annual Reporting Requirements

The Internal Revenue Service today made it easier for taxpayers who hold interests in either of two popular Canadian retirement plans to get favorable U.S. tax treatment and took additional steps to simplify procedures for U.S. taxpayers with these plans.

As part of this, the IRS provided retroactive relief to eligible taxpayers who failed to properly choose this benefit in the past. In addition, the IRS is eliminating a special annual reporting requirement that has long applied to taxpayers with these retirement plans.

Under this change, many Americans and Canadians with registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) now automatically qualify for tax deferral similar to that available to participants in U.S. individual retirement accounts (IRAs) and 401(k) plans. In general, U.S. citizens and resident aliens qualify for this special treatment as long as they filed and continue to file U.S. returns for any year they held an interest in an RRSP or RRIF and include any distributions as income on their U.S. returns.

The change relates to a longstanding provision in the U.S.-Canada tax treaty that enables U.S. citizens and resident aliens to defer tax on income accruing in their RRSP or RRIF until it is distributed. Otherwise, U.S. tax is due each year on this income, even if it is not distributed.

In the past, however, taxpayers generally would get tax deferral by attachingForm 8891 to their return and choosing this tax treaty benefit, something many eligible taxpayers failed to do. Before today’s change, a primary way to correct this omission and retroactively obtain the treaty benefit was to request a private letter ruling from the IRS, a costly and often time-consuming process.

Many taxpayers also failed to comply with another requirement; namely that they file Form 8891 each year reporting details about each RRSP and RRIF, including contributions made, income earned and distributions made. This requirement applied regardless of whether they chose the special tax treatment. The IRS is eliminating Form 8891, and taxpayers are no longer required to file this form for any year, past or present.

The revenue procedure does not modify any other U.S. reporting requirements that may apply under the Bank Secrecy Act (BSA) and section 6038D. SeeFinCEN Form 114 due by June 30 of each year, and Form 8938 attached to a U.S. income tax return for more information about the reporting requirements under the BSA and section 6038D. Different reporting thresholds and special rules apply to each of these forms.

Further details on today’s change can be found in Revenue Procedure 2014-55, posted on IRS.gov.

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US Expatriate Mini Consultations and Reviews of Self Prepared Returns - Offshore Disclosure and Citizenship Surrender

What our CPA/Law Firm can do for US expatriates:

1. We  can review your self prepared expat returns or special international tax forms and provide you with suggestions, comments and corrects. This will help avoid potential IRS audits or problems.

2. If you are moving abroad, need to understand your personal expatriate tax or US international tax situation, we offer a mini consultation with an attorney that can give you guidance and resolve your questions. This consultation is subject to attorney/client privilege and its totally confidential.

3. Considering giving up your US Citizenship?  We have assisted over a hundred clients with this process and can provide you with guidance on all aspect of the legal and tax requirements, including assisting with the special required tax forms.

4. Haven't been filing your tax returns or special foreign tax forms (FBAR, Foreign Corp, etc) while living abroad?  Omitted your foreign income or failed to disclose foreign bank accounts to the IRS. We can help with the expertise and confidentiality of an Attorney/CPA.  We provide you with complete legal tax advice and can prepare all of the returns necessary to enter the IRS Offshore Disclosure Program or the new Streamlined Disclosure Programs (that can significantly reduce your penalties).

Email us if you need help at ddnelson@gmail.com or visit our websites at www.TaxMeLess.com or www.expatattorneycpa.com  

2014 California Tax Rates and Other Information

Many of our expat clients also pay taxes in California due to real estate, businesses, etc located in that state.  We also have many clients who have moved to California from abroad. The link below leads to a complete chart of the 2014 California Tax Rates and Other Information.

LINK TO 2014 CALIFORNIA TAX INFORMATION

IRS OVDP vs. Streamlined: What To Do?

Read the great article below from Forbes in you are not certain whether to enter the  IRS Streamlined

 program or the Offshore Voluntary Disclosure Program (OVDP).   Due to the new rules in the Streamlined program many can now enter that program which has significantly lower monetary penalties and much less paperwork.

Link to Forbes Article:  http://www.forbes.com/sites/irswatch/2014/07/07/irs-ovdp-vs-streamlined-what-to-do/

The disadvantage of the Streamlined Program is that it does not protect you from criminal prosecution and if you are rejected, your entire situation may be sent to the audit department and regular penalties may then be imposed which can be very high.

We have advised or represented in excess of a hundred clients in connection with the Streamlined program or the Offshore Voluntary Disclosure Program. We can advise you which program is best for you after you read the article above.

STATE DEPARTMENT RAISES FEE TO SURRENDER CITIZENSHIP

The US State Department has raised the fee they charge (for their costs) to surrender Citizenship from $450 to $2,350 effective 9/6/14.  If you are born here it costs nothing to become a citizen. This fee is in addition to the time and expense you must incur to file necessary forms with the IRS.

Statute of Limitations for Expatriates Living Outside the USA

IRS Statute of Limitations for expatriates.

1. Fail to file a return for any tax year that one is due on your worldwide income?  The statute of limitations nevers runs out to assess taxes for that year.

2. Fail to pay taxes on past filed returns or assessed by the IRS?  The normal statute of limitations is 10 years from the date of assessment and filing a tax lien (that may be a later date from the date you filed the return) to collect tax. However, if you leave the country or the tax is assessed while you are outside the USA, that statue of limitations is put on hold until you return to the USA when it starts to run again.

3. Failed to file Foreign Bank Account Reporting Forms (FBAR or now form 114)?  The statute of limitations to assess penalties for failing to file is 6 years from the due date of each years forms.

4. 3 years from date return is filed is normal statute. 6 years from date return filed if you omitted 25 percent or more of gross income.

5. The statute never runs out if you fail to file forms 5471, 8865, or 3520 --3520A.

Read more at www.taxmeless.com

Top Ten Tax Facts if You Sell Your Home

Do you know that if you sell your home and make a profit, the gain may not be taxable? These rules apply even if your primary home is located abroad. That’s just one key tax rule that you should know. Here are ten facts to keep in mind if you sell your home this year.

1. If you have a capital gain on the sale of your home, you may be able to exclude your gain from tax. This rule may apply if you owned and used it as your main home for at least two out of the five years before the date of sale.

2. There are exceptions to the ownership and use rules. Some exceptions apply to persons with a disability. Some apply to certain members of the military and certain government and Peace Corps workers. For details see Publication 523, Selling Your Home.

3. The most gain you can exclude is $250,000. This limit is $500,000 for joint returns. The Net Investment Income Tax will not apply to the excluded gain.

4. If the gain is not taxable, you may not need to report the sale to the IRS on your tax return.

5. You must report the sale on your tax return if you can’t exclude all or part of the gain. And you must report the sale if you choose not to claim the exclusion. That’s also true if you get Form 1099-S, Proceeds From Real Estate Transactions. If you report the sale you should review the Questions and Answers on the Net Investment Income Tax on IRS.gov.

6. Generally, you can exclude the gain from the sale of your main home only once every two years.

7. If you own more than one home, you may only exclude the gain on the sale of your main home. Your main home usually is the home that you live in most of the time.

8. If you claimed the first-time homebuyer credit when you bought the home, special rules apply to the sale. For more on those rules see Publication 523.

9. If you sell your main home at a loss, you can’t deduct it.

10. After you sell your home and move, be sure to give your new address to the IRS. You can send the IRS a completed Form 8822, Change of Address, to do this.

Delinquent FBAR Submission Procedures

Taxpayers who do not need to use either the OVDP (described in section 1 above) or the Streamlined Filing Compliance Procedures (set forth in section 2 above) to file delinquent or amended tax returns to report and pay additional tax, but who:

(1) have not filed a required Report of Foreign Bank and Financial Accounts (FBAR) (FinCEN Form 114, previously Form TD F 90-22.1),
(2) are not under a civil examination or a criminal investigation by the IRS, and
(3) have not already been contacted by the IRS about the delinquent FBARs

should file the delinquent FBARs according to the FBAR instructions and include a statement explaining why the FBARs are filed late.  All FBARs are required to be filed electronically at FinCen.  On the cover page of the electronic form, select the reason for filing late.  If you are unable to file electronically, you may contact FinCEN's Regulatory Helpline at 1-800-949-2732 or 1-703-905-3975 (if calling from outside the United States) to determine possible alternatives to electronic filing.  
The IRS will not impose a penalty for the failure to file the delinquent FBARs if you properly reported on your U.S. tax returns, and paid all tax on, the income from the foreign financial accounts reported on the delinquent FBARs and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted.

FBARs will not be automatically subject to audit but may be selected for audit through the existing audit selection processes that are in place for any tax or information returns.

Delinquent International Information Return Submission Procedures

Taxpayers who do not need to use the OVDP (described in section 1 above) or the Streamlined Filing Compliance Procedures (set forth in section 2 above) to file delinquent or amended tax returns to report and pay additional tax, but who:

(1) have not filed one or more required international information returns,
(2) have reasonable cause for not timely filing the information returns,
(3) are not under a civil examination or a criminal investigation by the IRS, and
(4) have not already been contacted by the IRS about the delinquent information returns

should file the delinquent information returns with a statement of all facts establishing reasonable cause for the failure to file.  As part of the reasonable cause statement, taxpayers must also certify that any entity for which the information returns are being filed was not engaged in tax evasion.  If a reasonable cause statement is not attached to each delinquent information return filed, penalties may be assessed in accordance with existing procedures.

All delinquent international information returns other than Forms 3520 and 3520-A should be attached to an amended return and filed according to the applicable instructions for the amended return.  All delinquent Forms 3520 and 3520-A should be filed according to the applicable instructions for those forms.  A reasonable cause statement must be attached to each delinquent information return filed for which reasonable cause is being requested.

Information returns filed with amended returns will not be automatically subject to audit but may be selected for audit through the existing audit selection processes that are in place for any tax or information returns.

Pilots..IRS Tax Return Problems

Pilots, flight attendants and those that work on ships have complex US tax returns if they work abroad. Read more:

http://money.cnn.com/2014/07/01/pf/expat-taxes-irs/

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