Expat Tax Blog
The IRS reminds U.S. taxpayers with undisclosed offshore accounts that they should use existing paths to come into full compliance with their federal tax obligations.
Updated data shows 55,800 taxpayers have come into the Offshore Voluntary Disclosure Program (OVDP) to resolve their tax obligations, paying more than $9.9 billion in taxes, interest and penalties since 2009.
OVDP offers taxpayers with undisclosed income from foreign financial accounts and assets an opportunity to get current with their tax returns and information reporting obligations. The program encourages taxpayers to voluntarily disclose foreign financial accounts and assets now rather than risk detection by the IRS at a later date and face more severe penalties and possible criminal prosecution.
The IRS developed the Streamlined Filing Compliance Procedures to accommodate taxpayers with non-willful compliance issues. Submissions have been made by taxpayers residing in the U.S. and from those residing in countries around the globe.
Original Story at IRS website.
The IRS issued a warning of 2017 tax refund delays for certain taxpayers, urging folks to adjust their tax withholding now. It’s about your 2016 taxes that are due April 15, 2017.
A couple things are to blame. First, a new tax law effective next year requires the IRS to hold refunds a few weeks for some early filers who claim the Earned Income Tax Credit and the Additional Child Tax Credit. The IRS has to hold the entire refund, not just the portion associated with those credits, until at least February 15.
Second, the rise in identity theft is causing the IRS and state tax authorities to spend additional review time to protect against fraud. Additional safeguards will be set in place for the upcoming 2017 filing season.
So what’s the solution if you don’t like the idea of a tax refund delay? Adjust your tax withholding for the rest of 2016, so you get more take-home money now and a smaller refund. Check out IRS tips on tax withholding and a withholding calculator.
Already in 2016, the IRS has issued more than 102 million tax refunds (out of 140 million individual returns), and the average refund is over $2,700. Most refunds will still be issued within 21 days or less, the IRS says.
Original Story at Forbes.
Higher-income workers will pay more in payroll taxes next year to support Social Security. Meanwhile retirees and other program beneficiaries see a scant increase in their monthly benefits.
Nearly 66 million people receive Social Security and Supplemental Security Income payments from the U.S. government.
According to the Social Security Administration, the maximum amount of earnings subject to the Social Security tax would climb 7.3% to $127,200 in 2017 from $118,500 in 2015 and 2016, affecting an estimated 12 million workers. The worker’s share of Social Security payroll tax is 6.2% of eligible wages; someone making at least $127,200 in 2017 would pay an additional $539 over the course of next year.
Employers also pay a 6.2% tax on eligible wages and would pay more, too, though economists generally believe those costs are borne by workers in the form of lower wages. Self-employed people pay the employer’s and employee’s share of the tax.
Original Story at WSJ.
Hundreds of thousands of American citizens by birth live abroad without a Social Security number. Many of them have recently discovered that they have U.S. tax compliance obligations. Most often this news is delivered by a foreign bank that has custody of their money, through ascary letter with the threat of freezing their funds unless they provide proof of U.S. tax compliance.
However – obtaining a Social Security number, even if you have all the required documents, may be a challenge for those living in remote parts of the world, far away from the nearest U.S. Embassy. But people need to catch up with their filing obligations ASAP and they search for a way to file without a Social Security number.
First they learn the acronym ITIN – Individual Tax Identification Number. The Application for an ITIN can be submitted by mail to the IRS along with the completed tax returns. This is the easy and speedy solution. Unfortunately, individuals eligible for a Social Security number are not eligible for ITIN – a tax ID for the foreigners. This option does not work for the US citizens by birth.
Whole story at TFE.
Make sure you are prepared for the upcoming tax season. Here are some need-to-know facts for optimized filing.
The new tax season is just around the corner, and you need as much information as you can get about what to do and what not to do when it comes to filing your US expat tax return. You can avoid some common mistakes when it’s time to file.
Even though filing a US expat tax return can be time consuming and often confusing, you still must file a tax return to remain in good standing with the IRS.
As a US Expat, you may not have any tax liability after considering the deductions and exclusions for which you qualify. In order to get these deductions and exclusions, though, you must file a US expat tax return. No matter what your tax liability is, you are still required to file a tax return every year to report your worldwide income – which includes capital gains, dividends, gambling winnings, income from partnership or trust, interest, rental income, retirement distributions, salary/wages, social security income, and any other income you receive from any source in the world.
If you have children who are earning any type of income, they are not exempt from being required to file a US income tax return claiming their worldwide earnings. If your child’s income meets the required tax filing thresholds, he/she will be required to file a tax return, and it’s your responsibility as a parent to see that the return is filed and filed correctly.
Whole story at TFE.