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Expat Tax Blog

Jan 17

TFX Support Options 2018

by julie

At TFX customer service is not an afterthought – it’s the core of how we deliver service to clients. That is why we offer numerous ways to get help – whichever route works best for you.


Website Chat

On any page of taxesforexpats.com you will find a blue envelope icon -.

Click it and a chat window with a member of customer support team will come up. We provide live support 18 hours a day, 5 days a week.

If we are not there, leave a message and one of us will reach out to help in a couple of hours.

Please note that the chat is 100% human – we don’t employ bots or Artificial Intelligence.

Call Us

If you are more comfortable calling in, the same support team is here to answer your phone call. We can be reached at our NYC phone number – +1 646 EXPAT US or on the local country number (you can find it here: Contact Us).

Alternatively you can call us for free from the website – click this widget.

Whole Story at TFX.

Jan 17

TFX New Features 2018

by julie

We are busy year-round improving our system – hence making your life easier. Here are the changes we rolled out since the last tax year.

New Tax Questionnaire

We continue to improve our Tax Questionnaire. This year brings a wholesale redesign as well as many functional improvements. The clients who’ve started using it are giving it extremely high marks!

Income Calculator

Many of our clients live in the countries where the tax year differs from the U.S. calendar (Jan 1 – Dec 31). We have built a calculator in the Tax Questionnaire that allows you to input the income you earned in your home country calendar and it will convert it to the US tax year automatically. No more excel spreadsheets

Whole Story at TFX.

Jan 15

How does the IRS decide who to audit?

by julie

They say that the best defense is a good offense. So, to understand the best way to react to an audit from the IRS, it helps to understand the methods the IRS uses to select tax returns for audit. There are several methods that are used by the IRS. Some of them are objective and based on confidential formulas in the IRS computer system. Others are subjective and based on investigative work by IRS agents.

Keep in mind that just because you receive notice of an audit, it does not necessarily mean that there is a problem with your return.

Random Computer Selection

The IRS chooses some tax returns to audit by comparing your return to statistical data for similar tax returns. This statistical data is developed from historical audits of random samples of returns under the IRS National Research Program. As new data is gathered, the IRS updates the return selection formula.

Other returns  are chosen by computer based on the Discriminant Function System, or DIF. This mathematical formula is used to analyze each return and score it using data from previous IRS audits. The tax returns that score poorly are examined manually for potential further audit action. This formula is periodically updated to reflect current statistical data.

There are different formulas for different categories of taxpayers. The specific DIF formulas and other program details are not made public, but experience shows that certain things are more likely to generate a high DIF score and cause the tax return to get chosen for manual examination. These items include:

– Large expenses for automobiles
– Large expenses for travel and entertainment, such as sky box seats
– Large deductions for home offices
– Large contributions to charities
– Using tax shelters

Once a return is selected for manual examination, an IRS examiner can properly consider attachments, notes made on the tax return, and additional information that the computer formula could not take into account before deciding whether or not to audit the return.

Some returns are chosen randomly rather than by using statistical data. This allows the IRS to feed current data to the statistical methods and to measure taxpayer compliance.

Whole Story at TFX.

Jan 12

Streamlined Domestic Offshore & Certification Form 14654

by julie

Streamlined Program Overview

The IRS streamlined program breaks down into two camps.

  1. Streamlined Foreign Offshore Program (SFOP)
  2. Streamlined Domestic Offshore Program (SDOP) – described herein

The key difference between these two programs is that the first requires the taxpayer to meet the non-residency test. This has nothing to do with citizenship, or whether you filed 1040 or 1040NR, or the physical presence test.

To qualify for the more lenient program (Option 1 – Streamlined Foreign Offshore) – the taxpayer must be outside of the U.S. at least 35 days in 1 of the last 3 years (both programs require 3 tax returns + 6 FBARs).

If the taxpayer was present in the US (did not meet the above test), then they would only be eligible for DSOP.

The primary benefit of both programs is amnesty from FBAR penalties, failure to file penalties, and accuracy-related penalties.

Whole Story at TFX.

Jan 10

Choosing Between Traditional and Roth IRA Guide

by julie

How to Choose Between Traditional and Roth IRA

Based on 2017 tax year.

When choosing between a Traditional IRA and a Roth IRA, some of the key aspects to consider include income limits, tax incentives, withdrawal rules, and other specific rules and benefits.

Income Limits

1. Is there an age restriction for contribution?

a. Traditional IRA: Anyone with earned Income younger than age 70 ½ can contribute.

b. Roth IRA: No age restriction.

2. Is the contribution tax deductible?

a. Traditional IRA: Yes. However, eligibility for the tax deduction depends on your income and whether you or your spouse (if you’re married) are covered by a retirement plan with your job (i.e. 401(k)). For further detail please see the 2017 IRA Deduction Limits – If already covered by a retirement plan at work.

b. Roth IRA: No. Contributions are not tax deductible.

3. Is there an income-eligibility restriction? If so, how does that affect the contribution?

a. Traditional IRA: No. Contributions to a Traditional IRA are not limited by annual income.

b. Roth IRA: Yes. Contributions to a Roth IRA are affected by your filing status and the amount of your modified adjusted gross income (MAGI). For example, if you are single you must have a MAGI less than $133,000 in order to contribute to a Roth IRA. (Please note: contribution limits begin to phase out starting with a MAGI of $118,000.) Married couples filing a joint return must have a MAGI less than $196,000 in order to contribute to a Roth IRA. (Please note: contribution limits begin to phase out starting with a MAGI of $186,000.)  For further details, please see the IRS guidelines for the Amount of Roth IRA contributions.

Whole Story at TFX.