more info Menu

Expat Tax Blog

Feb 18

American Business Owners Abroad – Top 6 US Tax Issues To Be Aware Of

by julie

Congratulations, you’re a business owner! You’ve finally done it; you quit your job and sprung out on your own, you are your own boss! Aside from the painful realization that it’s not all peaches and cream and you actually wind up working more when working for yourself, you also face additional tax reporting burdens (and that’s especially true if you are a US person – which requires you to file special tax forms in the US). This article will summarize your requirements and go over the common pitfalls you should avoid.

1. Most importantly – what forms do I need to file?

You must remember that different countries have different reporting requirements. What may be a simple venture in your residence country may not be treated as such in the U.S. We’ve compiled a table breaking down different business types by country, indicating what the U.S. filing requirement is for your business.

Whole article at TFX.

Feb 16

Major Blow to Obamacare Mandate: IRS Won’t Reject Tax Returns That Don’t Answer Health Insurance Question

by julie

How much difference does a single line on a tax form make? For Obamacare’s individual mandate, the answer might be quite a lot.

Following President Donald Trump’s executive order instructing agencies to provide relief from the health law, the IRS appears to be taking a more lax approach to the coverage requirement.

The health law’s individual mandate requires everyone to either maintain qualifying health coverage or pay a tax penalty, known as a “shared responsibility payment.” The IRS was set to require filers to indicate whether they had maintained coverage in 2016 or paid the penalty by filling out line 61 on their form 1040s. Alternatively, they could claim exemption from the mandate by filing a form 8965.

The IRS would not accept 1040s unless the coverage box was checked, or the shared responsibility payment noted, or the exemption form included. Otherwise they would be labeled “silent returns” and rejected.

But what would have been a mandatory disclosure will instead be voluntary. Silent returns will no longer be automatically rejected. The change is a direct result of the executive order President Donald Trump issued in January directing the government to provide relief from Obamacare to individuals and insurers, within the boundaries of the law.

Original Story at Reason.

Feb 16

The Other Travel Ban – How The IRS Can Take Your Passport

by julie

When HR22 was passed on Dec 4 2015, it included specific language amendments to Section 7345 of the US tax code which gave the IRS the authority to ask the US State Department to seize passport.

While the IRS can’t seize your passport themselves, they can certify to the state department that you have delinquent tax debt, which will in turn lead the state department to not renew your passport or the department may limit your passport to return travel to the U.S.

When do these certifications begin? How will I find out if I have been selected?

The IRS has not yet started certifying tax debt to the State Department. Certifications to the State Department will begin in early 2017. The IRS is required to notify you in writing at the time the IRS certifies seriously delinquent tax debt to the State Department. The IRS is also required to notify you in writing at the time it reverses certification. The IRS will send written notice by regular mail to your last known address.

Whole Story at TFX.

Feb 15

Saudi Arabia approves Intergovernmental Agreement to implement FATCA

by julie

On 6 February 2017, the Saudi Arabian cabinet formally approved the Intergovernmental Agreement (IGA) between Saudi Arabia (KSA) and the United States (US) to improve international tax compliance and implement the Foreign Account Tax Compliance Act (FATCA).

Under the IGA, KSA based financial institutions will be treated as compliant with FATCA and should not be subject to a 30% withholding tax on US source income and gross proceeds, unless a financial institution fails to meet the requirements set out in the IGA and KSA implementing regulations.

The IGA, signed on 15 November 2016, requires financial institutions to report US Reportable Accounts to the local Competent Authority, the Saudi Arabian tax administration, General Authority for Zakat and Tax [GAZT]. In case of noncompliance with the IGA requirements, GAZT may subject the relevant financial institutions to penalties.

Original Story at EY.com.

Feb 14

How to Avoid an IRS Audit

by julie

Even if you follow the law as best as you can by paying your tax bills on time and filing your tax return every year, you are always potentially subject to an IRS audit. No one knows for sure what criteria the IRS uses to trigger an audit, and you can never eliminate the risk entirely, but there are generally accepted practices that will minimize that risk. In the event of an audit, taking the following advice to heart will also make the audit go much more smoothly.

Don’t Forget To Turn The Lights Off

It may seem obvious, but it is often simple errors that lead to an audit. Make sure you use the correct tax forms, and fill them in completely and properly. Double check all of your math. Many audits are the result of simple math errors. Tax preparation software will help tremendously with avoiding these mistakes. If the IRS does catch a math error, you will probably get an IRS notice correcting the error. The less attention you draw to yourself, the better off you’ll be.

Cross Your T’s, Dot Your I’s

There are many tax forms that are sent to taxpayers. What many people don’t realize is that these same forms are sent to the IRS. Any form that is received by the IRS must be properly reported to the IRS on your tax return. When the IRS finds discrepancies, red flags go off – this you want to avoid.

This is the easy part. All Forms 1099, W-2, 1098 – forms that taxpayers receive to report interest earned, retirement distributions, wages earned, etc – failure to properly report these items will make your life hard. Make sure all of the income on these forms are included on your tax return.

Whole Story at TFX.