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Expat Tax Blog

Oct 21

IRS Warns Of 2017 Tax Refund Delays

by julie

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.  10212016-2

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.


Oct 19

Social Security Taxes to Rise for Higher-Income Americans

by julie

Higher-income workers will pay more in payroll taxes next year to support Social Security. social-security-2016Meanwhile 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.

Oct 10

IRSN (Internal Revenue Service Number) – What It Is, Who Needs It and Who Should Avoid It.

by julie

Hundreds of thousands of American citizens by birth live abroad without a Social Security number. Ma10102016ny 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.


Oct 9

How To Avoid Major Tax Mistakes In the Coming Tax Season

by julie

ines125pxMake 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.

Oct 7

Dozens arrested at India call center linked to IRS scam calls

by julie

Indian police have arrested 70 people and are questioning hundreds more after uncovering a massive scam to cheat thousands of Americans out of millions of dollars by posing as U.S. tax authorities and demanding unpaid taxes, a police officer said Thursday.

According to police in Mumbai, the yearlong scam involved running fake call centers which sent voice mail messages telling U.S. nationals to call back because they owed back taxes.

The scam brought in more than $150,000 a day, Marere said without giving a total sum. If the scam netted that amount daily, it would have made almost $55 million in one year.

Some victims were also told to buy gift vouchers from various companies, and hand over the voucher ID numbers which the impostors then used to make purchases.

Police said they are likely to file charges against many of the 600 or more people still being questioned on suspicion of running the fake call centers, housed on several stories of a Mumbai office building.

The IRS reports receiving more than 900,000 complaints about similar scam calls since October 2013. More than 5,000 people have fallen for the scam, paying out more than $26 million collectively as a result of scams.

If you receive a call form someone claiming to be from the IRS and asking for money, you should never give out personal information. Report the call to the IRS using their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.

Original Story at abc27.