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Expat Tax Blog

Dec 22

FIRPTA Withholding of Tax on Dispositions of United States Real Property Interests

by julie

What is FIRTPA withholding

The disposition of investment in U.S. real property by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests.

A disposition means “disposition” for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers’ agents, and settlement officers are required to withhold 15% (10% for dispositions before February 17, 2016) of the amount realized on the disposition (special rules for foreign corporations apply).

Whole Story at TFX.

Dec 22

New Due Date for FBAR filing – April 15 With automatic extension until Oct 15

by julie

On December 16, 2016 FinCEN officially announced the new annual due date for filing Reports of Foreign Bank and Financial Accounts (FBAR) for foreign financial accounts. This date change was mandated by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114-41.

The due date will be April 15 to coincide with the Federal income tax filing season.

In the upcoming tax season of 2017 the due date for filing FBAR for calendar year 2016 is  April 18, 2017, consistent with the Federal income tax due date.

Whole Story at TFX.

Dec 20

Who is Likely to be Targeted for an IRS Audit?

by julie

Are you wondering if you are at risk for an audit? Chances are, you probably won’t see one.

As the end of the year approaches, you may be starting to worry about having your taxes audited by the IRS. But, you likely have very little reason for fear. Last year, not even 1% of taxpayers were audited by the IRS – and the trend is toward even fewer audits this year.

It is simple math. The IRS has fewer auditors, so they can’t conduct as many audits. Over 2,200 IRS agents have been lost since 2010. This brings the total to around 11,600, which is the lowest number in over a decade.

Nonetheless, there are some people who are more likely to get scrutinized than others. While the IRS does not publish exactly why they single out certain returns for audit versus others, simply looking at the Internal Revenue Service’s track record does give some clues. The following are the ones that are most likely to attract the attention of the government:

Whole Story at TFX.

Dec 16

10 Tips for Americans Abroad to Prepare for the Upcoming 2017 US Tax Season

by julie

We are in the midst of the holiday season, and a new year is upon us. A new year means tax time. The best way to have an easy tax season is to prepare for it now!

Sure, the last thing you want to think about this holiday season is your taxes, but it’s the perfect time to make last minute moves and preparations. You can increase your tax refund by performing a few simple actions right now before the year is over. While you’re working on optimizing your tax refund, you can take a few extra steps to prepare for the upcoming tax season so the process of filing your US income tax return runs smoothly.

Whole Story at TFX.

Dec 10

2017 Tax Filing Season Begins Jan. 23 for Nation’s Taxpayers, Tax Returns Due April 18

by julie

The IRS announced that the nation’s tax season will begin Monday, Jan. 23, 2017, and reminded taxpayers claiming certain tax credits to expect a longer wait for refunds.

The IRS will begin accepting electronic tax returns that day, with more than 153 million individual tax returns expected to be filed in 2017. The IRS expects majority of tax returns to be prepared electronically. Many software companies and tax professionals will be accepting tax returns before Jan. 23 and then will submit the returns when IRS systems open.

April 18 Filing Deadline 

The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday — April 17. However, Emancipation Day — a legal holiday in the District of Columbia — will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017.

Refunds in 2017

Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund.

Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit until mid-February.

The IRS will begin releasing EITC and ACTC refunds starting Feb. 15. However, the IRS cautions taxpayers that these refunds likely won’t arrive in bank accounts or on debit cards until the week of Feb. 27 (assuming there are no processing issues with the tax return and the taxpayer chose direct deposit).

Help for Taxpayers

The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax return on IRS.gov. Taxpayers can also, if eligible, locate help from a community volunteer. Go to IRS.gov and click on the Filing tab for more information.

Seventy percent of the nation’s taxpayers are eligible for IRS Free File. Commercial partners of the IRS offer free brand-name software to about 100 million individuals and families with incomes of $64,000 or less.

Renewal Reminder for Individual Taxpayer Identification Numbers (ITINS)

ITINs are used by people who have tax-filing or payment obligations under U.S. law but are not eligible for a Social Security number. Under a recent change in law, any ITIN not used on a tax return at least once in the past three years will expire on Jan. 1, 2017. In addition, any ITIN with middle digits of either 78 or 79 (9NN-78-NNNN or 9NN-79-NNNN) will also expire on that date.

This means that anyone with an expiring ITIN and a need to file a tax return in the upcoming filing season should file a renewal application in the next few weeks to avoid lengthy refund and processing delays. Failure to renew early could result in refund delays and denial of some tax benefits until the ITIN is renewed.

Original Story at IRS website.