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Expat Tax Blog

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.

Oct 7

IRS Now Accepting ITIN Renewal Applications; Taxpayers Encouraged to Act Soon to Avoid Processing Delays in 2017

by julie

ITIN-changes-2016The IRS reminds that taxpayers affected by recent changes involving the Individual Taxpayer Identification Number (ITIN) program can now begin submitting their ITIN renewal applications to the IRS.

According to the Protecting Americans from Tax Hikes (PATH) Act of 2015, any ITIN not used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return as of Jan. 1, 2017.

If a taxpayer has an ITIN that is scheduled to expire and needs to file a tax return, it’s important not to delay. To help taxpayers, the IRS has prepared a variety of informational materials, including flyers and fact sheets, available in several languages on IRS.gov.

ITINs are used by people who have tax filing or payment obligations under U.S. law but who are not eligible for a Social Security Number.

Who Should Renew an ITIN

Only ITIN holders who need to file a tax return in 2017 need to renew their ITINs. Taxpayers will need to have a current ITIN in order to file a federal return in 2017. Others do not need to take any action.

  • Taxpayers with ITINs that haven’t been used on a federal income tax return in the last three years won’t be able to file a return unless their ITINs are renewed.
  • ITINs with the middle digits 78 or 79 (xxx-78-xxxx; xxx-79-xxxx) need to be renewed even if the taxpayer has used it in the last three years. The IRS recently mailed more than 300,000 letters alerting taxpayers with ITINs with middle digits of 78 or 79 of the need to renew their ITINs.

How to Renew an ITIN

To renew an ITIN, a taxpayer must fill out a Form W-7 and submit all required documentation. The IRS began accepting ITIN renewals on Oct. 1.

IRS Acceptance Agent Program

To increase the availability of ITIN services nationwide, particularly in communities with high ITIN usage, the IRS is actively recruiting Certified Acceptance Agents, and applications are now accepted year-round. Interested individuals, community outreach partners and volunteers at tax preparation sites are encouraged to review all program changes and requirements.

Original Story at IRS.

Sep 28

Understanding Forms You Might Need for Your US Tax Return

by julie

We posted a series of articles that describe how to parse various tax forms you may be given before you work on your tax return.

Here are the inks to them:

a) Understanding Forms You Might Need for Your US Tax Return. Interest Income – Form 1099-INT https://www.taxesforexpats.com/articles/understanding-us-tax-forms/understanding-forms-you-might-need-for-your-us-tax-return-interest-income-form-1099-int.html

b) Understanding Forms You Might Need for Your US Tax Return. Form W-2, Wage & Tax Statement https://www.taxesforexpats.com/articles/understanding-us-tax-forms/understanding-forms-you-might-need-for-your-us-tax-return-form-w-2-wage-tax-statement.html

c) Understanding Forms You Might Need for Your US Tax Return. Form 1098-T, Tuition Statement https://www.taxesforexpats.com/articles/understanding-us-tax-forms/understanding-forms-you-might-need-for-your-us-tax-return-form-1098-t-tuition-statement.html

d) Understanding Forms You Might Need for Your US Tax Return. Form 1098 – Mortgage Interest Statement https://www.taxesforexpats.com/articles/understanding-us-tax-forms/understanding-forms-you-might-need-for-your-us-tax-return-form-1098-mortgage-interest-statement.html

e) Understanding Forms You Might Need for Your US Tax Return. Form 1099-MISC – Miscellaneous Income https://www.taxesforexpats.com/articles/understanding-us-tax-forms/understanding-forms-you-might-need-for-your-us-tax-return-form-1099-misc-miscellaneous-income.html

f) Understanding Forms You Might Need for Your US Tax Return. Form 1099-A – Acquisition Or Abandonment Of Secured Property https://www.taxesforexpats.com/articles/understanding-us-tax-forms/understanding-forms-you-might-need-for-your-us-tax-return-form-1099-a-acquisition-or-abandonment-of-secured-property.html

g) Understanding Forms You Might Need for Your US Tax Return. Form 1099-C, Cancellation of Debt https://www.taxesforexpats.com/articles/understanding-us-tax-forms/understanding-forms-you-might-need-for-your-us-tax-return-form-1099-c-cancellation-of-debt.html

Sep 26

Tax Credits for Education Expenses – The American Opportunity Credit (AOTC)

by julie

content_09052016This article will explain the American Opportunity Credit, rules for who is eligible for the credit, what expenses qualify, the value of the credit, limitations on claiming the credit, and how the credit is claimed on your Form 1040 (including related tax schedules).

Original Story at TFE.