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Expat Tax Blog

Sep 24

IRS Tax Payments – How Much to Pay, When to Send, Where to Send?

by julie

09202016-1The ultimate goal of having your taxes prepared is finding out whether you owe anything to the IRS (or perhaps, vice-versa). Lucky taxpayers who owe no tax do not have worry about payment logistics. For those who do owe tax, it is paramount to send the right amount to the right address and at the prescribed time. Otherwise penalties will accrue and increase this (already unpleasant) item of expense.

A copy of tax return furnished to you by your tax preparer will include different types of payment due slips. It is important to know the difference and to know what each voucher covers.

This article will cover Payment Vouchers, Estimated Tax Payments, and Installment Agreements.

Whole story at TFE.

Sep 22

US – Israeli Dual Nationals Lose FATCA Challenge In Israel

by julie

israel-usaAn Israeli Supreme Court panel has thrown out a challenge to a tax information-sharing agreement with the U.S. and removed a temporary block on FATCA’s implementation, rejecting arguments that the agreement violates the rights of Israelis.

The three-justice panel issued a brief ruling rejecting the challenge, with a more detailed opinion to follow, while also lifting an injunction issued late last month that had barred Israeli officials from implementing the law facilitating the U.S. Foreign Account Tax Compliance Act among Israeli financial institutions. The statute had been contested on concerns that it violates rights to property and privacy, and has inadequate protections for the information sent to the Internal Revenue Service.

In temporarily blocking the pact’s implementation, Israel Supreme Court Justice Hanan Meltzer had in part cited concerns that there was inadequate time between the notification to people affected, U.S. citizens and those holding green cards, in August and the final implementation this month. The case was launched by U.S. citizen and Israeli resident Ritan Schreiber and the group Republicans Overseas Israel, protesting the legality of legislation intended to make Israeli financial institutions share information about accounts of U.S. citizens and green card holders with more than $50,000.

The group launched its suit against the Israeli government in December, claiming violations of rights to privacy, dignity and private property. The complaint raised concerns over the law’s automatic effect and lack of legislative input on implementation decisions.

Israel is not the first country whose government pushed back on FATCA’s requirements, as the Cayman Islands government ordered a delay in reporting dates earlier this summer, starting compliance reporting in August.

The case is Republicans Abroad in Israel v. Government of Israel, case number 8886/15, in the High Court of Israel. The appellate court overturned an earlier injunction against FATCA’s implementation in Israel, on the basis that ‘privacy in modern life is very limited’.

Sep 15

Americans Abroad: Important Information for Overseas Home Buyers

by julie

The American Dream isn’t only ‘American’: many expats who move outside the US for a lengthy period of time consider purchasing a home in their new country. Often, this is not a decision based only on finances. Expats 09092016frequently look to make a connection to the local area, and regain a feeling of permanence and stability. And, in some cases, expats don’t want to be left out of quickly appreciating housing markets.

Similar to making a purchase in their home country, purchasing a home in a foreign country could be a wise decision. However, it remains a decision with potentially large financial consequences. It isn’t a decision that should be make without giving it careful consideration.

This article explains some basic information that is important for you to know prior to purchasing a home in another country.

Original Story at TFE.

Aug 28

Which financial fees are tax deductible?

by julie

Legal and financial fees are expenses we don’t choose to pay. 08252016Those payments are necessary expenses; therefore it seems logical to deduct them on your tax return. However, only certain types of financial and legal fees are deductible. The following article explains which fees are deductible on your US tax return and which ones are not.


The full story can be found TFE.

Aug 25

IRS Grants Sweeping Relief To Retirement Savers Who Miss Rollover Deadline

by julie

The IRS made it dramatically easier and cheaper for taxpayers who miss the 60 day deadline for rolling over retirement account money to fix their errors. retirement-08252016

By law, money received by a taxpayer from an IRA, 401(k), or other workplace retirement plan, must be contributed (i.e. rolled over) to another retirement account within 60 days to escape immediate taxation. Otherwise, it is considered a distribution subject to regular taxes and (if you’re under 59 ½), a possible 10% early withdrawal penalty.

Till now, however, to get 60 day relief, you had to apply to the IRS for what’s known as a private letter ruling. That meant paying the IRS a stiff fee (which rose on January 1, 2016 to a stunning $10,000), plus shelling out another $5,000 to $10,000 for a tax pro to prepare the private letter ruling request. The ruling took six to nine months, and you couldn’t roll the money into a new account until the IRS gave the green light.

But in Revenue Procedure 2016-47, both  issued and effective today, the IRS has created a new “self-certification” procedure that allows someone who misses the 60 day deadline to avoid the expense and delay of obtaining a private letter ruling. Thus, a taxpayer submits a model IRS letter to the  new retirement account custodian, checking in that letter one of 11 acceptable excuses for missing the deadline. This isn’t an unconditional pass—the IRA custodian will report the letter to the IRS and should the taxpayer be audited, the IRS can still determine he didn’t quality for 60 day relief.

These 11 excuses include an error by a financial institution; a taxpayer misplacing (and never cashing) the retirement account distribution check; and a taxpayer mistakenly putting the check in a taxable account he thought was an eligible retirement account.  There’s also lots of dispensation for personal problems, including a death or serious illness in the family; a home being severely damaged; and even a taxpayer being unable to complete the rollover because he was incarcerated.

Original Story at Forbes.