resh Start Tax L.L.C. is a worldwide tax practice specializing in all facets of tax representation.
We have over 205 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service in the local, district and regional offices of the IRS. While at IRS we taught Tax Law.
We know all the policies and procedures regarding Expatriate Tax Law and the rules and regulations that apply.
Our team includes Board Certified Tax Attorneys, Tax Lawyers, CPA,s and Former IRS Agents and Managers. We are one of the most trusted and experienced professional tax firms., and have an ” A ” plus from the Better Business Bureau.
Expatriate Tax Provisions
The expatriation tax provisions under Internal Revenue Code (IRC) sections 877 and 877A apply to US citizens who have renounced their citizenship and long-term residents (as defined in IRC 877(e)) who have ended their US resident status for federal tax purposes. Different rules apply according to the date which you expatriated.
Expatriate Tax Services & Help
• Unfiled income tax returns, expat tax returns
• Delinquent (FBAR) reports and penalty abatement
• Tax return preparation for expatriates and foreign nationals
• Assistance with complex social security rules for the self employed
• Amended tax returns and refund claims
• Tax planning and compliance for U.S. nationals working overseas
• IRS audit and appellate representation
• Statement of specified foreign financial assets (Form 8938)
• RRSP and RRIF (Form 8891)
• Information return by a shareholder of a passive investment company (Form 8621)
• Tax analysis for renunciation of US citizenship or resident alien status
• Maximize use of Foreign earned income exclusion and foreign tax credits
• Expatriation and repatriation counseling
• Estimated tax payment planning
• Employment Tax Issues
• IRS installment agreements
• Non-resident alien married to U.S. citizen
What do do if you have not filed an Income Tax Return
Among the various new requirements contained in IRC 877 and 877A, individuals that have renounced their U.S. citizenship or terminated their long-term resident status for tax purposes after June 3, 2004 are required to certify to the IRS that they have satisfied all federal tax requirements for the 5 years prior to expatriation.
If all federal tax requirements have not been satisfied for the 5 years prior to expatriation, even if the individual does not meet the monetary thresholds in IRC 877 or 877A, the individual will be subject to the IRC 877 and 877A expatriation tax provisions.
Individuals that have expatriated should file all tax returns that are due, regardless of whether or not full payment can be made with the return. Depending on an individual’s circumstances, a taxpayer filing late may qualify for a payment plan.
All payment plans require continued compliance with all filing and payment responsibilities after the plan is approved.
What is an Expatriate?
In the broadest sense, an expatriate is any person living in a different country from where he or she is a citizen. In common usage, the term is often used in the context of professionals sent abroad by their companies, as opposed to locally hired staff.
The differentiation found in common usage usually comes down to socio-economic factors, so skilled professionals working in another country are described as expatriates, whereas a manual labourer who has moved to another country to earn more money might be labelled an ‘immigrant’. There is no set definition and usage does vary depending on context and individual preferences and prejudices.
IRS To start attacking Expats who have FBAR issues – What the GAO found
The Four Offshore Programs by the IRS collected over $5.5 Billion
As of December 2012, the Internal Revenue Service’s (IRS) four offshore programs have resulted in more than 39,000 disclosures by taxpayers and over $5.5 billion in revenues. The offshore programs attract taxpayers by offering a reduced risk of criminal prosecution and lower penalties than if the unreported income was discovered by one of IRS’s other enforcement programs.
The First OVDP Program
For the 2009 Offshore Voluntary Disclosure Program (OVDP), nearly all program participants received the standard offshore penalty–20 percent of the highest aggregate value of the accounts–meaning the account value was greater than $75,000 and taxpayers used the accounts (e.g., made deposits or withdrawals) during the period under review.
The Median Balance
The median account balance of the more than 10,000 cases closed so far from the 2009 OVDP was $570,000.
Participant cases with offshore penalties greater than $1 million represented about 6 percent of all 2009 OVDP cases, but accounted for almost half of all offshore penalties. Taxpayers from these cases disclosed a variety of reasons for having offshore accounts, and more than half of them had accounts at Swiss bank UBS.
Using 2009 OVDP data, IRS identified bank names and account locations that helped it pursue additional noncompliance. Based on a review of cases, GAO found examples of immigrants who stated in their 2009 OVDP applications that they were unaware of their offshore reporting requirements. IRS officials from the Offshore Compliance Initiative office said they have not targeted outreach efforts to new immigrants.
Using information from the 2009 OVDP, such as the characteristics of taxpayers who were not aware of their reporting requirements, to increase education and outreach to those populations could promote voluntary compliance.
IRS has detected some taxpayers with previously undisclosed offshore accounts attempting to circumvent paying the taxes, interest, and penalties that would otherwise be owed, but based on GAO reviews of IRS data, IRS may be missing attempts by other taxpayers attempting to do so.
GAO analyzed amended returns filed for tax year 2003 through tax year 2008, matched them to other information available to IRS about taxpayers’ possible offshore activities, and found many more potential quiet disclosures than IRS detected.
Moreover, IRS has not researched whether sharp increases in taxpayers reporting offshore accounts for the first time is due to efforts to circumvent monies owed, thereby missing opportunities to help ensure compliance.
From tax year 2007 through tax year 2010, IRS estimates that the number of taxpayers reporting foreign accounts nearly doubled to 516,000. Taxpayer attempts to circumvent taxes, interest, and penalties by not participating in an offshore program, but instead simply amending past returns or reporting on current returns previously unreported offshore accounts, result in lost revenues and undermine the programs’ effectiveness.
Expatriates – What to do if you haven’t filed an Income Tax Return
Among the various new requirements contained in IRC 877 and 877A, individuals that renounced their US citizenship or terminated their long-term resident status for tax purposes after June 3, 2004 are required to certify to the IRS that they have satisfied all federal tax requirements for the 5 years prior to expatriation.
If all federal tax requirements have not been satisfied for the 5 years prior to expatriation, even if the individual does not meet the monetary thresholds in IRC 877 or 877A, the individual will be subject to the IRC 877 and 877A expatriation tax provisions.
Individuals that have expatriated should file all tax returns that are due, regardless of whether or not full payment can be made with the return. Depending on an individual’s circumstances, a taxpayer filing late may qualify for a payment plan.
All payment plans require continued compliance with all filing and payment responsibilities after the plan is approved.
IRS is sending notices to expatriates that have not complied with the Form 8854 requirements, including the imposition of the $10,000 penalty where appropriate.
US Citizen Abroad
If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.
When to File
If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return and pay any amount due without requesting an extension.
For a calendar year return, the automatic 2-month extension is to June 15.
If you are unable to file your return by the automatic 2-month extension date, you can request an additional extension to October 15 by filing Form 4868 before the automatic 2-month extension date. However, any tax due payments made after June 15 will be subject to both interest charges and failure to pay penalties.
Where to File
If you are a U.S. citizen or resident alien (Green Card Holder) and you live in a foreign country, mail your U.S. tax return to:
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
USA
Estimated tax payments should be mailed with form 1040-ES to:
Internal Revenue Service
P.O. Box 1300
Charlotte, NC 28201-1300
USA
AGI Requirements
Taxpayers with an AGI (Adjusted Gross Income) of $57,000 or less can electronically file their tax return for free using freefile. Taxpayers with an AGI greater than $57,000 can either use the Free File Fillable Forms or efile by purchasing commercial software.
A limited number of companies provide software that can accommodate foreign addresses. To determine which will work best for you, get help choosing a software provider.
Taxpayer Identification Number
Each taxpayer who files, or is claimed as a dependent on, a U.S. tax return will need a social security number (SSN) or individual taxpayer identification number (ITIN). To obtain a SSN, use form SS-5, Application for a Social Security Card. To get form SS-5, or to find out if you are eligible for a social security card, contact a Social Security Office or visit Social Security International Operations.
If you, or your spouse, are not eligible for a SSN, you can obtain an ITIN by filing form W-7 along with appropriate documentation.
Exchange Rates
You must express the amounts you report on your U.S. tax return in U.S. dollars. If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U.S. dollars.
Taxpayers generally use the yearly average exchange rate to report foreign-earned income that was received regularly throughout the year. However, if you had foreign transactions on specific days, you may also use the exchange rates for those days.
Exchange rates can be found at Foreign Currency and Currency Exchange Rates. Yearly average currency exchange rates for most countries can be found at Yearly Average Currency Exchange Rates.
Why use Fresh Start Tax L.L.C. for your Expat Tax Issues?
1. We are composed of Board Certified Tax Attorneys, Tax Lawyers, CPA’s and Former IRS Agents and Tax Managers.
2. When employed by the IRS, we taught Tax Law to new IRS Agents.
3. We have over 205 years of professional tax experience and over 60 years of direct Internal Revenue Service experience in the local, district and regional offices of the IRS.
4. We are “A” rated by the Better Business Bureau.
5. Because of our vast experience at the IRS we know all the tax policies and tax procedures that govern FBAR.
Call Now to step up an free consultation and solve your Expatriate Tax problems: 866-700-1040
