Tax Newsletter - September 2019 No Images? Click here September 2019 Tax NewsletterDown the stretch ......Summer is approaching its end! School days, autumn days, cooler days baseball playoff days, and holidays are all coming upon us! However, if you filed an extension to file your taxes, Tax-extension Day is also approaching on October 15. Are you prepared? Here's is a link for a Checklist to assist you in gathering data and documents to get your tax returns to Uncle Sam on time. If you reside in the U.S., you have exactly one month! Contact us if you have questions. Click on our links below to read about various tax topics. Several informative headlines concerning taxes, scams, business, etc. is provided to keep you in the news! One of these topics could affect your situation or possibly more. If you have any tax questions, please feel free to email us at info@mirtaxes.com. What to know for filing?Tax Preparation Checklist - start getting ready to get your tax return prepared for the 2018 tax year. The Checklist has been created to assist in getting organized. Click here._____________Other deadlines to keep in mind:November 14 - last day to e-file your tax return for this year until next February. December 16 - absolutely last day for U.S. Persons residing abroad to file taxes. But a letter must be sent to the IRS to request this extension. Click on the headlines for the link to read these warnings. Relief Procedures for Certain Former CitizensThe IRS updated their procedures for certain former citizens who have renounced, or intend to relinquish, their U.S. citizenship. These are persons who wish to become compliant with their U.S. income tax and reporting obligations. By being compliant, they can avoid taxation as a “covered expatriate”, under section 877A of the U.S. Internal Revenue Code (IRC). The IRS website includes information on this announcement as well as Frequently Asked Questions (FAQ) that can assist those persons who are in question. All U.S. Persons must remain compliant on their tax reporting requirements even while residing outside of the United States. U.S. citizens must report their worldwide income and financial assets high balances (if threshold met) each year to the U.S. government agencies. Persons born in the U.S. to foreign parents are considered U.S. citizens, or possibly “accidental Americans”. By relinquishing the U.S. citizenship and not being compliant could subject the person to taxes imposed by the IRS. With the passage of the Foreign Account Tax Compliance Act (FATCA) on March 18, 2010, foreign financial institutions are required to determine whether their customers are U.S. citizens and, if so, report certain information about the customer’s account. U.S. citizens are still required to “self-report” their financial accounts via the FinCEN Form 114 (Report of Foreign Bank and Financial Accounts (FBAR)). Individuals who seek to renounce or relinquish U.S. citizenship should be aware that expatriating may have U.S. tax consequences. To comply with existing tax law and to avoid significant tax liability under the U.S. Internal Revenue Code, U.S. citizens who renounce or otherwise relinquish their citizenship must comply with Federal tax requirements for the year of expatriation and for the five tax years priorto their expatriation, which includes using their SSN as their identification number on Federal Tax Returns. Relinquishing U.S. citizenship and the tax impacts of surrendering U.S. citizenship are severe complications that involve irrevocable results. Persons should consider conferring legal counsel before making any decisions about relinquishing U.S. citizenship. With the announcement of the Relief Procedures for Certain Former Citizens, the IRS is providing an alternative method to satisfy the tax compliance certification process for citizens who expatriate afterMarch 18, 2010. However, these procedures are only available to U.S. citizens with a net worth of lessthan $2 million (at the time of expatriation and at the time of making their request under these procedures), and an aggregate tax liability of $25,000 or less for the taxable year of expatriation and the five prior years. If these individuals present the information and meet the requirements of these procedures, they will not be “covered expatriates” under IRC 877A, nor will they be liable for any unpaid taxes and penalties for these years, or any previous years. Individuals seeking to enact under these procedures may file their reports without a social security number. These procedures may only be used by taxpayers whose failure to file required tax returns (including income tax returns, applicable gift tax returns, information returns (including Form 8938, Statement of Foreign Financial Assets), and FBAR, and pay taxes and penalties for the years at issue was due to non-willful conduct. Non-willful conduct is conduct that is due to negligence, carelessness, or error or behavior that is the consequence of a good faith misinterpretation of the requirements of the law. Additional information as well as access to the IRS FAQ, please visit the IRS website here. Any questions can be addressed to us as well here. Read about the FBAR to determine the requirements for filing here. If considering to relinquish U.S. citizenship, additional information can be obtained here on the U.S. government website. See article on website. International Tax NewslinksUnited States: The "Backdoor" Roth IRA Strategy United States: IRS Notice: Domestic Partnerships and S Corporations Filing Under Proposed GILTI Regulations United States: Seven Reasons Why You Still Need To Care About Tax Reform United States: IRS Says Some Business Expenses Are Personal United States: Guidelines for Deducting Business Meals United States: Updated Guidance for IRS Voluntary Disclosure Practice United States: Tax readiness: California - Key developments in the Golden State United States: California FTB IPM addresses sourcing asset management fees, other topics “Accidental Americans” Face Bank Accounts BlockedPersons with foreign parents but born in the United States, although raised in their native countries, are considered U.S. citizens under the Fourteenth Amendment of the United States Constitution. Many of these citizens are at times referred to as “accidental Americans” and many do not know or understand of their “obligations” to the United States with this citizenship. These U.S. citizens are also subject to the Foreign Account Tax Compliance Act (FATCA) on March 18, 2010. FATCA was passed by President Barack Obama and accepted internationally by governments and financial institutions. FATCA obliges financial institutes to forward certain financial information to the U.S. Department of Treasury of all U.S. citizens holding a non-U.S. financial account. Since 2015, European banks have been slowly complying with this law by providing details of customers who are U.S. citizens to the U.S. government. Most “accidental Americans” have no ties to the United States other than their citizenship but now face the impact of having their bank accounts blocked by their banks, or pension institutions. U.S. banks are also required to do so for any Americans living abroad. The information provided to the U.S. Treasury includes account and BIC numbers, balances, interest, dividends of the foreign accounts. U.S. citizens are required to give their social security numbers to the foreign banks via the Form W-9 (Request for Taxpayer Identification Number and Certification). The main issue seems to be that persons born in the U.S., with foreign parents and dual citizenship, may not know of their obligations to the U.S. government since they feel they are not Americans having been accidently born in the U.S. These accidental citizens must request a tax identification number to file the W-9 with the banks or face the blockage of their bank accounts. The problem is that the U.S. is considering sanctions of a levy of 30% tax on all payments from the U.S. to the foreign banks. Also, a 50% fine can be levied on the bank accounts’ balances for failure to report and file a FBAR (FinCEN Form 114-Report of Foreign Bank and Financial Accounts). In order to avoid the sanctions, the financial institutions may decide to block the bank accounts of customers whose data are incomplete by 2020. The few options available is either to apply for a social security number in the USA or renounce the U.S. citizenship. Both procedures are lengthy and expensive for renunciation. In Belgium alone, around 1,000 people is estimated to be vulnerable by the law even though it is not known exactly how many persons outside of the United States were "born accidentally” in the U.S., and still do not have a social security number. Contact us if you have any questions concerning these issues here. See article on website. "Do I have to file?"Wondering if you are required to file because your income is too low? There are changes for 2018 tax year so you could possibly do not have to file taxes to Uncle Sam this year. Click here for thresholds from 2014 to 2018.
Baseball playoffs and World Series soon here! Enjoy! |