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What If I Own Real Estate In A Foreign Country? Answers Here!

Green house

There’s this question that I always get from my clients: “Do I have to report my real estate holdings in a foreign country?” To which, my answer (in true accountant style) is always: “It depends”. Let me explain further.

You may be a first generation immigrant to the US and still have strong ties to your home country; by way of family elders who live there or a strong sense that you would like to some day retire back there, where you grew up. Or you are an adventurous investor who would like to invest in a little vacation home by the beach in the Caribbean. Or you were stationed abroad through your job and loved it so much that you invested in some property there. Then this blog is for you to read! Read More

The New American Expat: More Collateral FATCA Damage

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As I reported in a previous article, the Department of Justice (DOJ) and the IRS instantly began to drool in anticipation when The Foreign Account Tax Compliance Act was passed in March of 2010. This gives them enforcement tools to make foreign countries and banking institutions play by our rules whether they like it or not. The Department of Justice has gone even further thinking it has been given the power to make foreign treaties without the constitutionally required Senate ratification. The Senate so far doesn’t seem to mind, but some other countries and taxpayers are taking offense.

FATCA Basics

FATCA gets its teeth from two provisions: Read More

IRS Clarifies Application of One-Per-Year Limit On IRA Rollovers, Allows Owners of Multiple IRA’s A Fresh Start In 2015

Retirement Investment Security

If you have an IRA beware of this new rule that limits the number of IRA Rollovers that are not “trustee to trustee” to one per year.

When you receive a distribution from a traditional IRA or your employer’s plan, you would normally report it as income unless you rollover that distribution to another IRA no later than 60 days after the day you receive the distribution from your traditional IRA or your employer’s plan. In the absence of a waiver or an extension, amounts not rolled over within the 60-day period do not qualify for tax-free rollover treatment. You must treat them as a taxable distribution from either your IRA or your employer’s plan. These amounts are taxable in the year distributed, even if the 60-day period expires in the next year. You may also have to pay a 10% additional tax on early distributions as discussed later under Early Distributions. Read More

EU’s New VAT “MOSS” – Relevance For MFA?

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On January 1, 2015, the EU’s new approach for charging and collecting VAT on B2C sales of e-services and digital goods begins. The key to the approach is that all businesses will charge based on the customer’s location (destination basis). That makes sense for a consumption tax, but has its challenges. One key one is knowing where the customer is, which is not always easy to determine for digital goods relative to physical goods.

One administrative simplification is the Mini One Stop Shop or MOSS. This allows a business to register in one country for filing purposes. The business still has to collect the appropriate VAT for the country where the consumer is, but rather than quarterly filing in each country, the business just files in the MOSS country. That country makes sure the funds get to the right country (and handles the currency translation since not all EU countries use the Read More

The Unknown Tax Comic – Part 12

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♦ “People who complain about taxes can be divided into two classes: men and women.”  — Anonymous

♦ When your ship comes in, it’s always docked by the Government.

♦ Income tax is Uncle Sam’s version of “Truth or Consequences.”

♦ It’s hard to believe America was founded to avoid high taxation.

♦ Suggested simplified tax form: How much money did you make last year? Mail it in. — Stanton Delaplane

♦ “Worried about an IRS audit? Avoid what’s called a red flag. That’s something the IRS Read More

Questions To Ask NOW Regarding The Affordable Care Act

Smiley who have some questions

As an astute navigator of the Internal Revenue Code over the last decade or so I’ve been asked by media heads for my opinions on the Affordable Care Act. Even though I have many to offer the fact of the matter is the deeper I get into the compliance reporting abyss the less sense it seems to make. The following four quotes I can hang my hat:

“For sure the ONLY thing we can rely on, barely, seems to be TITLE 26 and the best place to start your journey in these regards is with the Department of Health & Human Services.”

“The IRS is implementing the tax provisions of Affordable Care Act – and the 2014 filing season is shaping up to be a N-I-G-H-T-M-A-R-E! So be nice to our friends who work in bureaucracy, we are all in this together.” Read More

Government Expands Forfeiture Program

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In 1984, George Orwell’s novel about a dystopian near-future society, Oceania was constantly at war with one of its geopolitical rivals. The grandfatherly yet sinister O’Brien later admitted that victory over Eurasia or Eastasia was not the war’s objective – the ongoing conflict was simply an excuse for the totalitarian government to intervene in peoples’ affairs.

The United States is in the midst of several wars, many of which are against rather amorphous opponents. Case in point: the war on drugs. It’s not exactly like Oceania’s war against Eurasia/Eastasia, but there are some common elements. Both conflicts are seemingly endless, and both have political overtones. Perhaps most significantly, in both conflicts, bystanders are caught in the crossfire. Read More

Year-end Tax Checkup If You Are Older Than 70.5 Years – Have You Satisfied Your 2014 Required Minimum Distribution?

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Do Not Be At Risk for A Major Tax Penalty

Don’t let the hustle and bustle of the holiday season distract you into a hefty tax penalty come April. As the end of a year approaches, many consumers begin taking distributions from many of their retirement accounts-including 401(k) and 403(b) plans, and traditional IRAs-starting in the year they turn 70-and-a-half or the year when they retire, whichever is later. Failure to do so and the amount you should have withdrawn will be taxed at 50%. It’s one of the biggest penalties in the tax code and you would be surprised how many people fall into this trap. Fidelity Investments reports that of the more than 750,000 Fidelity IRA customers who need to take a Required Minimum Distribution (“RMD”) this year, 68% have yet to withdraw enough. Read More

Form 8938 And Offshore Real Estate Holdings

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Owning a portfolio of offshore assets can be a headache thanks to the Foreign Account Tax Compliance Act (FATCA). FATCA requires both U.S. citizens and foreigners living in the U.S. to make extensive disclosures about overseas holdings on their tax returns or face stiff penalties. Foreign financial institutions also must report more detailed information on income earned by their U.S. account holders, or face possible U.S. tax penalties.

FATCA is the culmination of a three-year campaign by Washington to combat offshore tax evasion. It has its genesis in a 2009 settlement with UBS AG where the Swiss bank agreed to turn over to the U.S. the names of more than 4,000 U.S. taxpayers with hidden offshore accounts. Read More

5 Payroll Tax Mistakes To Avoid

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If you have at least one employee, you are responsible for payroll taxes. These include withholding federal (and, where appropriate, state) income taxes and FICA tax from employees’ wages as well as paying the employer share of FICA tax and federal and state unemployment taxes. The responsibility is great and the penalties for missteps make it essential that you do things right.

1. Misclassifying workers

Perhaps the hottest audit issue today is misclassifying workers. There’s incentive to treat workers as independent contractors rather than employees because payroll taxes and employee benefit costs are high; a company’s only tax responsibility for an independent is Read More

Taiwan Provided the US Financial Information on 4,273 US Green Card Holders Under FATCA!

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According to The China Post The Financial Supervisory Commission’s (FSC) chairman Tseng Ming-chung met with the U.S. treasury from Nov. 2 till Nov. 5 and signed an Intergovernmental Agreement (IGA) under the Foreign Account Tax Compliance Act (FATCA) that will see Taiwanese financial institutions directly providing 4,273 Taiwanese green-card holders and American citizens’ bank account information to the U.S., Tseng said in the Legislative Yuan on November 18, 2014.

According to Tseng, the agreement is not a full tax treaty, but rather a model under the treaty to exchange tax information.

Tseng said he was given the final copy of the IGA in person on Nov. 3. The U.S.’ request Read More

Why The Ministerial Housing Allowance Might Not Survive

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On September 7, as was discussed in “Appeals Court Upholds Clergy Housing Exemption,” the Seventh Circuit of appeals reversed a Federal District Court decision that ruled the minister’s housing allowance was unconstitutional. The suit had been brought by the Freedom From Religion Foundation. So the housing allowance survives, for now.

The Appeals Court ruling was actually based on the fact that the plaintiffs, Dan Barker and Laurie Anne Gaylor (co-presidents of FFRF) did not have standing to sue as they had not been denied the benefit of a housing allowance. In ruling that the plaintiffs did not have standing, the court did not actually address the issue of the constitutionality of the housing allowance. Read More