Tag Archive for Tax Blog

Learn How Tax Professionals Are Winning New Clients Through TaxConnections

By far the best part of being Founder and CEO of www.taxconnections.com is listening to how excited our members become when they realize we exist to drive business to tax professionals. An AICPA member told me recently, we can teach all the courses about social media to our members but once they close the books and step away from the courses it ends there as they generally do not have the time to market their services to new clients. They also told me “TaxConnections is in a space no one else is occupying and that is the pure focus on driving new business to its members! The enormity of weight of driving new business to tax professionals has been lifted thanks to TaxConnections!”

This month I am focused on personally talking to new members and walking them through features on TaxConnections. Hearing the excitement in their voices of what the Read More

Written by | Posted in TaxConnections

Canadian Tax Issues With Foreign Inheritances

Many immigrants to Canada will ultimately inherit substantial wealth from family members who did not follow them here.

Usually, those new Canadians are not aware of the Canadian income tax implications of those future inheritances and the fact that careful planning in that regard can often reap rewards, in terms of savings in future Canadian taxes, that far exceed any related costs.

Firstly, the good news: inheritances, whether from non-resident relatives or from Canadians are never taxable income.

However, the income and capital gains earned from such inherited assets (whether in their original form, or reinvested in other assets) will be subject to tax in Canada. Read More

Written by | Posted in Capital Gains • Income Tax • International

Should I Stay or Should I Go? – Part 8

Answers to the Most Frequently Asked Questions Regarding OVDP

As a tax attorney specializing in the Offshore Voluntary Disclosure Program (OVDP), nary a day goes by that I don’t get a call from a person inquiring about the OVDP. The questions asked are relatively the same. After a while, I began to make a list of the most frequently asked questions. Below are my answers to them: (continued)

XI. I made a quiet disclosure by filing amended returns. Will the IRS audit me? If so, will I be eligible for OVDP?

The IRS is reviewing amended returns and could select any amended return for examination. It has identified, and will continue to identify, amended tax returns Read More

Written by | Posted in FBAR • OVDP

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 2 – 2.4.3)

Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

2.4 THE RELEVANCE OF PAJA AND THE PRINCIPLE OF LEGALITY

2.4.3 Recent developments in the principle of legality Read More

Written by | Posted in Africa • Audit

Avoid Future Headaches – Remember To File IRS Form 8594 When Buying Or Selling Business Assets

Buying and selling business assets can be complicated. The last thing you want – BELIEVE ME – is the hassle of explaining inconsistent treatment of the sale for tax purposes 3 YEARS INTO THE FUTURE. Avoiding this is simply accomplished by remembering to file one extra tax form. Basically the US tax law requires both the seller and purchaser of a group of assets that makes up a trade or business to file IRS Form 8594 to report the sale if:

1. Goodwill or going concern value attaches, or could attach, to such assets.
2. The purchaser’s basis in the assets is determined only by the amount paid for the assets. In other words no other substantiation of market value … Read More

Written by | Posted in IRS

Thousands of Canadian Expats In The U.S. Needlessly Pay Canadian Tax!

Canadian citizens are not subject to Canadian tax on worldwide income if they are not resident in Canada. Rather, a Canadian citizen who is a non-resident of Canada is only subject to Canadian tax on certain Canadian source income (most commonly, rents or capital gains from Canadian real estate; dividends from Canadian companies; income from employment in Canada). This is no different than any other non-resident-citizenship generally is not relevant in determining liability for Canadian taxation.

Every year thousands of Canadians move to the U.S. to continue their careers there. In many cases, these Canadian expats continue to file Canadian tax returns and pay Canadian tax on their U.S. employment income under the assumption that they are still tax residents of Canada. This generally translates into a big tax cost. Even though Canada Read More

Written by | Posted in Expatriate • International

Alimony? What Is That? And… Do I Have To Report It On My Taxes?

The word Alimony comes from the Latin Word alimonia which means nourishment or sustenance. It also comes from Scots Law which is the legal system of Scotland and their concept of aliment. This was a rule of sustenance to assure the wife’s lodging, food, clothing and other necessities of divorce.

In the 1970s, the United States Supreme court ruled against gender bias in alimony awards. You may remember some high profile divorces, where women such as Britney Spears, Jessica Simpson etc., have paid multimillion dollar settlements in lieu of alimony to their ex-husbands.

Alimony is not child support. Child support is paid by one parent to the custodial parent Read More

Written by | Posted in Income Tax • Individual • Treasury Regulations

Should I Stay or Should I Go? – Part 7

Answers to the Most Frequently Asked Questions Regarding OVDP

As a tax attorney specializing in the Offshore Voluntary Disclosure Program (OVDP), nary a day goes by that I don’t get a call from a person inquiring about the OVDP. The questions asked are relatively the same. After a while, I began to make a list of the most frequently asked questions. Below are my answers to them: (continued)

X. I failed to file an FBAR disclosing an offshore bank account in my name and failed to report income from that same account on my tax return. I subsequently filed an amended return reporting all of my offshore income. Now I’m having second thoughts and want to apply to the OVDP. Am I still eligible?

Read More

Written by | Posted in FBAR • OVDP

Lowering The Bar For Willfulness For FBAR Penalties

The IRS has authority to assert FBAR civil penalties. Before delving into the FBAR abyss, this is a good time to debunk some FBAR myths. First, there is no such thing as an FBAR penalty within the Offshore Voluntary Disclosure Program (OVDP). The FBAR penalty exists only outside of the OVDP framework. However, there is a penalty within the OVDP that is often considered to be the equivalent of the FBAR penalty. That penalty is commonly referred to as the offshore penalty. Generally, it is 27.5% of the highest aggregate balance of all foreign accounts during the disclosure period.

Second, contrary to popular belief, an FBAR violation doesn’t automatically mean that a penalty will be asserted. Examiners are expected to exercise discretion, taking into account the facts and circumstances of each case, in determining whether a penalty Read More

Written by | Posted in FBAR • OVDP • Tax Fraud/Evasion/Crimes

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 2 – 2.4.2)

Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

2.4 THE RELEVANCE OF PAJA AND THE PRINCIPLE OF LEGALITY

2.4.2 The principle of legality
The principle of legality was considered as an aspect of the rule of law in Fedsure Life Read More

Written by | Posted in Africa • Audit

Americans Abroad – Selling the Principal Residence

When it comes to considering gross income for tax purposes, Section 121 of the US Internal Revenue Code allows for the exclusion of up to $250,000 in gains arising from the sale of a “principal residence.” The exclusion should apply whether the property is in the US or a foreign country. In the case of married couples filing a joint return, up to $500,000 may be excluded. The tax law is very specific in how it defines a “principal residence”, and in the “ownership” and “use” requirements that form part of the definition for utilizing this exclusion.

Principal Residence under Section 121

In order for a property to qualify as a principal residence, the residence must have been owned and occupied by the taxpayer for a minimum of 2 years (specifically, 730 days) Read More

Written by | Posted in Corporate • Expatriate • Income Tax

Decoding IRS Document 6209

Understanding what you are up against with the IRS can be frustrating on many levels. When it comes to the terminology they throw around, especially acronyms, what you will find is that even seasoned veterans quite often pull out specialty reference manuals or what I often refer to as code books.  This post is intended to introduce you to to one of those most valuable pieces of literature if you will…

IRS’ 2014 Document 6209.

I cannot emphasize enough the significance of this document. It is profoundly instrumental in understanding the ‘Service’ and what the people as well as the systems inside the ‘Service’ have done to your accounts. Like the IRS itself each of the sections is Read More

Written by | Posted in IRS
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