Are you a U.S. citizen living overseas with a foreign bank account? If your accounts hold more than $10,000 in the aggregate anytime during the year, you are required to file an FBAR (Report of Foreign Bank Accounts) by June 30th of the following year. It doesn’t matter whether foreign accounts generate income or not; just owning them, or having signature authority, requires you to file. Failure to file can result in severe civil penalties and potential prosecution followed by a term in federal prison. [Read more…] about Opportunity for Noncompliant U.S. Citizens Overseas to Avoid Penalties
TAX TIPS FOR INDIVIDUALS
Got Unreported Foreign Assets? Get Out of Jail Free
The FBAR: Who Should File? Do you have income overseas you forgot to report? Did Grandpa leave you his foreign bank account when he passed away? If you have foreign bank accounts holding more than $10,000 in the aggregate anytime during the year, you are required to file an FBAR (Report of Foreign Bank Accounts) by June 30th of the following year. It doesn’t matter whether the foreign accounts generate income or not; just owning them, or having signature authority, requires you to file.
What’s the Big Deal? Failure to file can result in serious consequences. The sanctions for not completing the FBAR include numerous severe civil penalties and potential prosecution followed by a term in federal prison. [Read more…] about Got Unreported Foreign Assets? Get Out of Jail Free
Want to Share Your Lottery Winnings? It Could Result in Gift Tax
Most people fantasize about what they would do if they won a multimillion dollar lottery. Hopefully part of that fantasy is to give back to parents or close relatives who have been there for them. What most people don’t realize is that they can get slapped by the IRS with a considerable gift tax as a result of this generous gesture. In a Tax Court case this is precisely what played out. [Read more…] about Want to Share Your Lottery Winnings? It Could Result in Gift Tax
Selling Investment Real Estate in New Jersey? Beware of the “Exit Tax”
If you’re a non-resident selling investment real estate in New Jersey, there’s a unique NJ withholding tax you should be aware of. Both residents and non-residents always had to pay income tax on the gain upon the sale of real estate. This tax is required to be withheld for non-residents. The “Exit Tax”, which came into law six years ago, requires the seller to file a GIT/REP form (Gross Income Tax form) in order to record a Deed for the transfer of his property. When a non-resident sells the property, New Jersey will withhold this income tax in the amount of either 8.97 percent of the profit or 2 percent of the total selling price, whichever is higher. Therefore, even if the property is sold at a loss, tax must be withheld to fulfill the two percent requirement. When such a seller eventually files his NJ tax return he is refunded the difference between what was withheld and what was owed. [Read more…] about Selling Investment Real Estate in New Jersey? Beware of the “Exit Tax”
IRS Improves Offer-in-Compromise Terms for Struggling Taxpayers
The IRS has announced an expansion of its “Fresh Start” initiative by offering more flexible terms to its Offer in Compromise (OIC) program. An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. It can only be done if the IRS believes the liability can’t be paid in full as a lump sum or through a payment agreement. This determination is made by looking at the taxpayer’s income and assets. The new expansion of the OIC program includes, in certain circumstances: [Read more…] about IRS Improves Offer-in-Compromise Terms for Struggling Taxpayers
Employee Vs. Independent Contractor Status is Focus of New IRS Template
Should you be classified as an employee or independent contractor? This is an issue that has drawn a lot of attention from the IRS lately, as more employers have been trying to cut costs and classify employees as independent contractors thereby avoiding thepayroll taxes. To clarify how one determines his or her status the IRS has released Publication 1779, which looks at three areas: behavioral control, financial control, and the relationship of the parties to determine worker classification.
To view the template, click here: Employee Vs Independent Contractor Status