olivier Wagner | TaxConnections

09 Jan 2024

Grab Your Unclaimed Stimulus Checks: Last Chance For Late Tax Filers!

As a US expat, you’re accustomed to navigating the complexities of living abroad. But there’s one opportunity you don’t want to miss – claiming your federal stimulus checks, also known as Economic Impact Payments, which can amount to up to $3,200. The final deadline is looming: June 15th, 2024. This is not just another date on the calendar; it’s your last chance to access funds that could significantly support your life overseas. In this article, we’ll guide you through the essentials of becoming compliant and how to claim what’s rightfully yours. Remember, it’s now or never!

WHAT ARE STIMULUS CHECKS?

Understanding the Basics

The stimulus package, officially known as Economic Impact Payments, were introduced by the federal government as a response to the economic challenges posed by global events. These checks are designed to provide financial assistance to American citizens, including those living abroad.

Eligibility Criteria for US Expats

The eligibility criteria for U.S. expats to claim the government relief package issued by the IRS during the COVID-19 pandemic are as follows:

U.S. Citizenship or Residency: You must be a U.S. citizen or U.S. resident alien.
Dependent Status: You must not be claimed as a dependent on someone else’s tax return.
Social Security Number: You must have a valid Social Security Number (SSN). If you or your spouse is a member of the military, only one of you needs a valid SSN.
Income Limitations: For the third stimulus check, individuals earning up to $75,000 annually and married couples earning up to $150,000 annually were eligible for the full $1,400 stimulus payment. Payments phased out entirely at $80,000 for individuals and $160,000 for married couples filing joint return.
Tax Filing: Even if you live overseas, you qualify if you fall within the income threshold, have a social security number, and file taxes.

The IRS uses your tax return information to determine your qualification for the stimulus check. This means if you haven’t filed your taxes while living abroad, now is the time to do so.

Written by TaxConnections Admin | Posted in TaxConnections

04 Jan 2024

US Expat Tax News For 2024

As the year 2024 approaches, individuals and businesses need to be aware of the upcoming tax changes that will impact their financial planning. From adjustments in tax rates to updates in deductions and credits, understanding these changes can help taxpayers prepare and make informed decisions.

In this overview, we will discuss the key tax changes that will take effect in 2024, providing insights into how these revisions may affect your tax liability and overall financial situation. Stay informed and stay ahead of the game by keeping up with the latest developments in tax laws and regulations.

KEY TAKEAWAYS: 2024 US EXPAT TAX UPDATES

Tax Deadlines: The standard filing deadline for US residents is April 15, 2024, but expats get an automatic extension to June 17, 2024.
FBAR and FATCA Reporting: International taxpayers with foreign accounts get an automatic extension to October 15, 2024, to file their FBARs. FATCA reporting is tied to your individual tax return deadline.
Foreign Earned Income Exclusion: The FEIE for 2024 is increased to $126,500, aiding American citizens in managing their worldwide income more effectively.
Standard Deduction Increases: The standard deduction for various filing statuses has increased for 2024, impacting both passive and unearned income reporting.
Stimulus Checks and Compliance: US expats who haven’t claimed their stimulus payments for tax years 2020-2022 can still do so. Additionally, those who are behind on their tax filings can use the IRS amnesty program to become compliant without facing penalties.

WHEN DOES THE 2024 US TAX FILING SEASON START?

Written by Olivier Wagner | Posted in TaxConnections

26 Dec 2023

How To Claim $3200 With The IRS Streamlined Foreign Offshore Procedure

How to claim 3,200 USD with the IRS Streamlined Foreign Offshore procedure

If you are a U.S. citizen and haven’t filed your 2020 and 2021 tax returns yet, please do so.

June 15 2024 is the deadline to claim a refund for your covid 19 stimulus checks using the IRS Streamlined Foreign Offshore or tax amnesty.

This gives you four undeniable benefits:

Your non-compliance, which would otherwise lead to penalties, can be regularized under more friendly terms.

You can claim a stimulus check for a minimum amount of $3,200 on your 2020 and 2021 tax returns, provided that your annual income was less than $75,000 during those years.

It’s very beneficial: the value of stimulus checks exceeds the cost of the IRS Streamlined Foreign Offshore procedure.

We offer free consultations if needed: Book it now. Complimentary Consultation.Olivier Wagner, 1040 Abroad.

Written by Olivier Wagner | Posted in IRS Streamlined Foreign Offshore Procedure

12 Dec 2023

FBAR Penalties: Everything You Need To Know

If you’re required to file an FBAR (Foreign Bank and Financial Accounts Report) and fail to do so in a timely and accurate manner, you may face significant consequences, including civil monetary penalties, criminal penalties, or both.

For U.S. persons who discover they should have filed an FBAR in previous years, it’s important to take immediate action. The recommended course of action is to electronically file the overdue FBAR using the BSA E-Filing System. This article will delve deeper into the types of penalties associated with FBAR non-compliance, how these penalties are assessed, and the steps to become compliant.

UNDERSTANDING FBAR AND ITS FILING OBLIGATIONS

The FBAR is a critical reporting requirement for U.S. persons holding foreign bank accounts. This requirement is triggered when the total value of an individual’s foreign financial assets exceeds the reporting threshold of $10,000 at any time during the calendar year. It’s crucial to understand that these assets include not just bank accounts, but also other financial assets held overseas. Failing to meet these filing obligations can lead to significant penalties, as detailed in the sections below.

CIVIL PENALTIES FOR FBAR NON-COMPLIANCE: AN OVERVIEW

The civil monetary penalties for failing to comply with FBAR requirements come with various upper limits, but there is no set minimum. These limits are subject to annual adjustments for inflation, as mandated by the Federal Civil Penalties Inflation Adjustment Act of 1990 and its subsequent amendment, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. For penalties assessed after August 1, 2016, linked to violations that occurred post-November 2, 2015, the adjusted maximum penalty amounts are outlined in Title 31 of the Code of Federal Regulations (CFR), section 1010.821, under the Penalty Adjustment Table. This section details the inflation-adjusted civil penalties that can be imposed for failing to meet the FBAR reporting and recordkeeping obligations.

FBAR PENALTIES FOR NON-WILLFUL FAILURE TO FILE

Written by Olivier Wagner | Posted in FBAR Penalty

09 Nov 2023

The Complete Guide For Submitting Form 14653 For The Streamlined Program

As a U.S. expat, understanding your tax obligations is essential. Form 14653 plays a key role for those considering the IRS Streamlined Foreign Offshore Procedures. In this guide, we’ll simplify Form 14653, ensuring you can confidently navigate the Streamlined Program to address your tax compliance issues. Dive in to learn more and achieve seamless tax compliance.

At 1040 Abroad, we value transparency in our pricing. That’s why our Streamlined Compliance Package includes the certification statement (Form 14653) at no extra cost. With our flat fee policy, you’re assured of no hidden charges or additional costs for any extra forms required. Our goal is to provide comprehensive, worry-free support as you navigate your tax obligations

What Is IRS Form 14653?

IRS Form 14653, also known as the “Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures,” is a form used by U.S. expats and Green Card Holders residing abroad to certify that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct.

This form is part of the Streamlined Foreign Offshore Procedures, which offer a way for U.S. expatriates to become compliant with their U.S. tax obligations if they haven’t been willfully avoiding these responsibilities without risking any penalties.

What Is “Non-Willfull” Conduct?

Written by Olivier Wagner | Posted in Form 14653 • Non-Willful Conduct • Streamlined Compliance Filing Procedures

07 Nov 2023

Navigating International Remote Work: Tax Implications For Employers

Introduction

Following covid 19 when remote work became commonplace, or the only way to work, the concept of remote work has allowed employees to work from virtually anywhere. While this flexibility can be a win-win for both employers and employees, it also introduces complex tax considerations, particularly when employees are working from international locations. In this blog post, we will delve into the tax implications for employers of letting their employees work remotely in international locations, addressing potential dangers and offering solutions to minimize tax liabilities.

Ultimately, much of the exposure can be limited by restricting employees’ movement to countries that have a tax treaty and a social security totalization agreement with the country of origin, and fall within the parameters of that tax treaty.

Company Registration / Sales Tax / Corporate Income Tax

Company registration: By having a presence in given country, the corporation might be required to register itself with the local authorities. As these vary widely country to country, I will not get into specifics.

Sales tax: When employees work in a foreign country, it can create a nexus for the employer, potentially triggering the duty to collect and remit sales tax on goods or services sold in that area.

Corporate income tax: Tax treaties would exempt the corporation from paying corporate income tax to the foreign country if it doesn’t have a permanent establishment in that country.

A dependent agent (such as an employee), when acting on behalf of an enterprise, can create a permanent establishment if they have the authority to conclude contracts or regularly habitually perform activities on behalf of the employer. However, merely having an employee working in a foreign country does not automatically trigger PE status.

Income Tax Withholdings In Foreign Countries

Written by Olivier Wagner | Posted in Tax Implications Of Remote Work

20 Oct 2023

How Far Back Can The IRS Audit?

Navigating the labyrinthine world of U.S. taxes, including federal tax returns and individual tax returns, is challenging enough when you’re stateside. For U.S. expatriates, the complexity can multiply. One question that often looms large is, “How far back can the IRS audit?” Understanding the rules, statute of limitations, and exceptions surrounding IRS audits is crucial for maintaining compliance and peace of mind. Generally, the IRS has a three-year window to audit your tax returns, but as you’ll see, there are exceptions.

If you don’t file your tax returns, the statute of limitations never starts, allowing the IRS to audit the return at any time in the future. This is particularly important for U.S. expats who might assume they’re exempt from filing because they’re living abroad.

What Is The Statue Of Limitations?

The term “statute of limitations” refers to the time frame within which the IRS is legally allowed to audit your tax returns for potential errors, omissions, or fraud. This period is generally three years from the date you filed your return or the due date of the return, whichever is later. After the statute of limitations expires, the IRS generally can’t question the information you’ve reported on your individual income tax return, or your filing history, or request additional documentation.

Taxpayers generally have three years from the date they filed their original tax return to claim a refund.

What Happens When You Don’t File Your Tax Returns?

Written by Olivier Wagner | Posted in Audit

29 Sep 2023

Expatriates – How To File An Extension For Your Income Tax Return Due October 15th

Expatriates - Beat October 15th Tax Deadline

Tax season is a stressful time for many, but it can be especially daunting for U.S. expats living abroad. Navigating the complexities of foreign income, tax treaties, and deadlines can be overwhelming. If you’re an expat stressing about the upcoming October 15 tax deadline, you’re not alone—and we’re here to help.

The purpose of this article is to simplify the process for you. We’ll provide a straightforward, step-by-step guide on how to prepare your own additional extension letter to the IRS, effectively extending your filing deadline for your federal tax return to December 15. And the best part? If you find yourself stuck or in need of professional guidance, our firm offers this service absolutely free of charge.

So, let’s dive in and demystify the process, shall we?

WHEN ARE TAXES DUE WITH AN EXTENSION?
The regular deadline for filing individual income tax returns for U.S. expats is June 15. However, if you file for an extension, you will have until October 15 to submit your tax return. Additionally, you can file for a second extension that will extend the deadline to December 15.

WHY IT MATTERS
Missing the October 15 deadline can result in a late filing penalty, which is separate from any late payment penalties that may have started accruing from the original April 15 payment deadline. Here’s what you need to know:

Late Filing Penalties: The IRS imposes a penalty for filing your federal income tax return after the October 15 deadline. This can be as much as 5% of the unpaid taxes for each month your return is late, up to a maximum of 25%.
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Written by Olivier Wagner | Posted in Expatriates- How To File An Extension

20 Sep 2023

Form 3520-A Explained: The Ultimate Resource For US Expats

Navigating the complexities of U.S. tax compliance and international taxation can be challenging, especially for U.S. expatriates. One form that often goes unnoticed but carries significant penalties for non-compliance is Form 3520-A. In this article, we’ll delve into what Form 3520-A is, who needs to file it, and the penalties for failing to do so.

WHAT IS FORM 3520-A?
Form 3520-A, also known as the “Annual Information Return of Foreign Trust With a U.S. Owner,” is a tax form required by the Internal Revenue Service (IRS) to report information about foreign trusts. If you are a U.S. person who is treated as the owner of any part of the assets of a foreign trust, you are obligated to ensure that this form is filed annually as part of your income tax return.

WHO MUST FILE FORM 3520-A?
The responsibility for filing Form 3520-A generally falls on the trustee of the foreign trust. However, if the foreign trust does not have a U.S. agent, the U.S. owner must ensure that the form is filed. A U.S. owner is defined as a U.S. person, including foreign persons who are treated as the owner of any part of the assets of a Foreign Grantor Trust under the grantor trust rules.

WHEN IS FORM 3520-A DUE?
Form 3520-A must be filed by the 15th day of the 3rd month following the end of the trust’s tax year, usually March 15th for calendar year taxpayers. This is a crucial 3520-A filing requirement that many expats are unaware of, leading to hefty penalties.
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Written by Olivier Wagner | Posted in Form 3520-A • TaxConnections

12 Sep 2023

Understand Form 5471 And Controlled Foreign Corporations (CFC)

Controlled Foreign Corporations (CFCs) are a hot topic for U.S. expats who own or are considering owning a foreign company abroad. Understanding the U.S. tax implications of a CFC is crucial for compliance and optimal tax planning. This article aims to provide a comprehensive overview of what a CFC is, the benefits, and the tax obligations under U.S. law, focusing on the Internal Revenue Code (IRC) sections relevant to CFCs in the United States.

WHAT IS A CONTROLLED FOREIGN CORPORATION?
A Controlled Foreign Corporation is a corporate entity registered and operated in a foreign jurisdiction, where more than 50% of the total combined voting power or value is owned by U.S. shareholders. According to IRC Section 957, U.S. shareholders are defined as U.S. persons who own at least 10% of the foreign entity’s voting shares. This direct ownership is crucial for determining whether a corporation is a CFC under U.S. tax rules.

COMBINED VOTING POWER AND STOCK OWNERSHIP
The term “combined voting power” refers to the total voting rights held by U.S. shareholders in a foreign company. Stock ownership is not just direct but can also be indirect ownership through another entity. Understanding both direct and indirect ownership is crucial for determining CFC status.

FUNCTIONAL CURRENCY AND FINANCIAL STATEMENTS
The functional currency is the primary currency used in the day-to-day operations of the CFC. Financial statements, including balance sheets and income statements, must often be translated into U.S. dollars for reporting purposes.
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Written by Olivier Wagner | Posted in Controlled Foreign Corporation

06 Sep 2023

The Refundable Additional Child Tax Credit Guide For Expats

Navigating the labyrinthine U.S. tax system is challenging enough for American taxpayers living stateside, let alone for those residing abroad. One often-overlooked benefit that can make a significant difference on your expat tax return is the Refundable Additional Child Tax Credit (ACTC). This article aims to provide a comprehensive understanding of this credit, its refundable nature, and why it’s particularly beneficial for U.S. expats.

WHAT IS THE ADDITIONAL CHILD TAX CREDIT (ACTC)?

The ACTC is a tax credit designed to offer financial relief to families with children. Unlike the standard, nonrefundable Child Tax Credit, which requires the taxpayer to have lived in the U.S. for at least six months during the tax year, the ACTC has no such residency requirement. This makes it an invaluable asset for U.S. expats who may not meet the criteria for the standard Child Tax Credit but still have obligations for income taxes to the U.S. government.

For 2023, the refundable portion of this credit is worth up to $1,600 per qualifying child. The beauty of a refundable tax credit like the ACTC is that it not only reduces your tax liability to zero but can also result in a tax refund for the unused portion.

REFUNDABLE VS. NON-REFUNDABLE CREDITS

Tax credits come in two flavors: refundable and non-refundable. A nonrefundable credit, like the standard Child Tax Credit, can reduce your tax liability but won’t result in a tax refund if the credit amount exceeds your tax liability. On the other hand, a refundable tax credit like the ACTC can not only reduce your tax liability to zero but also result in a refund for the unused portion.

For example, if your federal tax return shows a tax liability of $1,000 and you qualify for a $1,400 ACTC, you would not only eliminate your tax liability but also receive a $400 refund from the IRS.
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Written by Olivier Wagner | Posted in Expat Tax Refunds • Expatriate

08 Aug 2023

Managing Taxes In Singapore: An American Expat’s Guide

Living as a US expatriate in Singapore presents a unique set of challenges, especially when it comes to understanding and navigating the tax system. The country’s tax-friendly environment for corporations, featuring a flat corporate tax rate, makes it particularly attractive for business owners and individuals engaging in business operations.

This guide aims to provide a comprehensive overview of the tax obligations for US expats living in Singapore, helping you to better understand your responsibilities and potentially avoid any tax pitfalls related to rental income, employment income, business profits, and more.

UNDERSTANDING TAX RESPONSIBILITIES FOR US EXPATS IN SINGAPORE

The US has a citizenship-based taxation system which means US expats must file a federal income tax return and report their worldwide income annually once their taxable income exceeds the filing threshold regardless of where they reside.

Singapore’s tax system, on the other hand, is territorial, meaning only income earned within the country is subject to tax. Tax obligations in Singapore are determined by one’s tax residency status. Non-resident individuals are only taxed on income earned within Singapore.

HERE’S A QUICK GLANCE AT SOME KEY FACTS:
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Written by Olivier Wagner | Posted in Expatriate Taxes • Singapore