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Canada: IRS Is Going After Taxpayers Abroad

IRS says it now plans to invest time and resources catching non-compliant Canadians and taxpayers abroad elsewhere with regards to forms commonly applicable to that specific group of taxpayers – ones unfortunately also commonly missed. It will focus on:

  • Form 3520/3520-A annual return to report transactions with foreign trusts and receipt of certain foreign gifts (a gift of more than $100,000 from a non-resident alien individual)
  • Forms 1042/1042-S Withholding – such as on payment from renters of USA property
  • Nonresident Alien Tax Treaty Exemptions – Improperly claim treaty benefits and exempt U.S. source income from taxation
  • Nonresident Alien – Proper deduction of eligible expenses including Sch A itemized
  • NRA Tax Credits – Erroneous claims of dependent (e.g., kids, spouse) tax credits or education credits only available to U.S. persons

Have questions? Contact Daniel Gray.

 

How Can Tax Debt Affect My Passport?

How Can I Undo IRS Passport Revocation?

As we observed previously, there are considerable parallels between losing your drivers’ license for non-driving reasons and losing your passport for non-travel reasons. The IRS cannot suspend your license, because it is a federal agency with no jurisdiction in that area. But your U.S.-issued passport is another matter.

Courts have consistently held that traveling abroad is a privilege and not a right. That stance allows government agencies to invent their own rules when it comes to things like IRS passport revocation.

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How To Formulate An IRS Penalty Abatement Request

Greetings fellow tax nerds! Perhaps life might suck for me at present but lately, there seems to be nothing more satisfying than making tax penalties go away. Think about it. You’re a good person. You work hard. You struggle every day to do right. Then all of a sudden something changes. It appears innocuous.

Your busy and it gets blown off. Happens all the time. Three years later the IRS sends you a letter asserting that you are guilty and you are indeed guilty as charged. I’ve grown exhausted by toothless IRS letters and more so the reprobate tax collection practice of preying on taxpayer fears of the IRS…for profit.

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IRS Offers Payment Plans For Those Who Filed Taxes But Did Not Pay

The Internal Revenue Service today advised those now receiving tax bills because they filed on time but didn’t pay in full that there are many easy options for paying what they owe to the IRS.

If a tax return was filed but the balance due remains unpaid, the taxpayer will receive a letter or notice in the mail from the IRS, usually within a few weeks. These notices, including the CP14 and CP501, both of which notify taxpayers that they have a balance due, are frequently mailed in the months of June and July.

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IRS Clarifies Interest On Home Equity Loans Can Still Be Deductible

In an Information Release, IRS has announced that in many cases, taxpayers can continue to deduct interest paid on home equity loans under the recently enacted Tax Cuts and Jobs Act.

Taxpayers may deduct interest on mortgage debt that is “acquisition debt.” Acquisition debt means debt that is: (1) secured by the taxpayer’s principal home and/or a second home, and (2) incurred in acquiring, constructing, or substantially improving the home. This rule hasn’t been changed by the Tax Cuts and Jobs Act.

Under pre-Tax Cuts and Jobs Act law, the maximum amount that was treated as acquisition debt for the purpose of deducting interest was $1 million ($500,000 for marrieds filing separately). Under the Tax Cuts and Jobs Act, for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026, the limit on acquisition debt is reduced to $750,000 ($375,000 for a married taxpayer filing separately).

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Can Filing Bankruptcy Wipe Out Your IRS Tax Debt?

Life happens! Divorce. Job loss. Serious illness. These are life events that can cause financial hardship and force good honest folks to file for bankruptcy. Those who have struggled with an endless stream of expenses that never end often owe income taxes that just will not let them be.

Taxes are a part of life. This is true after bankruptcy. Before filing your income tax returns when there has been a bankruptcy, it’s important to know things. Many people have either partial or incorrect information whether and how bankruptcy could help.

The following information may help you get a few things straight and find the best choice for you:

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Taxpayers Who Usually Itemize Deductions Should Check Their Withholding To Avoid Tax Surprises

The Internal Revenue Service encourages taxpayers who typically itemized their deductions on Schedule A of the Form 1040 to use the Withholding Calculator this year to perform a “paycheck checkup.”

People who have itemized before may be affected by changes from the Tax Cuts and Jobs Act. Taxpayers who itemize should use the IRS Withholding Calculator to make sure their employers are withholding the appropriate amount of tax from their paychecks for their financial situation.

The law changes are effective in 2018 and affect the tax returns taxpayers will file in 2019. The new law makes a number of major changes, including:

  • Limiting the deductions for state and local taxes
  • Limiting the deduction for home mortgage interest in certain cases (see IR-2018-32 for more information)
  • Excluding deductions for employee business expenses, tax preparation fees and investment expenses, including investment management fees, safe deposit box fees and investment expenses from pass-through entities

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IRS Eases Process To Fix IRA 60 Day Late Rollovers

Under prior IRS rules, a rollover on day 61 was incorrect and had to be self-corrected or an expensive time consuming private letter ruling process had to be followed by the taxpayer to obtain relief from the IRS. In either case, the taxpayer was looking at extreme financial and negative emotional consequences.

Rev Proc 2016-47: Self-Certification Of Late Rollover Contribution With IRS Model Letter

Under the new Rev Proc 2016-47, instead of being required to request a private letter ruling to receive a hardship waiver for a late 60-day IRA rollover , individuals will be able to “self-certify” to their financial institution that the rollover they’re making complies with the rollover requirements, even if it doesn’t otherwise meet the 60-day rollover period. Notably, though, if the taxpayer has already requested relief from the IRS for a rollover and been denied, these new self-certification provisions cannot be used to obtain relief.

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Country-By-Country Reporting Jurisdiction Status Table

Country-by-Country Reporting data will be exchanged pursuant to bilateral competent authority arrangements (CAAs), which rely on double taxation conventions, tax information exchange agreements, or the Convention on Mutual Administrative Assistance in Tax Matters that permit automatic exchanges of information.

This table includes those jurisdictions that are in negotiations for a CAA, have satisfied the United States’ bilateral data safeguards and infrastructure review, and have consented to be listed. The table also includes jurisdictions with which the IRS and the jurisdiction’s competent authority have signed a CAA.

All competent authority arrangements between the United States and our exchange partners can be found separately on the Competent Authority Arrangements page.

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Delinquent Tax Debt Can Lead To Passport Revocation

Delinquent Tax Debt Can lead to Passport Revocation. The fixing America’s Service Transportation (FAST) Act of 2015 which was signed into law on December 2015 requires the Internal Revenue Service to notify the State Department of taxpayers who are certified as owing a seriously delinquent tax debt.

Seriously certified tax debt is $51,000 indexed yearly for inflation which includes interest and penalties. This tax debt remains unpaid and legally enforceable and all administrative remedies have been lapsed and exhausted.

The IRS is required to notify you at your last known address of their intent to notify the State Department.

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Many Tax-Exempt Organizations Must File Information Returns By May 15, 2018

Tom Kerester, Tax Ambassador, Tax Blog, Washington D.C., USA, TaxConnections

Do Not Include Social Security Numbers Or Personal Data

WASHINGTON — The Internal Revenue Service reminded certain tax-exempt organizations that the Tuesday, May 15 filing deadline for Form 990-series information returns is fast approaching.

Form 990-series information returns and notices are normally due on the 15th day of the fifth month after an organization’s tax-year ends. Many organizations use the calendar year as their tax year, making May 15, 2018 the deadline to file for 2017.

No Social Security Numbers On Forms 990 Read more

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