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Tag Archive for Manasa Nadig

Offshore Voluntary Disclosure Program (OVDP) Update

Manasa Nadig - OVPD

It has been exactly a year to the day Part I of this post went up. The Internal Revenue Service decided to put an end to the Offshore Voluntary Disclosure Program (OVDP) on September 28th, 2018. That was just a precursor of the tumultuous changes to come at the Internal Revenue Service.

In November of 2018, the IRS released a Memorandum with updated procedures regarding voluntary disclosure both domestic and foreign submitted to them after September 28th, 2019. Notwithstanding the closure date, the IRS has the discretion to apply the new procedures to domestic voluntary disclosures received on or before September 28th, 2018.

Procedures Under The New OVDP

1.   All taxpayers, whether offshore or domestic need to submit a preclearance request on Form 14457 for screening to Criminal Investigation {CI} to determine eligibility. This can be requested via Fax or Mail to the IRS Criminal Investigation unit in Philadelphia.

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Section 199A: Tax Cuts And Jobs Act Introduction

Manasa Nadig - Section 199A 2

The biggest change that came out with the Tax Cuts and Jobs Act of 2017: Section 199A. This section allows owners of flow through entities such as Sole Proprietorships, S Corporations or Partnerships a deduction of 20% of the income earned by the flow-through. The Internal Revenue Service dropped the proposed Regs on Section 199A on August 8th, 2018, all of its 184 pages can be accessed here.

Caveat: Today’s post is a small introduction to this new section. There is a LOT more information to be culled from the 184 pages. Let us get some basics out of the way first:

  1. What is a pass through business? A pass through is a business where taxes are not levied at the entity level but rather at the owner level where the income and expenses have been passed through. The owners’ tax rates apply to this pass through income. Pass through entities are typically sole proprietorships, partnerships, LLC’s, trusts and S corporations. Only pass through entities are eligible for the Section 199A deduction.II. Do all pass-through businesses qualify for the deduction? YES, any trade or business qualifies UNLESSOne: The pass-through is a “Specified service trade or business” or SSTB.
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The 20% Qualified Business Income Deduction: Section 199A

Manasa Nadig - Section 199A

2018 has been all about Tax Reform, you would probably have to be living in a cave in the United States if you did not hear about this. In this post we will talk about the biggest change that came out with the Tax Cuts and Jobs Act: Section 199A. This section allows owners of flow through entities such as Sole Proprietorships, S Corporations or Partnerships a deduction of 20% of the income earned by the flow-through.

The Internal Revenue Service dropped the proposed Regulations on Section 199A on August 8th, 2018, all of its 184 pages can be accessed here. A lot of different interpretations have been tossed around; everyone was hoping that the guidance would clear up the ambiguity. There is still much that needs to be addressed but unlike the story of the four blind men and the elephant, a solid shape is emerging out of the mist!

Caveat: Today’s post is a small introduction to this new section. There is much more information to be culled from the 184 pages.  My goal in this post is helping you glean some knowledge about Section 199A and will talk to experts about the mechanics of qualifying for the deduction.

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Tax Cuts And Jobs Act (TCJA): Changes For American Expatriates

Many American citizens who live outside the US have for years raised concerns about the United States’ Citizen-Based-Taxation System. They may have been hopeful when tax reform was being proposed but have been disappointed that their concerns have been ignored. The new tax reform bill Tax Cuts and Jobs Act called TCJA (pronounced tick-jah) has brought about massive changes in the way individuals are going to be taxed but not much has changed for American Expatriates.

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Tax Reform Changes How You Itemize

The media is abuzz with Tax Reform news, here to allay your confusion regarding the cut to some deductions and tax rates is my latest blog post. The media is abuzz with Tax Reform news, here to allay your confusion regarding the cut to some deductions and tax rates is my latest blog post.

The tax rates change has been the most publicized but there are many deductions on the chopping block that will drastically change how you prepare your taxes and/ or your bottom line.  Read more

When Can A Non-Resident Spouse Be Treated As A Resident?

As the tax reform debate rages on currently, I do not see much in the proposals changing for US citizens living abroad. As this story unfolds, I think it is a good thing that US citizens/ resident aliens living abroad are not affected. We shall wait and watch. For all the latest news-stay tuned!

As it happens many times for those US citizens who have moved abroad and married someone who is a citizen of their resident country, when times comes to file a tax return, they have to use the “Married Filing Separately” or the “Head of Household” filing status. Both of these may not be as advantageous as the “Married Filing Jointly” filing status tax-wise.

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Foreign Freelance Income & What Does Maradona Have To Do With It?

Just when I was planning on publishing my post on foreign free lance income and tax consequences- the big news headline of 2017 dropped! Today special prosecutor, Robert Mueller brought charges against Manafort & Gates for money laundering and foreign bank accounts among any other things. While those fireworks continue and you think that you may not be in the same league as them, let me assure you that many U.S. citizens who live abroad and have freelance income do not understand its tax implications.

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Cryptocurrency: A Story And Tax Consequences

Thinking about writing about Bitcoin, I remembered my maverick of an Economics teacher back in high school in Mumbai, India whose very thick south Indian accent meant we did not know what he was saying more than half the time. He started off the chapter on currency by having everyone in class remain standing till we came up with a definition for “Money”. Thankfully someone said “medium of exchange” real quick!

Although the underlying meaning of currency remains the same, the simple concept of a medium of exchange has undergone several upgrades particularly so with the cryptocurrency or digital payment systems known more commonly as Bitcoin.

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TaxConnections Worldwide Tax Blogs Honors Manasa Nadig

Every week, until the end of the year, we will be celebrating one of our top writers on TaxConnections.

This week we are honoring Manasa Nadig.

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The IRS & Identity Theft: “New” News!

Manasa Nadig

There is something about old doors and entryways that fascinate me! Maybe it is the mystery of what lies beyond, the unknown, the thrill of opening closed doors to discover new places, new feelings, new people. But it is not as simple as that anymore, is it? These are different and more difficult times we live in now, I guess!

We could go down a very deep, philosophical route examining what Identity is, but we have to limit our discussion here to what Identity is in a digital age. And we all know how that ties into our finances!

We also know of all the hacks trying to get in on that precious information.

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Story of A Good Citizen Who Reports Foreign Bank Accounts But Forgets FBARs! Huh?

I have to say today’s blog post was triggered by a phone call a few weeks ago. The would-be client wanted to report his foreign bank accounts. Apparently, this good citizen had all his I’s dotted & T’s crossed – so to speak – so what was the problem you ask? I hate to say this, but it happens more than you would think. He did not know there were additional reporting requirements involved when it came to bank accounts in foreign financial institutions. (More on FBAR thresholds in my post here)

You have to know that the IRS will not impose a penalty for the failure to file the delinquent FBARs if you “properly” reported the foreign bank accounts on your US tax returns, and paid tax on the income from these accounts and have not been contacted by the IRS for an income tax examination or a request for the delinquent returns has not been made by them. Read more

QLACs And RMDs: Need a Break On Your Required Minimum Distribution? Read This!

I had a number of clients hit the magic RMD age this past year. RMD is an acronym for Required Minimum Distributions, if you are getting close to 70 years of age, you will be hearing that a lot. Even if that magic number is quite a ways down the road for you, this is a post you will want to read & remember.

Read more about RMDs in detail here on my blog post.

For a quick recap about what Required Minimum Distributions are, the Internal Revenue Service (IRS) defines it as “Required Minimum Distributions generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age or, if later, the year in which he or she retires. However, if the retirement plan account is an IRA or the account owner is a 5% Read more