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Expatriate Tax Returns

Failure to File Your Expat Taxes

Making Sense of the Options Available For U.S. Taxpayers with Undisclosed Foreign Financial Assets

Last week the Internal Revenue Service announced some major changes in its offshore voluntary compliance programs, providing new options to help both U.S. taxpayers residing overseas and those residing in the United States. The changes should provide thousands of people with new ways to come into compliance with their U.S. tax obligations.

The changes include an expansion of the streamlined filing compliance procedures announced in 2012 and important modifications to the 2012 Offshore Voluntary Disclosure Program (OVDP). The expanded streamlined procedures are intended for U.S. taxpayers whose failure to disclose their offshore assets was non-willful.

 

IRS Help for Expatriates
The implementation of FATCA and the ongoing efforts of the IRS and the Department of Justice to ensure compliance by those with U.S. tax obligations have raised awareness of U.S. tax and information reporting obligations with respect to non-U.S. investments. Because the circumstances of taxpayers with non-U.S. investments vary widely, the IRS offers the following options for addressing previous failures to comply with U.S. tax and information return obligations with respect to those investments:
  1. Offshore Voluntary Disclosure Program;
  2. Streamlined Filing Compliance Procedures;
  3. Delinquent FBAR submission procedures; and
  4. Delinquent international information return submission procedures.
Since the IRS encourages taxpayers to consult with professional tax advisers regarding these changes, Expatriate Tax Returns is encouraging current clients as well as potential expatriate clients to contact us to determine which option is the most appropriate for you. Visit our website today at www.expatriatetaxreturns.com or call toll-free (877)-382-9123.

American Expats Filing Late Tax Returns

BETTER LATE THAN NEVER!

Fallen behind, have you?  Well, just so you know, you’re not alone.  Many American expats are in the same boat and are able to file late and accrue no penalties or interest.

First question to ask yourself…do you owe tax?  If your income falls below the foreign exclusion amount (for 2012 it was $95,100) or if you pay tax in your residence country, chances are you will owe no tax, no penalties, no interest!    IF you have not filed in a good long time, we often suggest that you file under the new “steamlined” catch up program, which requires you to file 2009, 2010 and 2011 and 2012…and voila, you are up-to-date.

If you end up owing tax after the exclusion or if you are self-employed and living in a country that does not have a social security equalization treaty with the USA, the answer to your late filing dilemma is not quite so easy.  The IRS has 10 years to collect taxes due, so our suggestion would be to file as far back as you owe tax or 6 years, whichever is greater, considering this 10 year collection rule.  Since the late filing penalties and interest are accruing as you are reading this, it is probably a good idea to get the filing process started as soon as possible.

If you have already heard from the IRS…file asap, before they prepare your return(s) for you and you lose the foreign income exclusion for all years prior to 2009.

If you have not heard from the IRS…still file asap, declaring all of your foreign income taking the foreign income exclusion for every outstanding year.

If you owe tax and cannot afford to pay it, the nicer, kinder IRS will assist you in setting up an affordable monthly payment plan.

Need to file late tax returns 1, 2, 3, 5, 7, 10 years, or whatever?  Contact www.expatriatetaxreturnbs.com we are here to help!

 

A Look at Penalties for Not Filing your Expat Tax Returns

A Look at Penalties for Not Filing your Expat Tax Returns

The number one question that runs through the “expat mind” at tax time is: what happens if I don’t file my US taxes?  Would the IRS even notice?  What are the consequences if I get caught?  We are here to tell you what to expect.

Failure to File

Generally speaking, if you owe no tax there will be no assessed penalties or interest even if you file late.

If you owe tax, not filing by the deadline or the extension deadline, you will be penalized with a failure-to-file assessment which is 5% of the amount of unpaid taxes. Each month that the return is late you add another 5% to the amount owed, but it cannot exceed 25% of the amount unpaid tax.

Not Paying your Taxes

If you filed your tax return on time but you could not pay your taxes, the assessed penalty is .05% monthly of the unpaid amount not to exceed 25% of the amount owed.

If you wish to make a payment arrangement with the IRS, the process is usually pretty user friendly, but penalties and interest still accrue until the debt is paid in full.

As a US Expat you will get a slight break if you pay your tax by the June 15 due date.  From the period between April 15, when the tax is due and June 15, you will be assessed interest only if you pay the balance in full by the June due date of the return.

If you are a self-employed  or owe more than $1,000 of tax, you must pay quarterly estimates that cover your prior year’s tax liability. Neglecting to pay estimates will mean immediate assessment of penalty and interest even though you may pay all of your tax by the April 15th due date.

If you need to file a State income tax return, most follow the same rules as the Federal.    Since each State can be a little different, once we start your Federal return we will inform you of any State requirements at that time.

Non Filing American Expats

Not filing your tax return can lead to criminal charges! If you are afraid that you owe the IRS money and do not want to file because of it, we advise you to rethink your position.  In addition, if you wait and the statute of limitations for the foreign income exclusion is passed, you could find yourself paying a lot of tax that you would not have owed had you filed on time.

All refunds are waived on returns filed after 3 years from the due date.  So, if you have money coming back be sure to file within that 3 year time frame or lose it!

The kinder, friendlier IRS is there to help you by offering extensions, payment arrangements, and offers in compromise.

The IRS

The days of hiding from the IRS are slowly coming to an end! With global technology and the new foreign bank disclosure rules it will be easier for the  IRS to contact you.

If your tax situation is out of hand …we’re here to help.  Find us before they find you!